The costs of producing renewable energy sources in China are up to 200% lower, says WoodMac – pv International magazine

May 27, 2024 Patrick Jowett

Production costs for ChinaFrom a new report published by Wood Mackenzie.

The consulting firm said rapidly falling prices, combined with integrated supply chains and “high standards of efficiency”, have enabled Chinese renewable energy producers to meet more than 65% of total global demand. It said there is evidence that prices for products from outside China are twice as high as for comparable equipment made in China.

“By leveraging a robust domestic supply chain, equipment produced by Chinese manufacturers overseas remains price competitive despite growth driven by inflation uncertainty and higher production costs,” said Xiaoyang Li, director of energy and renewables research for APAC at Wood Mackenzie.

The consulting firm said Chinese manufacturers are targeting overseas markets with local requirements to become regional production hubs. From 2019 to 2023, China’s exports of renewable products increased by 35%, which Wood Mackenzie attributed to “competitive pricing and dominant production capacity.”

Over the same period, investment in wind and solar projects increased by 23%, and energy batteries overtook solar modules to become China’s top renewable energy export.

According to the report, Chinese enterprises’ interest in investing in overseas renewable energy projects is growing, but progress is slow due to high development risks and uncertain revenue flows. Wood Mackenzie said Chinese renewable energy companies typically invest in markets with high energy demand, a stable business environment and predictable revenue streams.

“Backed by strong equipment supply chains from Chinese manufacturers, Chinese solar and storage investors prefer greenfield investments as they look for opportunities overseas,” Li said.

In November, Wood Mackenzie published a report stating that the huge increase in the production capacity of photovoltaic modules and photovoltaic installations in China has allowed energy prices to remain relatively low and stable compared to Europe and the United States.

China’s total solar capacity exceeded 670 GW in April, thanks to about 60.5 GW of new solar installations since the beginning of the year.