PV Module Supply Chain Moves Towards Global Layout | Overseas Module Capacity Data Survey [SMM Analysis]

SMM, Oct 30: In recent years, the global demand for renewable energy has been continuously growing. As an important part of clean energy, the PV industry has received strong support from policies and markets in various countries. As the world's largest manufacturer of PV products, Chinese PV companies have significant advantages in technology, scale, and cost. Facing intensified domestic market competition and the potential of international markets, Chinese PV companies are accelerating their internationalization strategies and actively setting up production sites overseas.

This trend is driven by multiple factors. Firstly, strict carbon emission controls and renewable energy support policies in Europe and the US provide good opportunities for the growth of PV products in these markets. Secondly, due to frequent trade protection policies, some countries impose high tariffs on imported PV products, forcing Chinese companies to build production sites locally to avoid trade barriers. Additionally, the restructuring of the global supply chain and the increase in transportation costs also motivate PV companies to localize production near target markets to enhance competitiveness and market responsiveness.

Overseas PV companies are also accelerating the expansion of their production and supply chain capabilities, especially in the US, India, and Europe. Various countries and regions are introducing trade barriers, non-trade barriers, subsidy policies, and other measures to support the expansion of local PV product supply chains, aiming to reduce the risk of supply chain disruptions caused by over-reliance on imported PV products and to propose strategic plans for local PV product supply.

In recent years, driven by policies promoting local production, countries and regions around the world are expanding their PV manufacturing footprints. According to SMM statistics, by the end of 2024, the global PV module capacity is expected to reach 1,424.9 GW. China, India, and the US are the top three countries in PV module productivity.

China, with its complete PV supply chain, is the largest producer of PV modules, with an expected year-end capacity exceeding 1,100 GW, accounting for 80% of the global total. India and the US are both increasing their investments in PV product manufacturing, with expected year-end capacities of 70 GW and 46 GW, respectively, accounting for 5% and 3% of the global total. However, due to factors such as solar cell supply shortages, lack of technology, and worker shortages, the operating rates of the PV module industries in India and the US are constrained and are unlikely to exceed 40% this year.

The PV module capacity in Southeast Asia is also substantial, with an expected year-end capacity of about 96 GW, accounting for 7% of the global total, led by Vietnam. In Southeast Asia, Chinese module companies' production sites account for 78%. However, due to US tariff policies, the operating rates of modules in this region have recently dropped significantly.

Other regions, including Turkey, Germany, Italy, Brazil, and South Korea, also have PV module capacity layouts, with Turkey, Germany, and Italy leading the way. By the end of the year, the PV module capacity in these regions is expected to be close to 80 GW, accounting for 6% of the global total.

India:
India plans to increase its PV module manufacturing capacity to 150 GW by 2028. To support the domestic solar manufacturing industry and reduce reliance on imports, the government has set multiple tariff barriers (BCD) and non-tariff barriers (ALMM and DCR) and introduced production-linked incentive schemes. Through these measures, India's solar cell module manufacturing capacity has significantly increased over the past two years, from about 10 GW in 2021 to over 65 GW in 2024. By the end of 2024, India's PV module capacity is expected to reach 70 GW.

As of Q3 2024, India's total PV module capacity was about 67 GW. The largest module companies in India are Waaree (capacity 12 GW), TP Solar (capacity 4.3 GW), and Adani (capacity 4 GW). India's module capacity is relatively dispersed, with Gujarat accounting for 49%, and other regions including Telangana and Tamil Nadu.

However, India's module supply still faces challenges, mainly due to heavy reliance on imported upstream raw materials, lack of production equipment commissioning and maintenance, slow pace of technological innovation, and shortage of skilled labor. This makes India susceptible to various supply chain shocks and limits the operating rates of modules. The lack of vertical production capacity also makes it difficult for India to compete with China in terms of production costs.

US:
The US IRA policy has greatly promoted the rise of its PV manufacturing industry. In 2023, the US announced 51 new and expanded module producers, with a total capacity of 155 GW. The US has also set multiple tariff barriers (Section 201, Section 301, anti-dumping, and countervailing duties) and advanced manufacturing production subsidies to reduce overseas module imports and encourage local module production.

As of Q3 2024, the total PV module capacity in the US is 53 GW. The largest is thin-film module producer First Solar (capacity 10.7 GW), followed by Qcells (capacity 8.4 GW), and LONGi and Canadian Solar (capacity 5 GW). There are 16 PV module companies with capacities exceeding 1 GW. Other large PV module companies include Sirius PV, Solar4America, Runyang, and SEG Solar.

The local module capacity in the US accounts for about 75%, with the rest being capacities of Chinese companies setting up factories in the US. Currently, the planned expansion of local module capacity in the US is still 20-30 GW, with most capacities expected to be operational between 2025 and 2026. Although the US is actively expanding its PV module capacity, investors and manufacturers continue to face policy uncertainties, leading to increased wait-and-see sentiment. At the same time, the US still faces significant gaps in the upstream of the PV manufacturing chain, posing supply and technology challenges for PV module production.

Europe:
The European PV module industry is mainly composed of numerous small manufacturers, with at least 200 module manufacturers having factories in Europe, most of which have capacities below 1 GW.

As of Q3 2024, the total PV module capacity in Europe is 30 GW. The largest module manufacturer is RECOM Technology, which has expanded its capacity to 3.2 GW. Other module companies include IBC Solar (capacity 3 GW) and AE Solar (capacity 1.8 GW), with a total of 14 module companies exceeding 1 GW in capacity, located in Germany (7), France (1), Spain (1), Belgium (1), Switzerland (1), and Italy (3).

To reduce reliance on imported modules and support local module manufacturing, the EU proposed in the Net-Zero Industry Act that by 2030, at least 40% of the EU's PV demand should be met through local production. The EU's goal is to achieve an annual local manufacturing capacity of at least 30 GW for the entire PV supply chain by 2025. Currently, the module capacity within the EU is close to 22 GW, and it is expected to achieve this goal by 2030. Many European countries (such as France) have started offering tax credits or subsidy incentives for projects using locally manufactured PV modules to promote localization. Due to differences in production costs, the actual available module capacity in Europe is currently small, but the expansion targets are clear.

Southeast Asia:
The PV module capacity in Southeast Asia is mainly dominated by Chinese companies, aiming to avoid the risk of US trade sanctions on Chinese module exports. The module capacity of Chinese companies in Southeast Asia is about 75 GW, accounting for about 78% of the total capacity in the region.

Among the four Southeast Asian countries, Vietnam leads with the largest module capacity layout of about 40 GW, mainly including Chinese companies such as Jinko, LONGi, JA Solar, and companies like VSUN and Green Wing.

The future of the PV module manufacturing industry in Southeast Asia depends on US anti-dumping and countervailing duties. Due to the high risk of retrospective tariffs on products, a few Chinese PV companies with production capacities in Southeast Asian countries have almost stopped shipping or are only shipping inventory. PV manufacturers have significantly reduced utilization rates before the preliminary ruling. In early October, after the preliminary ruling tariff rates were set, PV companies studied the US market and tariff rates to plan subsequent production. However, it is clear that the current demand for solar cells in the US is more urgent, so the number of PV modules exported to the US by Chinese PV companies in Southeast Asia will gradually decrease, and solar cells will become the preferred export product.

In summary, global PV companies are accelerating the expansion of their supply chains through various strategies to cope with the rapid changes and challenges in the global market. Geopolitical factors and international trade frictions also make companies pay more attention to setting up production sites in multiple locations worldwide. The implementation of global PV industry chain layout strategies not only helps secure market share but also improves responsiveness and flexibility to regional demands. This trend of globalization will continue to drive the development and growth of the PV industry and play an important role in the global green energy transition.