In Europe, where energy is scarce, a new industry is booming ahead of winter. According to overseas media reports, sales of roof-mounted solar power generation equipment in the UK are growing rapidly. According to data from Solar Energy UK, UK's photovoltaic energy association, the number of households in the UK installing photovoltaic systems on their roofs topped 3,000 a week at the end of August. Currently, the wait for the installation is two to three months.

UK Renewable Energy Association (REA) supports the installation of roof-mounted solar power plants (Image source: Shutterstock)

Electricity bills in Europe are on the rise and are expected to reach £6,000 ($10,000) a year next year. At around £4,000 ($7,000), solar panels can be installed on your roof, and in today's electricity bills, you'll save around £1,200 ($2,000) a year. It could save over £3,000 ($5,000) a year if electricity bills continue to rise. According to NHK reports, in Japan, the Tokyo metropolitan government has decided to make it mandatory to install solar power generation equipment in new houses from 2025 to reduce greenhouse gas emissions. In both countries, governments are pushing forward with the construction of large-scale solar power plants, while enlisting the cooperation of the general public to achieve carbon-neutral goals. In countries like Japan and the UK, where single-family homes are the norm, the best option is to install a solar power generation system on the roof. China is a major exporter of solar power generation equipment. But while Europe and Japan need Chinese products amid heightened geopolitical risks, Chinese companies should not pursue blind expansion.

Business development is difficult

It is an opportunity for Chinese companies to make money in Europe. For example, in the UK, 90% of rooftop solar installations are made in China. Former economics correspondent for The Guardian, Ashley Seager, predicts that 95% of UK solar panels will come from China. Due to relatively cheap labor costs and government subsidies, the industrial chain is concentrated in China, where economies of scale produce low-cost, high-quality products. In the first half of 2022, China's exports of solar power generation-related products will reach $25.9 billion (approximately ¥3.9 trillion), doubling from the previous year. The export volume of solar panels reached 78.6 GW. But there are also risks in the European and US markets. The EU needs Chinese solar panels to deal with the energy crisis, while on September 14 it announced a bill banning the distribution of goods produced by forced labor within the EU. In other words, there is an unavoidable aspect of adopting Chinese products. If we only look at the share of Chinese products in Europe, we may misunderstand that Europe is unilaterally dependent on Chinese solar power generation companies. The production capacity of solar panels in mainland China is expected to reach 359 in 2021. 1 gigawatt, manufacturers continue to scale up production. But in China, bids for solar panels were just under 90 gigawatts in the first half of 2022. Doing business outside of Europe is even more difficult. The solar panels that China exports to the U.S. are at risk of being banned as products produced through forced labor, just like in Europe. . In addition, many of the US industrial chains have already been built by domestic companies, and Tesla, which is also a major US EV (electric vehicle) company, occupies more than 70% of the market. Where Chinese manufacturers can play an active role is to providing resources such as batteries to downstream manufacturers like Tesla. Some Chinese manufacturers develop products for the Japanese market, but the Japanese market requires designs that can withstand disasters such as volcanoes, typhoons, and earthquakes. Making money in Japan is not easy. Therefore, it can be said that Europe, which is active in new energy, is currently the ideal market. However, while Chinese solar panel makers rely on the European market, the European market has announced strict policies. On March 30 this year, the European Commission published the "Ecodesign Energy Label Work Plan 2022-2024". It may require carbon footprint declarations for solar panels, inverters, and systems exported to the EU. Chinese manufacturers, which account for nearly half of the export share in Europe, have no choice but to follow the rules set by the other party, and this kind of thing will become the norm in the future.