With trade barriers from Europe and the US against Chinese solar imports, the Middle East, which is currently moving toward clean energy transformation and enjoys good trade relationships with China, has emerged as a crucial outlet for China's solar capacity expansion.
Since 2023, China's solar industry has experienced chaotic overexpansion and vicious price competition among manufacturers. High tariffs imposed by the US and Europe on Chinese solar products have put many companies at risk of losses and elimination. Even large manufacturers are facing precarious situations.
China's solar energy giants such as JinkoSolar, LONGi Green Energy Technology, TrinaSolar, and JA Solar Technology, have struggled since 2023. LONGi and JA Solar recorded losses in the first quarter of 2024, while JinkoSolar and TrinaSolar saw their net profits plunge by 29.09% and 70.83%, respectively, to CNY 11.76 billion (US$1.62 billion) and CNY 5.16 billion. Solar silicon wafer providers Tongwei and TCL Zhonghuan Renewable Energy Technology also swung from profit to loss.
Nevertheless, major Chinese industry players still keenly showcased their latest advancements in next-generation solar technology at the 2024 International Photovoltaic Power Generation Conference and Exhibition held June 13-15 in Shanghai, often dubbed the "Oscars of the Solar Industry." JinkoSolar, for instance, unveiled cutting-edge N-type innovations, while Trina Solar debuted its proprietary TSHJ heterostructure cells and THBC back-contact heterostructure cell technology, with a maximum module output power exceeding 760W.
While TOPCon remains the current mainstream technology, emerging technologies such as perovskite and heterojunction (HJT) were also on display, with many companies involved. Industry experts predict that HJT will gradually become comparable to TOPCon in the next five years.
AI integration in solar energy
Artificial Intelligence (AI) became a hot topic at the exhibition, with the concept of "AI-enhanced solar energy" frequently discussed. Companies like Shanghai Sigenergy announced plans at the event to integrate AI technology into their solar storage and charging products.
Just ahead of the Shanghai show, the US launched anti-dumping and anti-subsidy investigations into crystalline silicon solar cells from Cambodia, Malaysia, Thailand, and Vietnam. This move poses new challenges for Chinese solar companies that have established manufacturing facilities in Southeast Asia to circumvent US trade tariffs on Chinese-made solar products.
In response, industry experts believe that full-scale globalization is the inevitable path for Chinese solar companies, even in the current environment of rising trade protectionism. The presence of numerous overseas buyers from countries like Germany, Spain, South Korea, Japan, India, Malaysia, Argentina, the UAE, and Saudi Arabia at the Shanghai solar power exhibition underscores opportunities for collaboration between Chinese solar companies and international partners.
From an investment perspective, the Middle East is emerging as a key new hotspot for Chinese solar players to materialize their "going global" strategy. Since 2023, leading Chinese solar companies such as GCL New Energy Holdings, TCL Zhonghuan, and TrinaSolar have announced investment plans in the Middle East, covering crystalline silicon, solar cell modules, and auxiliary materials.
According to the China Photovoltaic Industry Association, while Europe was the primary GW (Gigawatt)-level market in 2022, the number of GW-scale markets increased from 26 to 32 in 2023, with a significant presence in Middle Eastern countries such as the UAE and Saudi Arabia.
Data from Infolink Consulting indicates the Middle East's demand for solar energy is expected to grow to 29-35 GW by 2027 from 20.5-23.6GW estimated for 2023, with significant increases in Turkey, the UAE, and Saudi Arabia. Chinese suppliers play a crucial role in meeting this demand.
Zhu Gongshan, chairman of GCL New Energy, highlighted the profound structural adjustments in the global solar industry chain, making overseas expansion inevitable for Chinese companies. In this regard, the Middle East has become a crucial outlet for capacity expansion by Chinese players, given its trade honeymoon with China.
Transition to clean energy sources
Another compelling factor driving this shift is the Middle East's historical reliance on oil and natural gas as primary energy sources, leading to a lag in renewable energy development. However, with the urgency of decarbonization goals intensifying, Middle Eastern nations are recognizing the need to accelerate their transition to clean energy sources.
For instance, the UAE aims to increase the share of clean energy to 50% by 2050 under its "2050 Energy Strategy" and achieve net-zero greenhouse gas emissions by 2050. Similarly, Saudi Arabia's "Vision 2030" aims to increase the contribution of non-oil exports to GDP from 16% to 50% by 2030, seeking to multiply non-oil revenue sixfold, with solar energy being a key focus area.
From 2022 to 2023, China's exports of solar modules to the Middle East and North Africa consistently exceeded 10 GW, with rapid growth in Saudi Arabia and the UAE. In the first four months of 2024 alone, China exported 10.3 GW of modules to the Middle East, representing a year-on-year increase of 180%.
Major solar players such as JinkoSolar and Trina Solar are forming delegations to explore new business cooperation opportunities in the Middle East. Other companies, including LONGi Green Energy, have secured major orders in the Middle East, with peripheral component suppliers planning to establish wholly-owned subsidiaries locally.
In May 2023, TCL Zhonghuan forged a strategic partnership with Saudi Arabia's Vision Factory to establish a solar energy plant. TrinaSolar plans to construct a facility in the UAE capable of producing 50,000 tons of silicon materials, 30 GW of crystalline silicon wafers, and 5 GW of battery modules in three phases. GCL New Energy plans to build a 120,000-ton silicon material project and is in discussions with Saudi Arabia to establish its first overseas silicon material plant.
