Is solar manufacturing a highly automated business?

Is solar manufacturing a highly automated business?

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In the past decade, if not more, the big news in the solar manufacturing industry has been the incredible cost reduction, which is largely due to China’s dumping of cheap components on the international market.

The collapse in prices has turned insurvivable renewable energy into energy that can eventually compete with carbon substitutes. All the good news.

but The current report is There is growing evidence that some of these cost reductions may be due to ESG investors’ dislike of high carbon footprints: forced labor in the Xinjiang Uygur Autonomous Region.Especially height Survey cited by the University of Sheffieldy claims that as many as 45% of the global polysilicon comes from this region, which depends on the potential forced labor of ethnic minority groups.

Since then, these claims have attracted the attention of US officials, and Biden’s special envoy for special climate affairs, John Kerry, pointed out the issue last week. Raised a question For the United States’ green energy transition. Kerry also hinted that the United States might consider sanctions.

The writer and activist Michael Shellenberger has long believed that renewable energy is not as clean as it seems. Further pointed out This incident supports his view that these processes obscure the true cost of solar energy:

I have extensively documented how renewable energy everywhere makes electricity more expensive. It is speculated that the price increase of cheap solar panels in California is seven times that of other parts of the United States in the past decade. But the Xinjiang incident further exposed the fraudulent claims that solar panels are cheap electricity.

The need to use the cheapest slavery and the cheapest energy, coal, highlights the potential physical problems of solar and all renewable energy, namely its extremely low “power density.” Power density is the amount of electricity generated per unit of land, labor or capital.

Chinese officials strongly denied this request.An article from the weekend In the “Global Times” These claims are considered “unfounded” and are largely regarded as the mouthpiece of the Chinese Communist Party.In order to prove its position, this article mentions the eyewitness report of the recently organized open day In Daegu factory in Xinjiang.

But like Bloomberg’s famous, The facility is not one of the facilities directly suspected of using forced labor:

Unlike the other three companies in Xinjiang that produce polysilicon (a key component of solar panels), Daktronics is not associated with so-called human rights violations. However, Daktronics maintains contact with government-managed labor programs under international supervision and maintains the same secrets as its peers. In March, the company rejected an interview request for its executives and rejected foreign observers.

However, the Chinese government is not alone in taking a cynical attitude towards forced labor claims.Renewable Fan response News on the Internet is equally confusing. Their confusion stems from the fact that the investment community generally recognizes that solar manufacturing is a highly automated business, which means that there is no or no need for forced labor.

But we believe that these two facts may be true at the same time. To understand why, it is worth reviewing the story of how China became the world’s largest photovoltaic producer. Statista’s chart below shows the market situation in 2019:

In the early days, the companies that dominated the field were manufacturers in Japan, Germany, and the United States. In general, China is a rising star of solar energy, and it only turned to manufacturing in the middle of the Middle Ages. However, by 2009, the influence of China’s industrial power on the industry has been felt.

Faced with the rapidly growing global photovoltaic supply with the continuous increase in sales in China and the need to reduce operating costs after the global financial crisis, the first market to be eliminated is mid-range European manufacturers, such as BP Solar operating in Spain and other countries/regions.

By 2014, the oversupply flood from China began to deal a heavy blow to even the worst countries in the world Efficient and mature producer For example, Sharp in Japan, Layoffs In the United States and Europe.

In January 2021, Japan’s Panasonic, another leader in the industry Formally confirmed Due to increasingly fierce competition from China, it will abandon its solar cell manufacturing business.

So, what drives price competition? How can China compete so effectively when other entrenched, arguably more innovative players cannot do it? Is it all due to cheap labor? If so, how could the world’s investment community miss this?

In January of this year, the Goldman Sachs equity team, led by Alberto Gandolfi, argued that the decline in global photovoltaic power generation costs may be due to the following three factors:

In the past ten years, the cost of solar photovoltaic power generation has dropped significantly. This is mainly due to: (1) Lower capital cost: Since 2010, due to scale expansion, manufacturing automation, labor cost reduction and process digitization, capital expenditure per kilowatt has dropped by nearly 70%; (2) Lower interest rates; (3) The module efficiency is higher, and the utilization rate has increased by 22% (250-300 bp more than ten years ago).

This is the support chart:

It is fair to say that the downward price trend is highly welcomed by the entire renewable energy community. Graphs depicting curves from various sources have been copied in various media, and some people believe that solar energy is experiencing Moore’s law-type effects.

But sometimes we only see what we want View. After further examination, the argument of Moore’s Law did not hold. As the Goldman Sachs report in January pointed out, the cost reduction in the past 10 years has little to do with photovoltaic innovation, but more with industrial processes, automation and modular efficiency. Moreover, what is important is cheap labor.

This is not to say that innovation did not happen.As this MIT Report from The 2013 summary is progress, but in general, “Chinese factories have lower manufacturing costs compared to American factories, which can be explained by scale and supply chain advantages, such as the location of suppliers and transportation costs. ”

Recently, the Information Technology and Innovation Foundation Find However, China’s entry may have led to the stagnation of photovoltaic innovation (our focus):

Following the surge in China, conventional indicators of product innovation such as patents and the ratio of R&D to sales have fallen sharply. The obsolescence of photovoltaic manufacturing outside China has caused many innovative companies to withdraw from their business, largely because they cannot match the predatory prices offered by government-subsidized Chinese competitors. China’s emerging photovoltaic giants have already innovated in important aspects, especially through process innovation, making the industry’s leading technology rapidly fall along a steep experience curve. However, in the long run, the prospect of shifting to better, cheaper, and greater emission reduction potential photovoltaic products has been delayed or even lost.

As ITIF pointed out, the core of China’s hegemony is the fact that its major photovoltaic manufacturers can operate for most of the decade without making a lot of money. This shows that subsidies determine the international competition in the industry.

But this also implies an economic model of performance, which is not only willing to weaken its market share, but also willing to rely on progressive labor practices to achieve success, which is often at the cost of innovation.

As ITIF concluded:

Although the growth of the photovoltaic manufacturing industry supported by Chinese mercantilists was a gift of accelerated global adoption in the 2010s, it has also changed the trajectory of technological innovation. Mercantilism policies have helped destroy many innovative companies outside of China, restrict new entry, and limit survivors’ investment in innovation. So far, the change of trajectory has not yet fully explored some technological opportunities, which may produce better results in the long run. Looking to the future, the continued behavior of mercantilism may weaken the next wave of innovation, otherwise this wave will make PV take a big step forward.

This is in sharp contrast with the image Zhang Dan portrayed in the Global Times. In Zhang’s image, she portrayed “a production line humming with robots and a small number of workers-with stereotypes and antiquated production. The allegations of equipment and the use of forced labor are in stark contrast. Labor’”

What is real is hard to say.

Unless Western media or analysts have unrestricted access to facilities that produce polysilicon wafers and modules (because that is the real advantage of using manual processing), it is difficult to support the theory that the solar industry is overly dependent on potential forced labor. There is nothing but publicly available data.

On this point, it’s worth pointing out that a quick Google image search will definitely show a lot of workers in the stock image:

Will China resort to real competitive advantage (cheap labor) in order to solve the problem, and will adopt outdated manufacturing methods, which is far-fetched? Maybe. Maybe not.

In another life, this FT Alphavillain used to work as an editor for BP’s internal magazine BP Horizon. In 2004, she had the opportunity to visit BP Solar’s photovoltaic manufacturing plant in Tres Cantos near Madrid. A key learning at the time was that due to the deliciousness of silicon wafers, the entire production process was labor intensive.

At the time, the factory was stepping up preparations to automate these extremely fragile processes. However, everyone seems to agree that this is tricky.

In May 2004, “BP Horizon” stated:

. . . In order to compete effectively, BP Solar will have to continue to increase production and continuously reduce costs. So far, one of the main issues surrounding production costs has been the subtle nature of the solar cell itself. About 0.3 mm (0.011 inch) thick, they can easily break if not handled properly. As a result, production in the past largely depended on manual operations. This slows down the production speed, and a misplaced fingerprint is enough to cause the battery to fail.

Long-term memory has led us to speculate that labor-intensive practices are not necessarily Has disappeared in China. Allegedly, because the industry is clearly highly automated, we were quickly rejected by the well-informed Twitterati.

Go to figure it out.

Related Links:
The impact of China’s surge in production on global solar photovoltaic industry innovation -ITIF
Duel in the sun – with



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