US solar modules 107% more expensive without global supply chains

From pv magazine USA

Researchers from the University of California, Los Angeles, have developed a model that shows how much more the world would pay for solar modules if countries were to implement trade-limiting policies.

The group estimates that from 2008 to 2020, the United States saved between $19 billion to $30 billion on solar module pricing due to the free flow of capital, talent and innovation. Germany saved $5 billion to $9 billion, and China saved $26 billion to $46 billion. The groups suggest that if the three nations had “adopted strong nationalistic trade policies,” then module pricing in 2020 would have been 107% higher in the United States, 83% higher in Germany, and 54% higher in China.

The “Quantifying the cost savings of global solar photovoltaic supply chains” report suggests that if the world were to localize its supply chains, we could expect the price of solar to increase by 20% to 25% by 2030. Credit Suisse estimates that structural conditions in the United States resulted in a 33% higher price for solar panels through the end of the decade, when compared to China.

The researchers arrived at these numbers by estimating what they believe would be the costs of legislative actions taken in favor of “localizing benefits such as economic growth, employment, and trade surpluses.” The variance – $50 billion to $85 billion in savings from 2008 to 2020 – is based on varying levels of isolation from the global market’s learning curves. Nearly 800 GW of solar capacity was deployed during this period. Going forward, an additional 1.3 TW to 2.3 TW of capacity deployments are projected in the next decade, depending on how various policies facilitate that deployment.

The logic behind this study is as follows: If the production of a product is heavily localized within a country, then the global learning curves associated with that product will only be affected by solar modules deployed in that country. As each country is a part of the whole volume deployed, limiting trade lowers learning curves and raises prices.

The researchers have created an online tool that visualizes these equations. On the Projections tab, it is possible to adjust the percent of a benefit a country gains from global innovation versus being more nationally focused.