India Led Alliance for Diversified Solar Market

Suspension

In order for countries to move away from fossil fuels and towards cleaner energies such as solar, officials said during a conference on solar energy in New Delhi, on Tuesday, the supply chains for components must be more geographically diverse.

Currently, 75% of the components needed for solar energy are manufactured in China, according to a recent report from the International Energy Agency. Representatives of the Fifth Assembly of the International Solar Alliance, made up of 110 member states, want to change that.

“By 2030, we expect solar energy to be the cheapest source of electricity in most geographies,” said Ajay Mathur, Director General of ISA.

Adding that freight rates have gone up, Mathur urged “multiple regions where solar PV products can move from producer to supplier” to ensure more countries benefit from cheaper solar prices.

Launched by India and France at the 2015 Paris Climate Conference, the ISA aims to boost the use of solar energy as countries look to reduce the use of fossil fuels to curb global warming. And although China has invested more than $50 billion in new solar supply capacity – ten times more than Europe – and created more than 300,000 manufacturing jobs, it is not part of the alliance.

“China’s policies have contributed to a cost drop of more than 80%, helping solar photovoltaics become the most affordable electricity generation technology in many parts of the world,” said Hemi Bahar, senior analyst at the International Energy Agency. “However, it has also led to an imbalance between supply and demand.”

Bahar added that the global market is almost entirely dependent on China for solar energy products, with 15% of global supply coming from just one Chinese plant, leading to concerns that the world is too dependent on few concentrated supply chains.

“This focus has really driven up prices during the Covid-19 pandemic and extreme weather events” in China when exports were disrupted, Bahar said. “Diversification will result in a safer supply chain.”

Industry experts say a diversified supply chain can also increase jobs, grow economies, encourage innovation, provide energy security, as well as help countries achieve their climate goals.

“Right now, the jobs that are being created in countries like India are largely on the build-up side of things rather than the manufacturing side,” said Olka Kelkar, who directs India’s climate policy analysis at the World Resources Institute. “To really tap into the full potential of the job-creating potential of solar manufacturing, it’s important to diversify.”

India’s federal energy minister, RK Singh, said at the conference on Tuesday that countries had “a responsibility to enable development in parts of the world that lack energy access and energy security”.

The Indian federal government recently approved $2.6 billion in funding for a production-linked incentive scheme that will encourage domestic solar module manufacturing. The US Inflation Reduction Act also encourages domestic manufacturing of solar components.

The solar market needs to grow tenfold by the end of the decade if we are to meet global climate goals, according to both the ISA and the International Energy Agency.

The ISA gathering, which runs through Wednesday, also announced programs that will encourage investments in solar energy in Africa as well as help solar startups.

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