The position of the Dutch Solar PV Sector in the European Value Chain

Background
Solar PV has experienced exponential growth, with global installed capacity exceeding 1 TWp and prices decreasing below 0.4 USD/W. As demand has been increasing ever since the introduction of the Kyoto Protocol, manufacturing of solar PV equipment and panels has shifted to Asian countries for cheaper and large-scale production. 83 per cent of all solar PV manufacturing stages still take place in China. There is evidence of forced labour in parts of Chinese production processes and a relatively high CO2 footprint in the Chinese production chain of solar PV. However, recent price hikes in the energy market and the full-scale Russian invasion of Ukraine in 2021 have raised Europe’s awareness of the energy market’s vulnerability and dependence on foreign countries. The strategic importance of an independent solar panel industry is recognised throughout Europe. This research maps out the potential role of the Dutch PV industry in a more independent European solar PV manufacturing industry.

Study
Through desk research and interviews with industry experts we address relevant market failures that affect the European solar PV supply chain and provide strategic perspectives for rebuilding it. A scenario analysis explores the effect government support can have on the level of dependence on import from non-European countries and on the diversity of trading partners. The research outcomes presented in this report indicate that the potential role of the Netherlands in the PV supply chain cannot be assessed in isolation. The Netherlands’ potential role is dependent on collaboration within Europe. This study therefore focusses on Europe, while zooming in on the Netherlands where possible.

Results
The Netherlands’ solar sector is not characterised by its size and can only be rebuilt by relying on European collaboration. The scenario analysis demonstrates that a subsidy of about 5 cents/Wp is required for European-made PV panels to compete with other global PV manufacturers. Scale is a major reason for Dutch companies to buy materials from Asian factories. Therefore, joint purchases of bulk equipment from European manufacturers can strengthen a more autonomous Dutch and European solar PV production chain. European producers should first focus on scaling up their capacity of the value chain segment that is closest to the one in which they are already relatively mature. The Netherlands has a pioneering role in the development of mass customisation and lightweight panels. By building on that strength, they can gain a competitive international position in the integration of PV modules in the built environment. For that, clear technological and product standards between the construction sector and the solar PV sector are necessary. Since Asian companies are quick to catch up with technological advances, collaboration between (European) knowledge institutes, government and companies is crucial to shift towards a more local PV supply chain. The IPCEI PV presents a unique opportunity to support the Dutch solar PV industry and foster collaboration between European suppliers. Furthermore, the government should ensure sufficient budget for technology demonstration and system development and should also address efficient energy storage possibilities. International governance should enable transparent standards on products associated with forced labour and harmful environmental practices. Standards for the latter should be based on a life cycle assessment (LCA) approach. At the same time, there is a responsibility for government, companies and knowledge institutes to explore and support recycling of critical materials in the solar PV industry.