Solar panel costs drop with global trading, SEAS professor finds

Media Credit: Sage Russell | Photographer

John Helveston, the lead author on the study, said the learning models in the study found energy costs from solar panels went down in China when compared to Germany and the United States, where fewer panels are manufactured.

A professor in the School of Engineering and Applied Sciences found that the global trading of solar panel technology saved countries $67 billion from 2006 to 2020, in a study published late last month.

John Helveston, the lead author of the study, said the study calculates how much money China, as the leader of global solar manufacturing, has saved globally by increasing their manufacturing and export of solar panels, as opposed to individual countries producing their own solar panels with strict trade policies that are more costly. The study’s findings – which focus on Germany, China and the United States – show how strict trading policies like tariffs can increase solar panel prices, decrease manufacturing rates and in turn contribute to the creation of more carbon emissions.

Helveston, an assistant professor of engineering management and systems engineering, said the main goal of the study is to determine how China’s increase of solar panel production has saved money globally. He said the learning models in the study found energy costs from solar panels went down in China when compared to Germany and the United States, where fewer panels are manufactured.

“So what I think would be the smarter strategy, at least in terms of meeting climate goals, is to reduce our barriers, get rid of our tariffs on Chinese panels,” Helveston said.

He said the study found that projected solar panel costs will continue to fall globally until 2030, and the inclusion of barriers like tariffs will keep solar power’s prices high. Helveston said reducing travel for scientists working with foreign businesses that have a more complicated process to obtain work visas can also keep costs high.

“So restricting the foreign talent from really anywhere is shooting ourselves in the feet in terms of being able to learn quickly,” Helveston said.

He said to meet climate goals, production of solar panels in the United States needs to increase. He said President Joe Biden’s implementation of the Inflation Reduction Act has intensified domestic production of solar panels and will allow more companies to enter the solar industry.

Helveston said if the U.S. were to purchase solar panels from China for the next 10 years, it would allow American solar panel manufacturers to perfect their designs and make the building process efficient enough to become self sufficient in solar panel production.

The study found China accounts for 81 percent of the world’s solar panel production, according to data from 2021.

“That’s the number-one benefit, is trying to push the world more and more towards decarbonizing our economies,” Helveston said.

Experts in environmental studies and economics said tariffs on solar panels inflate purchasing prices and increasing domestic manufacturing can decrease the carbon emissions.

Dustin Mulvaney, a professor of environmental studies at San Jose State University, said Helveston’s study accurately provides data showing how solar panel manufacturing without policies like tariffs increase global savings because they increase production costs. But he said the “learning curve” approach – that a learner’s knowledge increases the more the task is performed – used in the study overlooks critical aspects like increased prices in polysilicon and glass used to produce solar panels that have increased due to tariffs.

He said the prices of solar panel modules “bottomed out” at 19 cents per watt in 2019 and today costs 25 cents per watt.

“Polysilicon production by 2050 will have greater emissions than aluminum,” Mulvaney said in an email. “So it is critical that the solar industry commits to low-carbon supply chains.”

Mulvaney said tariffs between China and the United States pushes companies to produce solar panels in other foreign countries to avoid the tariffs, which raises the price of solar energy overall. He said the carbon footprint of the photovoltaic solar panel module in China is higher than in Europe because of the amount of solar panel production with materials like polysilicon that have a high-carbon footprint.

Mulvaney said he agrees with the study that increasing solar panel manufacturing in the U.S. can reduce carbon emissions, and said the U.S. produced a “record” number of photovoltaic solar modules in 2020.

Solar panel production increased by 34 percent in the U.S. from 2020 to 2021, according to data from the U.S. Energy Information Administration.

“There are other trends that have gotten worse with global photovoltaic development, including lost opportunities to develop low-carbon supply chains and a failure to share environmental health and safety data has increased accidents and explosions in photovoltaic supply chains,” Mulvaney said.

Kenneth Gillingham, a professor of environmental and energy economics at Yale University, said “very little” solar manufacturing actually occurs in the U.S. and the majority of the domestic manufacturing process involves the final assembly of the panels. He said domestically produced solar panels tend to be more expensive than their competition, like solar panels made in China.

Gillingham said tariffs have resulted in a “notable” rise in the final purchase price of solar panels, and the Solar Energy Industries Association – a nonprofit solar energy trade association – has been fighting against them. He said the high cost of producing solar panels hinders the U.S.’s production rates of solar panels.

“If different regions have comparative advantages, they can specialize, really do well and produce components that go into renewable energy at lowest cost,” Gillingham said. “Despite the fact that there are some costs of shipping, that can lead to lower overall cost for renewable energy.”

Audrey Scott contributed to reporting.

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