Europe should abandon 'buy abroad' renewables strategy, say researchers

Researchers at Italy’s Roma Tre University have looked at global PV supply chain dependencies, with a focus on China, the European Union, Japan, South Korea, and the United States from 2007 to 2021.

The scientists focused on the long-term evolution of trade and technological hierarchies, mapping the global solar supply chain in terms of trade and technology. They said that achieving environmental targets through a “buy from abroad” strategy will have consequences for technological and productive sustainable development.

Researcher Francesco Crespi said that despite recent efforts by the European Union to resume PV component production in some member countries, it remains vulnerable to strategic dependencies.

“In our study, we adopted a perspective to identify the segments of the PV supply chains where Europe has the most relevant dependencies and where, on the other side, still has some competitive advantages,” Crespi told pv magazine. “For instance, our study detects a competitive advantage for Europe in the production of machineries employed in the PV industry, which however risks to be rapidly eroded in the absence of a dedicated strategy to further strengthen the European competitiveness in this segment. On the other hand, we identify the production of inverters as a sector where dependencies appear to be particularly problematic and where urgent actions are needed.”

The researchers have identified growing disparities in production costs between Europe and China in the 2022-23 period.

“Interestingly enough a relevant part of this difference is explained by the excess costs of energy in Europe vis a vis China,” Crespi said. “This does not imply that we should accept to maintain current levels of unilateral dependency. On the contrary, in the current geopolitical scenario, it is essential to avoid switching from a dependency on fossil fuels and their suppliers to another. Surely, the process should be gradual and cannot be realized without a common and effective European industrial strategy that allows leveraging technological and productive synergies and scale economies, especially regarding the development and production of next-generation PV components.”

The scientists based their analysis on trade data from the UN Comtrade database and the Organisation for Economic Co-operation and Development’s (OECD) patent database. The main limitation of this approach relates to the level of detail of patent information.

“Going beyond four-digit patents would have allowed for a more fine-grained analysis of the technologies underlying materials and components, as well as a more precise matching of the productive and technological sides,” the researchers said.

A key finding of the study suggests that greater technological specialization could mitigate strong dependencies in the global PV supply chain, particularly in the upstream segment.

“The PV industry is one of the most relevant candidates to apply and test the effectiveness of a new policy approach in which climate objectives, technological sovereignty and strategic autonomy objectives go hand in hand to maximize sustainability, security and growth opportunities for the green transformation of the economy,” the scientists said.

The research group presented its findings in the paper “Technological sovereignty and strategic dependencies: The case of the photovoltaic supply chain,” which was recently published in the Journal of Cleaner Production.