Trading into a bright energy future The case for open, high-quality solar photovoltaic markets


The COVID-19 pandemic has caused the most acute health crisis in generations and has sent shockwaves across economies worldwide. Renewable energies can play a dual role in helping the world to recover. First, they can strengthen healthcare and other critical public infrastructures. Second, when integrated into response plans and strategies to “build back better” (i.e. rebuild economies in light of the numerous problems which arose as a result of the pandemic), renewable energies can help mitigate the economic effects of the COVID-19 pandemic by supporting economic recovery, boosting job creation, fostering access to electricity and economic diversification and putting the world on a climate-safe path. Solar photovoltaic (PV) technologies use solar panels that convert sunlight directly into electricity. PV is a key renewable energy technology, which has experienced plummeting costs and increasing deployment across the world (IRENA, 2019a). Global value chains allow manufacturers of solar PV equipment to source goods and services from the most cost-competitive suppliers and reap economies of scale, helping to reduce costs (IRENA, 2019a). Well-designed policies geared at eliminating remaining trade barriers and facilitating trade could further enhance solar PV supply chains and accelerate the deployment of solar PV and other renewable energies.

The recent crisis has exposed massive gaps in energy access, which affect healthcare, water supply, information and communication technologies and other vital services. Recovery plans incorporating the transformation of energy systems toward sustainable energy could help tackle these challenges while helping to overcome the economic slump and create much-needed jobs. Due to the global diversification and decentralization of the solar PV market, as well as its rapid growth, renewable energies present an opportunity for job creation across the globe. It is estimated that 11.5 million jobs will be created in the
solar PV industry by 2050 (IRENA, 2019b). In 2019, the number of jobs in the solar PV sector reached 3.8 million, a threefold increase since 2012. Asia accounts for 3 million of these jobs (Figure 1). A growing number of jobs, especially in Africa, are being created in off-grid decentralized renewables, which are also propelling employment in agro-processing, health care, communications and local commerce, among other sectors. Employment in the renewable energy sector as a whole, which
totalled 11.5 million jobs worldwide in 2019, could almost quadruple by 2050 (IRENA, 2020b).

The role of solar PV in the transition towards sustainable energy systems

Solar PV, which can be deployed rapidly in a wide variety of locations, is one of the strategic renewable energy solutions needed to transform energy systems. It has the potential to generate over 25 per cent of all necessary electricity in 2050 and to reduce CO2 emissions by 4.9 Gt per year in 2050, equivalent to 21 per cent of the total emission mitigation potential in the energy sector (IRENA, 2020d).1 The rapid deployment of solar PV has led to a sharp increase in installed capacity. Between 2005 and 2018, the cumulative installed capacity of solar PV increased 100-fold to 480 GW,2 helped greatly by the emergence of a globally integrated solar PV supply chain.3 During the same period, the overall installed renewable energy capacity grew 2.5 times. According to IRENA projections, the installed capacity of solar PV will continue to increase to more than 5,200 GW in 2030 and to 14,000 GW in 2050 (Figure 2), which would account for 43 per cent of the global installed energy capacity (IRENA, 2021).
Already in 2018, the installed solar PV capacity increased by 100 GW, faster than fossil fuels and nuclear power generation technologies combined.

The role of international trade and quality infrastructure in the development of solar PV

The globalization of the solar PV market has been a major factor driving the decrease in the price of solar PV. Part of the reason for this is that the emergence of globally integrated solar PV value chains has allowed solar PV equipment manufacturers to source goods and services from the most competitive
suppliers in terms of cost, quality, skills, materials and other location-specific advantages. In addition, the globally integrated solar PV equipment market has expanded opportunities for solar energy companies to reap significant economies of scale and to “learn by doing”, while stimulating competition and strengthening incentives to invest in research and development (IRENA, 2017a). The COVID-19 crisis has disrupted crossborder supply chains, including in the renewable energy sector. Looking ahead,
further diversification of solar PV supply chains may be needed to improve their long-term resilience against exogeneous shocks (IRENA, 2020a). The current momentum for policymakers to consider
ways to “build back better” offers a unique opportunity to pursue policies that facilitate trade and spur diversification through the integration of newcomers into value chains. Trade policies can also accelerate the cross-border dissemination of affordable and high-quality solar PV technologies, taking them from where they are produced to where they are needed. This could boost the competitiveness of solar energy across countries, helping to deepen the transition towards sustainable energy systems and to secure the jobs that go with it.


Value creation along the solar PV supply chain involves a broad range of goods and services (Box 1). Some of these goods and services are supplied domestically, but many others are traded across borders. This section provides an overview of global trade flows in selected goods along the solar PV value chain. Included in the analysis are machines to manufacture solar PV wafers, cells, modules and panels, along with selected solar PV components, such as PV generators, inverters, PV cells and, where relevant, the parts needed to produce some of these goods (see Appendix). Estimating international trade flows of goods along the solar PV value chain is very challenging. Many goods related to sustainable energy systems are highly specialized and often relatively new in the market. Others have multiple uses, so they are used in both renewable energy and non-renewable energy applications. This means that the classification and identification of solar PV and other renewable energy goods are difficult to achieve uniformly across governments. Even the Harmonized System (HS) – a multipurpose international product nomenclature developed by the World Customs Organization (WCO) and comprising about 5,000 commodity groups, each identified by a six-digit “subheading” – lacks the required level of detail. As a result, internationally comparable estimates of trade for solar PV goods must rely on product categories that are often quite broad and that include other goods besides solar PV goods.

represented around 82 per cent, on average, of the total value of exports of these goods between 2017 and 2019, and around 70 per cent of imports. Two-way trade is also prevalent for specific solar PV products. For example, China is both the top exporter and top importer of goods under HS code 854140, which includes solar PV cells and modules.2 China represented, on average, around 36 per cent of the value of world exports and almost 16 per cent of the value of world imports of these goods for the period 2017-19. Japan is the fourth-largest exporter and importer of these goods.


Open and transparent trade policies implemented over several decades have resulted in lower barriers to goods and services trade, including goods and services related to renewable energies in general and solar PV in particular. More open and transparent trade regimes have enabled the emergence of a globally integrated solar PV market where silicon, wafers, cells, modules, inverters, mounting systems, combiner boxes and other solar PV components, along with the machines to manufacture PV cells, modules and panels, are routinely traded back and forth among countries along tightly integrated value chains. Additional policy efforts to reduce remaining trade barriers and facilitate trade could further enhance solar PV supply chains, reduce costs and accelerate the dissemination of solar PV and other renewable energies to where they are needed.

At the global level, there have been several efforts to tackle tariffs and other trade barriers affecting solar energy, often as part of trade initiatives targeted at broader categories of goods and services, including the category of environmental goods and services (Table 3). Environmental goods and services, according to a common definition developed in the 1990s by the Organisation for Economic Co-operation and Development (OECD) and Eurostat (the EU’s statistical agency), are activities which produce goods and services to “measure, prevent, limit, minimise or correct environmental damage to water, air and soil, as well as problems related to waste, noise and eco-systems” (Eurostat, 2009).

Broader challenges

Solar PV is a technology with extremely high potential, but there are many barriers besides those affecting trade that could hinder its deployment. Such barriers may be of a technological, economic, policyrelated or regulatory nature (Figure 9). With declining costs and financial schemes to support further deployment, some of the remaining challenges are often of a technical nature. They relate mostly to keeping the energy supply and demand balanced at all times. These concerns are often not exclusive to solar PV, but are general issues that arise with an increasing integration of variable renewable energy. While some of these barriers are universal, many vary across regions. This poses an additional challenge to the deployment of solar PV. Not all countries have the same preconditions in terms of starting points within the energy transition, degree of fossil fuel dependency, means of implementation, and diversity and strength of supply chains (IRENA, 2019b). Overcoming these barriers while considering local conditions is crucial to achieving a just and inclusive transition, which in turn calls for innovation, investment, and an enabling and integrated policy framework focused on deployment. While such policies must be country-specific, the solutions may have an impact on a much broader scale and may influence global markets.


A robust quality infrastructure is essential to participate in solar PV trading markets

Trade in solar PV goods and services can only help to build a competitive solar energy sector if the goods and services in question meet customer requirements and are otherwise fit for the purpose for
which they are intended. Underperforming, unreliable and failing products create barriers to the development and enhancement of solar PV and hamper the role of trade in promoting the technology’s rapid diffusion across borders. A wellfunctioning QI system is a key tool to keep deficient, sub-standard quality products from entering the supply chain and to build a competitive solar PV sector that delivers
economic, social and environmental benefits (IRENA, 2017a). A QI system is made up of the institutions and the legal and regulatory frameworks responsible for standardization, accreditation, metrology and conformity assessment (IRENA, 2017a). These frameworks are essential to build trust
among consumers, producers, investors, traders and governments that imported and domestic products and services will meet all the relevant state-of-the-art requirements and best practices. QI systems thereby contribute to ensuring stability and predictability for investors and other stakeholders and are essential instruments for protecting and accelerating future investments in PV deployment.


In today’s globalized world economy, QI systems cannot operate in isolation. Cross-border cooperation on QI can help governments achieve sustainable energy systems, while helping companies along the solar PV value chain seize market opportunities and avoid unnecessary costs. International cooperation on QI takes different forms, from mutual recognition and regulatory provisions in trade agreements to formal cooperation partnerships and regulatory harmonization. The most appropriate approaches in any given situation differ depending on the compatibility of regulatory environments and systems, the sector, type and degree of regulation already in place and the level of technical and institutional capacity of the countries involved, among several other factors. International organizations serve as institutional forums for governments to cooperate on QI-related issues. For example, international organizations enable countries to share practices in specific fields and to develop a common language and joint approaches.


Solar photovoltaic (PV) technologies use solar panels to convert sunlight into electricity. Having been rapidly deployed, solar PV has become the cheapest source of new electricity generation in many parts of the world. The cost of the electricity generated by PV plants declined by 77 per cent between 2010 and 2018, while the cumulative installed capacity of solar PV increased 100-fold between 2005 and 2018. As a result, solar PV has become a pillar of the low-carbon sustainable energy system needed to
foster access to affordable and reliable energy and help achieve the goals of the Paris Agreement and the 2030 Sustainable Development Agenda. Underpinning the rapid deployment of solar PV is a globally integrated market in which PV components such as wafers, cells, modules, inverters and combiner boxes, as well as the machines which produce them, routinely criss-cross the world. Trade in solar PV components, which has grown faster than overall manufacturing trade since 2005, has become a critically important means for firms, governments and consumers around the world to access the most efficient, innovative and competitive goods (and services) needed for the transition to sustainable energy systems.


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