The collaboration between Bruegel and Rhodium Group delves into the contrasting strategies of the US and Europe within the global solar photovoltaic (PV) landscape. Europe’s dominance in solar capacity deployment contrasts with the US’s recent surge in domestic solar manufacturing, driven by policies like the Inflation Reduction Act. The Clean Investment Monitor by Rhodium Group and MIT tracks investments in clean technologies in the US, while Bruegel’s European Clean Tech Tracker highlights trends in Europe.
Solar PV technology has revolutionized the clean energy transition, with plummeting module prices facilitating widespread global deployment. The industry, valued at $90 billion in 2023, is mainly led by China, with significant overcapacity and trade dynamics shaping the market. Europe heavily relies on solar equipment imports from China, while the US has diversified its supply chain, importing primarily from Southeast Asia due to trade policies.
Both the US and Europe are committed to tripling renewable generation capacity by 2030, with solar PV expected to dominate new clean electricity capacity. Europe’s early subsidies fueled rapid solar deployment, but policy shifts led to a slowdown. In contrast, the US, despite initial solar R&D investments, saw growth driven by federal tax credits and state-level incentives. By 2023, the EU had deployed more solar capacity than the US, although both regions generated a similar amount of solar electricity.
While China dominates global solar manufacturing, questions arise about domestic manufacturing in the US and Europe. The US witnessed a surge in solar manufacturing investments post the Inflation Reduction Act, leading to significant capacity growth. Conversely, Europe’s investments in solar manufacturing have been stagnant, with the US experiencing a boom in announced capacity across the supply chain.
The case of Meyer Burger exemplifies the shifting landscape of solar manufacturing investments. The Swiss company’s plans to expand solar manufacturing in the US due to tax credits were hindered by policy changes, leading to a restructuring plan to regain profitability. Trade dynamics also play a crucial role, with both the EU and the US relying on imports to meet solar PV demand, albeit facing challenges from Chinese imports.
Looking ahead, the US aims to enhance domestic solar supply and reduce reliance on Chinese imports, while Europe prioritizes rapid solar deployment. The Clean Tech Tracker and Clean Investment Monitor will continue to monitor the evolving solar PV sector in both regions. The research, supported by the Children’s Investment Fund Foundation, presents an independent perspective on the solar industry’s trends and challenges.
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