After decades of continuous investment and innovation in solar panel technology, the solar business has boomed in recent years. Solar manufacturing is booming and is expected to continue to grow at a faster rate in the future. Led by China and the United States, countries around the world are investing heavily in increasing solar power capacity to support the green transition.

The International Energy Agency's (IEA) World Energy Outlook 2023 (WEO) explores the growth potential of the solar industry, building on its already strong performance in recent years. Based on the current project pipeline, renewables are expected to contribute about 80% of new power generation capacity by 2030, with solar generating more than half of the new capacity. However, the WEO highlights that the potential for solar energy is much greater.

By 2030, the world's annual solar panel capacity will be around 1,200 GW, but only 500 GW of that is expected to be deployed. However, according to the International Energy Agency, if China's new solar PV capacity reaches 800 GW by 2030, China's coal-fired power generation will be reduced by another 20%, and Latin America, Africa, Southeast Asia and the Middle East will be reduced by another 25%.

Over the past decade, solar manufacturing has boomed as investment in solar power has increased dramatically. This is expected to support the goal of green transition in several countries around the world.

Currently, however, five countries dominate solar manufacturing - China, Vietnam, India, Malaysia and Thailand. China's solar module production capacity has exceeded 500 gigawatts, accounting for about 80 percent of global capacity. This means that many countries rely heavily on imported solar panels to develop solar projects. Increasing manufacturing capacity in small solar manufacturing markets such as the United States, South Korea, Cambodia, Turkey and the European Union can reduce dependence on a handful of markets and strengthen supply chains.

The solar market is expected to experience a compound annual growth rate of 26% over the next five years and become the leading source of electricity generation in the United States within the next decade. In addition, recent innovations and widespread adoption of solar businesses are driving down production prices, with utility-scale solar costing between $24 and $96 per megawatt-hour without subsidies. This is 56% cheaper than nuclear and natural gas generation and 42% cheaper than coal generation. Combined with the subsidies provided by the Biden administration's Inflation Reduction Act, solar energy costs significantly less to produce than other energy sources.

At the same time, China leads the world in solar power generation, setting an example for other countries. Wind and solar power generation is expected to surpass coal-fired power plants this year, and by 2023 China will add 217 gigawatts of installed PV capacity, more than the rest of the world combined.

When it comes to solar energy, China and the United States are leading the way, and many other countries around the world are following suit. However, greater diversification in the solar module manufacturing market could improve supply chains and reduce dependence on a small number of high-production countries. All areas of the solar supply chain must be strengthened to ensure that growing manufacturing capacity matches production and demand along the supply chain to support optimal deployment rates.