The solar photovoltaic technology is poised to play a crucial role in the global energy transition, driven by a significant drop in solar module costs. A booming global solar manufacturing industry, primarily led by China, has resulted in massive overcapacity compared to deployment. Europe, having kickstarted the solar industry with subsidies, initially led the US in solar deployment. However, with more sunshine in the US southwest, both regions now generate similar amounts of solar electricity.
While the EU saw a rapid increase in solar deployment in the 2000s, the US lagged behind initially. Subsequent investments and tax credits in the US boosted solar deployment, aligning it with EU rates by the second half of the 2010s. However, recent years have seen a resurgence in European solar deployment, widening the gap with the US once again.
Despite the EU having a higher deployed solar capacity, both regions generated similar amounts of solar electricity in 2023 due to varying sunlight hours. Germany leads European solar deployment, benefiting from higher solar hours. In contrast, the US has seen a surge in solar manufacturing investments, particularly after the Inflation Reduction Act, leading to significant growth in manufacturing capacity.
As the US accelerates solar manufacturing investments, Europe maintains a more stable approach. The US has seen a tenfold increase in solar manufacturing investments, while Europe’s investments remain at a lower level. The US is diversifying its solar trade partners, reducing reliance on China, whereas Europe continues to import predominantly from China.
With the US focusing on domestic supply and Europe prioritizing rapid deployment, the two regions are likely to experience diverging trends in the clean energy sector. The US’s emphasis on local supply chain development contrasts with Europe’s deployment-centric approach. Future briefings will delve deeper into these trends and their impact on clean energy technologies.
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