China Made Solar Cheap With Coal, Subsidies, And “Slave” Labor — Not Efficiency

Low power density means high environmental impacts and poor labor practices

Until recently, many renewable energy advocates claimed that  China had made solar panels so much cheaper than everybody else because of efficiency, automation in factories, and improved supply chains. 

But events over the last few months make clear that the reason China came to dominate the market, producing 71% to 97% of solar panel components, is due to three main factors: cheap coal, heavy Chinese government subsidies allowing for the dumping of solar panels on foreign markets, and the use of forced labor in conditions the U.S. government representatives today describe as “genocide” and “slavery.”

It’s true that solar panels became more energy efficient, that the solar industry has been trying to automate, and that the Chinese make production efficient by successfully locating factories, mines, and power plants near each other. Goldman Sachs recently pointed to “higher module [solar panel] efficiency.” And The Financial Times’ Isabella Kaminska notes that when she visited a solar panel factory in Spain in 2004, it was “gearing up for automating.”

But the best performing models of the most common type of solar cells became just 3 percentage points more efficient during the decade that the cost of solar panels declined by roughly 75 percent, disproving the claim that panel efficiency was of much importance. 

Goldman Sachs, in its same report, emphasized lower capital costs from “cheaper labour” were a key factor in China’s ability to lower costs, and the Chinese government admits that it operates “surplus labor” programs relocating millions of people from their homes in Xinjiang. It simply denies that it uses coercion in such relocations.

Moreover, there is little evidence the Chinese significantly automated its factories, which is why it has had to rely so much on forced labor. FT’s Kaminska posted photos of workers in solar panel factories creating panels by hand. 

Part of the reason for that is because solar panels are so fragile and easy to break, notes Kaminska, citing a solar company report pointing to “the delicate nature of solar cells themselves. Around 0.3mm (0.011 inches) thick, they can be easily broken if not handled properly. As a result, production in the past has largely been dependent on manual handling. This slows down production and just a single misplaced thumbprint is enough to render a cell useless.”

And the Chinese government itself attributes its cheap solar panels to coal. “Over the past decade,” wrote a reporter for the web site, Global Times, which  is a mouthpiece for the Chinese government, “Xinjiang has become a major polysilicon production hub in China, as the industry requires extensive amounts of energy, and that makes relatively cheaper electricity and abundant thermal power in Xinjiang appealing.”

In other words, China made solar panels cheap with coal, subsidies, and “slave” labor, not efficiency. Why is that?