In the past decade, no major energy source has grown faster than solar energy. According to the BP Statistical Review of World Energy for 2020, installed solar photovoltaic (PV) capacity has grown by an average of 42% per year over the past 10 years, doubling global capacity on average every 1.7 years.
While this rapid pace could slow as installed capacity increases, solar is likely to remain the fastest growing energy source for the foreseeable future. Similar to other energy sources, however, the growth of solar raises a number of sensitive issues related to geopolitics, supply chains, and national security.
The path to decarbonization
From a North American perspective, Joe Biden’s election as US President has breathed new life into the Paris Agreement – the most significant global effort to date to curb carbon dioxide emissions. President Biden fulfilled an important election promise and officially entered the Paris Agreement last month. At the same time, following meetings between President Biden and Canadian Prime Minister Justin Trudeau, Canada pledged to present its own new Paris Pact target, with the two leaders insisting on a common approach to climate issues.
For its part, the European Union has consistently maintained an aggressive stance towards reducing CO2 emissions. The EU is on track to exceed its target of producing a third of its energy from renewable sources by 2030. In September last year, the European Commission presented its plan to reduce greenhouse gas emissions in the EU by at least 55% by 2030 compared to 1990 levels. This would mean that the EU would be on the way to climate neutrality by 2050.
All of these efforts point to one inescapable conclusion: installed renewable capacity will continue to grow as governments on both sides of the Atlantic pour money into decarbonization efforts.
At the same time, many of these countries are understandably sensitive to energy security. Political leaders do not like to rely on other countries for their energy supply, but this is often an accepted compromise for economic reasons. Related Topics: Biden’s Energy Agenda to Reduce Oil Production and Raise Prices
This pattern has long been true of fossil fuels, with OPEC firmly in control of the world’s oil supplies until the US fracking boom weakened its monopoly somewhat. Now that the renewable energy revolution is picking up speed, one country – China – has built a clear advantage over certain major renewable technologies, particularly the components needed to build solar energy infrastructure in the west.
Huawei in the spotlight
China’s own energy consumption continues to grow rapidly, making the Chinese economy the world’s largest energy consumer. As a result, Beijing aggressively invested in renewable energies and has now achieved dominant market shares in solar photovoltaics as well as lithium-ion batteries, another important renewable technology.
Chinese state-owned company Huawei, better known for telecommunications equipment and consumer electronics, has grown into one of the world’s largest suppliers of solar inverters, a key component of solar PV systems that convert DC power from solar panels into AC power electronics in homes and businesses.
Huawei’s dominant position in the inverter market and support from the Chinese government have raised concerns in the United States. In 2019, a non-partisan group of US Senators sent letters to Secretary of Energy Rick Perry and Secretary of Homeland Security Kirstjen Nielsen. I urge them to ban the sale of all Huawei solar products in the US, citing a national security threat to US energy infrastructure.
Related Video: The Pentagon has just captured sunlight from space
The letter said in part that Congress had previously banned Huawei from the U.S. telecommunications equipment market due to concerns about its ties to China’s intelligence services:
“Both large photovoltaic systems and those used by homeowners, school districts, and businesses are equally vulnerable to cyberattacks. Our federal government should consider banning the use of Huawei inverters in the US and work with state and local regulators to raise awareness and mitigate potential threats. “
There is concern that if the US power grid becomes dependent on a critical piece of government-affiliated Chinese electronic equipment, it could make that grid particularly vulnerable to outside interference or tampering. These dynamics reflect concerns in the US about dependence on OPEC for oil supplies. Huawei responded to the so-called “undesirable climate in the US” by closing its US inverter business.
Europe’s divergent approach
In the EU, a more ambivalent approach was initially chosen towards Huawei, which only agreed to reduce the dependency on devices that are exposed to the influence of the Chinese government for future 5G networks. However, officials in a number of EU countries are alarmed about the role of the Chinese state in sectors of their economies that represent important national security interests, including banking, energy and infrastructure.
These concerns extend to solar energy, and EU policymakers are also concerned about China’s use of Muslim forced labor in supply chains for solar panels. This question has given the European Parliament additional impetus, which is now pushing for trade bans for Chinese solar module devices if human rights violations are involved in their manufacture.
All of these factors create important incentives for Western countries to address the Chinese state’s dominance in clean energy. This imbalance did not arise overnight and it will take time to correct.
President Biden has taken a step in that direction by signing an executive order aimed at making U.S. supply chains more resilient. The report calls, among other things, to identify “Risks in the supply chain for high-performance batteries, including batteries for electric vehicles, and policy recommendations to address these risks”.
The EU must now decide whether it is ready to take a similar approach. Clean energy supply chains have not received much political attention until recently, but governments are under increasing pressure to ensure that potential threats to these supply chains do not interfere with global decarbonization efforts.
By Robert Rapier
More top reads from Oilprice.com: