China’s Multi-Billion Dollar Clean Energy Investments Propel Global Competition In Renewable Transition – Analysis

Global investments in clean energy have surged over the past decade, rising from $248 billion in 2014 to $745 billion in 2023. During this period, China has deployed more clean energy technologies than any other country, contributing significantly to the global energy transition. While concerns remain over China’s dominance in renewable energy supply chains, recent analysis by Rystad Energy shows that China’s rapid scale-up has positioned it as a leader in cleantech and created a ripple effect. Other nations are now ramping up their energy transitions in response to China’s competitive pressure.

China’s spending on solar and wind has outpaced the rest of the world, climbing from $150 billion in 2020 to nearly $400 billion in 2023. However, as other regions increase their investments, China’s lead is expected to shrink by the end of the year and could fade entirely by 2027. China’s progress is impressive even on a per-capita basis, surpassing regions like Europe and the US in renewable energy infrastructure investments relative to population size. Although Europe and the US are boosting their capital expenditure, they are projected to lag behind China through the decade.

China’s dominance in cleantech is largely driven by its vast manufacturing capabilities, particularly in solar and battery supply chains. The country controls about 80% of the global solar PV module supply chain and produced 90% of the world’s solar PV components last year. This production is expected to increase by 150% by 2030. However, 2027 is seen as a turning point when the rest of the world, led by regions like the US, may begin to outpace China in manufacturing due to growing investments.

Countries like Europe, the US, and India are actively working to expand their solar panel manufacturing capacity to reduce reliance on China. The US and India are investing heavily in cell manufacturing and module assembly plants, aiming for self-sufficiency by 2026. However, their production costs remain significantly higher than China’s, with Chinese solar modules costing around $0.10 per watt compared to $0.30 per watt in the US. This price difference affects project economics and the pace of the energy transition.

As nations strive to develop their cleantech industries, China’s massive production capacity remains a challenge. While countries are keen to build local industries for resilience, job creation, and innovation, they face a dilemma: invest in domestic production or rely on China’s lower-cost supplies to meet climate goals.

Balancing domestic manufacturing and a cost-effective energy transition is particularly difficult for countries with limited infrastructure. While using Chinese components can speed up clean energy deployment, over-reliance on a single supplier poses risks due to potential geopolitical tensions or supply chain disruptions. This forces countries to navigate the trade-offs between energy security and affordability.

Subsidies and government support play a critical role in this dynamic. The US, India, and the EU have introduced tariffs and restrictions on Chinese imports to protect local jobs and industries. These measures may slow the global energy transition compared to a more open trade approach, complicating efforts to meet climate goals.