Why the era of solar specialization is over: part I

Germany’s famous Solar Valley was always a misnomer from the get-go. The birthplace of the nation’s photovoltaic industry is actually more of a vast plain; as flat as a pancake and part of the wider drainage area of the mighty Elbe River, which winds a leisurely path through the federal states of Saxony, Saxony-Anhalt and Brandenburg.

Geographical inaccuracies aside, the name ‘Solar Valley’ was adopted by the Q CELLS founders back in 1999 to pay homage to California’s Silicon Valley, which to this day continues to serve as the globe’s epicenter of digital innovation. Hopes were high two decades ago that Germany’s Solar Valley could perform a similar role for PV: to act as a shining hub of photovoltaic excellence, and fuel an economic miracle in a corner of the country that had been somewhat left behind since reunification in 1990; all with the power of the sun.

For many years, solar exceeded those high hopes. By the turn of the millennium, Germany had cemented its reputation as a powerhouse in photovoltaic innovation and production. Yet in the decade that followed, the lower-cost locations of China and Southeast Asia gradually began to tease away the bulk of module manufacturing until there was very little capacity left in Europe, let alone Germany (although the recent announcement by Meyer Burger that it will return module manufacturing to Germany – and indeed, Solar Valley – could well reverse this trend). Such globalization of the solar industry was always going to be disruptive, but was arguably necessary in order to properly commoditize PV technology and make it an affordable source of energy capable of drawing sustained government, commercial and private investor interest.

Today, solar power is one of the key technologies that underpins the rapid energy transformation currently underway. In 2019, approximately €320 billion was invested into renewable energy, according to the International Energy Agency (IEA), and despite falling costs and the ongoing impact of COVID-19 (more on which later), that figure is expected to rise even higher year-on-year.

When taking stock of solar’s bright future, its growing global prominence, and the energizing role it plays in an increasingly diverse and innovative energy mix, it can prove enlightening to peer back at one of PV’s birthplaces to see just how much has changed over these past two decades.

Solar Valley – so incongruously named from the beginning – remains a thriving hub of innovation, expertise and energy, yet it’s now also the ‘solar’ part of its name that seems a little wide of the mark. Given how the incumbent Q CELLS has evolved into a total energy solutions provider with a solar DNA, Solar Valley is now shaping up to be the epicenter of a diverse energy industry supporting an assortment of technologies and services.

Expertise the cornerstone of opportunity

In July, Q CELLS announced that it was to inject €125 million investment into its R&D Center in Solar Valley over the next three years, with €20 million being spent on machinery and equipment to support the company’s ongoing pursuit of mastering and commercializing the next generation of high-efficiency, high performance photovoltaic technology.

Q CELLS CTO Dr. Daniel Jeong said: “With the investments that the company has made, we are laying the foundations for the next groundbreaking innovation that Q CELLS will develop in Germany and commercialize for the global solar markets.”

Photovoltaic technology has already proven its worth, and then some, as a key pillar in the energy transition that is helping to wean the world off its reliance on fossil fuels towards something altogether more sustainable, environmentally friendly, flexible and affordable. Q CELLS’ confidence in pouring such vast sums into PV research is underpinned by its unwavering trust in strong intellectual property (IP) laws, in Germany and worldwide.

A fair and competitive environment is crucial if photovoltaic technology is to continue taking the fight to the fossil fuel industry, because renewable energy derives, primarily, from good technology. With clean energy, there are no pipelines to secure, palms to grease or finite resources to squabble over; the battlefield instead is a rather more congenial one of IP and innovation, played out in laboratories and research institutes across the world. Recruit, train and employ the best experts and technologists, and secure for them a nurturing and protected R&D environment, and opportunity and success can follow. This approach has long served Q CELLS well, and enabled the company to set its sights beyond solar technology and towards becoming a vital component of a diverse energy mix.

Today, Q CELLS remains a top 10 producer of solar modules and a top-five producer of solar cells, with global manufacturing capacity of 11.3 GW and 9.6 GW respectively. Photovoltaic technology will remain the core tenet of both Q CELLS’ business and the glue that binds much of the world’s green energy mix, but emergent and complementary technologies are now so enmeshed in this great leap forward that to overlook the opportunities that exist in these fields would be short-sighted.

Follow the money

There are undoubtedly some negative connotations to the phrase ‘follow the money,’ but it can also be shorthand for positive market disruption. Like a canary in a coalmine, early-movers in high-tech industries can often precipitate a sea-change in perception, acceptance and – eventually – funding and governmental backing. Proponents of the energy status quo have long recognized the growing support for clean energy, and fought hard to derail it. Now, however, we have reached a tipping point. To ‘follow the money’ means to close coal plants en masse, to support the electrification of transportation, and to invest long term in renewables.

The evidence for this transformation is all around us. The European Union has pledged to boost the budget for the European Agricultural Fund for Rural Development to €15 billion per year, stating the pivotal role that farmers in Europe will play in the “green transition.” Germany has pledged more than €2 billion extra funding for a CO2-focused building renovation plan to improve energy efficiency. In the UK, a similar €2-5 billion ‘green homes grant' voucher scheme is being introduced in 2021, while in South Korea – where the global headquarters of Q CELLS is located – more than €4 billion (5.8 trillion won) is to be spent by 2022 on the nation’s ‘green transformation of living infrastructure' program. This government plan will create 89,000 jobs and transition all state-run facilities into zero-emission entities.

That is just a snapshot of some regions’ financial support for measures to improve energy efficiency as one strand in the energy transition. Elsewhere, and in other industry sectors, various national hydrogen strategies and proposed investments in renewable energy development are attracting billions of dollars of support, while tendering schemes for energy storage technologies, carbon capture and circular-economy initiatives have been rolled out in an encouraging number of countries.

The electric vehicle (EV) sectors of many European nations, for example, are now receiving unprecedented levels of financial support from government and industry. In Germany, consumers can receive between €3,000 and €6,000 as a grant from the government when purchasing an EV up to the value of €40,000, with the nation also pledging to spend €500 million to boost the EV charging infrastructure. China, meanwhile, has vowed to expand its charging network by 50% this year at a cost of more than $1.4 billion. This investment will support the build-out of 48,000 EV charging stations.

Driving the structural decline of emissions

The direction of travel is clear. Sustainability is no longer a negotiable add-on for governments. Renewable energy shook off its ‘alternative’ label years ago. Solar and wind have graduated from intermittent interlopers in centralized energy grids dominated by coal and gas, to become key ingredients in the mix. Solar and wind no longer complement the baseload; they are becoming the baseload. Energy production is becoming more intelligently connected, flexible, and low- (or increasingly zero) carbon. Consumer habits – once gently nudged in the direction of cleaner and greener – are now forcing policy to become bolder in its attempts to become more environmentally conscious. Buildings are increasingly constructed in the most energy-efficient, low-impact manner possible. The decentralization of the energy grid is continuing apace. Countries are looking not only at ways of weaning themselves off fossil fuels, but also their dependence and reliance on neighboring – sometimes hostile or unpredictable – nation states.

The convergence of these trends underline why companies such as Q CELLS are accelerating their efforts to not only meet, but also shape demand for a lower-carbon future. The COVID-19 global pandemic offers an unprecedented chance to “build back better.” There has never been a better time to seize this opportunity. As the director of the International Energy Agency (IEA), Fatih Birol, wrote in a blog post during the height of this year’s pandemic: “Although CO2 emissions declined by 400 million tonnes in 2009, they rebounded by 1.7 billion tonnes in 2010 […] a pandemic-driven drop in emissions is almost certain this year, but would be nothing to celebrate. We need to learn from what happened in 2009 and 2010 and make smart policy decision that can put emissions into structural decline this decade.”

Globally, Bloomberg has calculated that $12 trillion in government recovery funds has been pledged to tackle the financial hit of the pandemic. However, these analysts calculate that only $18 billion of that is specifically earmarked for the green economy. As a figure, $18 billion sounds like a lot, but it’s only 0.2% of the overall global stimulus package. Over a decade ago, as governments surveyed the smoking husks of their post-2008-crash economies, the almost universal response was to pour money into industries that were carbon- and brown-energy intensive – harming at a stroke tentative progress made during the recession to limit emissions growth.

Back then, the industries that are currently leading the fight against climate change were very different beasts. Cumulative global solar capacity was just over 40 GW in 2010 (according to the IEA); last year, nearly three times that amount (115 GW) was deployed in just 12 months. This is just solar. Factor in wind power’s tremendous growth, advances in storage technology, cost reduction and adoption, as well as the decentralizing impact of Internet of Things (IoT) and general intelligence in software and monitoring capabilities, and it is immediately clear that the world now has an uplifting array of tools at its disposal to properly “build back better”.

Companies such as Q CELLS have a vital role to play in this next chapter; to help ensure that the money earmarked for recovery measures is wisely invested in technology that cleanly serves the needs of the consumer in the most economical, efficient and reliable manner, and to ensure that carbon emissions do not rebound to historic highs – as seen in the post-recession recovery a decade ago.

In Part II, we will examine the new technologies and innovative business models that will lead this fight, and showcase some of the specific ways in which Q CELLS is adapting its portfolio to remain a competitive and influential player in the green energy transition.