Overseas expansion of Chinese PV manufacturers in 2024

PV supply and demand have sustained steady growth in 2024 despite global expansions during 2022 and 2023. Global demand came in at 467 GW in 2023 and will likely rise by 10% to 492-538 GW in 2024, a slightly slower year-on-year increase, chiefly supported by China, Europe, the U.S., Brazil, and India. Given trade barriers and policy changes in some major markets, manufacturers re-strategize overseas deployment. Meanwhile, some have executed expansion plans, becoming the talk of the industry. The following paragraphs comb through current trends of non-China production expansions.




 

Non-China production updates

Southeast Asia: End of anti-circumvention tariff exemption to boost local wafer and BoM production capacity

As one of the crucial hubs supplying the U.S. PV demand, Southeast Asia still faces the most obstacles in exporting modules to the U.S. under the Uyghur Forced Labor Prevention Act (UFLPA) due to polysilicon traceability issues. Using non-Xinjiang or non-China polysilicon has become necessary for modules attempting to cross the U.S. border.

Once the exemption of anti-circumvention duties ends in June 2024, module makers in Southeast Asia cannot import to the U.S. unless using non-China wafers or meet the BoM requirements. This will have a direct impact on module exports from Southeast Asia. Given the current deficiency in non-China wafer production capacity, many Chinese manufacturers plan to expand their wafer and BoM production in Southeast Asia.
 

The U.S.: Module production capacity increases rapidly but local supply chain is still immature

As the world’s second-largest PV market, the U.S. has supported local manufacturing strongly in recent years, sparking a surge in plans to set up production plants in the U.S. with generous subsidies, such as incentives under the Inflation Reduction Act (IRA) of 2022. Many manufacturers, including Q-cells, Silfab, Solar4America, Meyer Burger, etc., are planning production expansions.

However, the growth in local cell production capacity will be very limited, only reaching 7.3 GW per year by the end of 2024, given the time it takes for capacity ramp-up and equipment move-in. The performance of new capacities requires further observation as they are the first large-scale cell production expansion in the U.S. In 2027, local cell production capacity in the U.S. will likely rise to 38.15 GW.

As for modules, expansions have been significant over recent years. Many manufacturers, such as JA Solar, Trina, Astronergy, and 3SUN, decided to expand production in the U.S. By the end of 2024, the annual module production capacity in the U.S. will likely increase by 30 GW to over 50 GW.

The U.S. supply chain will experience a stark transformation under policy initiatives. While cell and module production is rapidly expanding, polysilicon and wafer expansion plans are few due to initial capital requirements, technical reserves, local electricity prices, and labor costs. Against this backdrop, how to complete the supply chain for the U.S. after considerable cell and module capacities come online is an issue all manufacturers investing in the U.S. must address.
 

Middle East: An emerging producing hub amid geopolitical changes

The Middle East is a promising PV market with local governments allocating investments in renewable energy, providing a favorable environment for foreign investors. So far, there have been manufacturers either undergoing or evaluating investments and constructions in all PV sectors.

For instance, Zhonghuan confirmed its collaboration with Saudi Arabia's Vision Industries to set up a wafer factory with a projected annual capacity of 20 GW. In the upstream, GCL announced the 120,000-MT polysilicon production capacity in Saudi Arabia. In the UAE, Trina planned to build integrated production capacity in three phases, including 50,000 MT of polysilicon, 30 GW of wafers, 5 GW of cells, and 5 GW of modules. In Turkey, in addition to the local module capacity reaching 19.7 GW by late 2023, Kalyon, a vertical integrator, also built an integrated production capacity, including 2 GW of wafers, 2 GW of cells, and 2 GW of modules. Given current international situations, production in the Middle East may be exported to the lucrative U.S. market besides serving local demand.
 

India: Expansions lag due to technological inadequacy and troubled equipment imports

The Indian government has introduced a series of policy incentives for domestic production. In 2021, the government approved the Production Linked Incentive Scheme (PLI), hoping to promote local manufacturing, even vertically integrated production, further stimulating local PV development. Moreover, with the implementation of the Approved List of Models and Manufacturers (ALMM), public PV projects must use modules listed in the ALMM, increasing the motivation behind local module production expansion since most manufacturers on the list are Indians.

Given these advantages, Adani Group is planning vertically integrated production in India, including 2 GW of wafers, 4 GW of cells, and 4 GW of modules. Meanwhile, foreign manufacturers establish cell and module production capacity. However, expansions in India will be slow due to technological inadequacy and troubled equipment imports.
 

Europe: Most manufacturers wait-and-see policy incentives

Compared to the aforementioned markets, there have been fewer expansion plans in Europe. Recently, governments have considered restricting China imports, given the low prices for China-made modules and the EU’s prohibition of goods using forced labor. However, since local production capacity still falls behind demand, Europe remains heavily dependent on China. Trade barriers will result in price hikes for Europe-made modules, affecting the profit of project developers, undermining its energy transition progress.

Hence, the EU aims to reduce reliance on Chinese imports and achieve energy independence via policy incentives. In March 2023, the European Commission proposed drafts such as the Net-Zero Industry Act and the Critical Raw Materials Act, hoping to increase the use of local manufacturing technology and materials. Still, most companies are cautious towards production expansion in Europe, given policy uncertainties and the progress of implementation requires further observation.
 

How to catch up?

The China-led PV manufacturing is undergoing reforms as markets introduced incentives and trade barriers to decouple from the Chinese supply chain. With manufacturers all eyeing non-China markets, how can one find the best location for the company timely?

InfoLink provides tailored consulting services for manufacturers seeking opportunities out of all the incentives and restrictions in various countries. Steered by qualitative research and qualitative study, our professions range from CapEx assessment to non-China market price trends and BoM supply solutions. 

Upstream sectors can hardly break from China in the near future as fewer manufacturers initiate expansions due to the longer time required. Meanwhile, cell and module production capacities outside China have been rising, especially the latter. This year, annual non-China module production capacity may reach 276 GW, a 17% increase from the previous year.

Expansions outside China will continue in the long run amid current geopolitical relations, reducing Chinese dominance and realizing a more diverse PV supply chain. By then, making informed, data-driven decisions to allocate investment in non-China markets will become a shared priority for all manufacturers.