Key challenges in diversifying solar panel supply chains revolve around cost competitiveness, supply chain complexity, raw material availability, and regulatory and logistical issues. The main points can be summarized as follows:
Cost Competitiveness
- China currently holds a dominant position in solar PV manufacturing because of its cost advantages. Manufacturing costs in China are about 10% lower than in India, 20% lower than in the U.S., and 35% lower than in Europe. These differences arise from variations in energy, labor, investment, and overhead costs. This cost competitiveness makes it difficult for other regions to establish economically viable manufacturing without substantial financial incentives and support.
Supply Chain Complexity and Raw Material Challenges
- The solar supply chain is complex, involving multiple stages including raw material sourcing, manufacturing, shipping, and installation. Coordinating multiple suppliers, manufacturers, and distributors adds complexity and risk. Delays at any point can cascade, affecting overall productivity and efficiency.
- Availability of raw materials critical to solar manufacturing can be volatile and geographically concentrated, presenting risks to diversification efforts.
Supply Chain Disruptions and Dependence on Imports
- Heavy reliance on imports, especially from China, exposes supply chains to risks from geopolitical tensions, global disruptions (such as the COVID-19 pandemic), and trade restrictions. This has prompted efforts to diversify and localize manufacturing to reduce vulnerability.
Regulatory and Compliance Issues
- Regulatory requirements such as the Uyghur Forced Labor Prevention Act increase the need for transparency and careful management of the supply chain to avoid legal and reputational risks. Compliance adds complexity and can impact supplier selection and sourcing strategies.
Technological and Innovation Challenges
- Transitioning to newer solar technologies (e.g., from PERC to TopCon and Heterojunction) is essential to maintain competitiveness but also requires adapting manufacturing processes and supply chains accordingly.
Strategies to Address Challenges
- Onshoring manufacturing to reduce import dependencies.
- Investing in technological innovation to improve efficiency and lower costs.
- Strengthening collaboration across stakeholders for better coordination.
- Leveraging data analytics to forecast demand, monitor inventory, and optimize logistics.
- Increasing financial investments to support domestic manufacturing capacity and supply chain resilience.
In summary, the key challenges in diversifying solar panel supply chains are overcoming China’s cost advantage, managing complex and multi-stage supply chains, securing raw materials, navigating regulatory compliance, and integrating technological advances — all while building resilient, localized manufacturing capacities.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/what-are-the-key-challenges-in-diversifying-solar-panel-supply-chains/
