LUNGILE MASHELE: Lessons for SA in China’s ambitious solar power path

The just energy transition has been popularised recently as most countries strategise for decarbonisation and energy security. However, almost 70 years ago, through state investment and strategic industrial planning, China started research & development on harnessing the sun to produce electricity. The first solar photovoltaic (PV) cells were developed in China in the 1950s.  

Between 1981 and 2000 China’s real GDP grew 9.89% on average, and this rapid economic growth necessitated the building of nuclear, coal and hydro plants to cater for growing industrialisation. 

While the sixth five-year plan (1981-85) was the first to mention renewables, it was not until the 11th plan (2006-10) that China began to set specific targets for renewable energy.

In the 10th plan (2001-05) China developed energy resources (including hydropower, oil and gas) in West China and the infrastructure to transport it to the coastal regions. The 11th plan set a target of increasing renewable energy generation capacity to 150GW by 2010. 

In 2001 the Chinese government introduced several policies to support the development of the solar PV industry. These included subsidies for solar PV manufacturing and installation, as well as tax breaks for solar PV companies. As a result, China’s solar PV industry grew rapidly. 

By 2008 China was the world’s largest producer of solar PV cells and modules. In 2013 it became the largest installer of solar PV. Today, China is the world leader in the industry.

China now accounts for more than 80% of global solar PV manufacturing capacity. It is also the largest market for solar PV, accounting for more than 30% of global installations. 

The 14th five-year plan (2021-25) is even more ambitious. China has a target of increasing renewable energy generation capacity to 1,200GW by 2025. The plan sets a target of increasing the share of renewable energy in total primary energy consumption to 25% by 2030 — this includes nuclear and hydro. 

China has exceeded its renewable energy targets in each five-year plan. By the end of 2022 it had more than 1,100GW of renewable energy generation capacity, making it the largest renewable energy market. 

Game theory studies decision-making, where the outcome for each participant depends on the actions of all participants. The growth of China’s solar PV industry was a result of strategic thinking where numerous players desired multiple outcomes. This was achieved through: 

• Government subsidies, tax breaks and other supportive policies. 
• A comparative advantage in the production of solar PV cells and modules due to China’s low labour costs, lax labour laws, cheap electricity tariffs and abundant manufacturing capacity. 
• A large domestic market for solar PV, which helped drive down costs and achieve economies of scale.
• The global demand for solar PV has grown rapidly in recent years, which has bolstered the growth of China’s solar PV industry. 

China’s transition through its five-year plans was premised on energy security, decarbonisation and economic development — the renewable energy industry is a major source of jobs and economic growth in China. The country therefore offers invaluable lessons for SA as it stumbles through its energy transition such as: 

• Formulate and execute plans. This is pivotal as we anticipate the Integrated Resource Plan (IRP) 2023. 
• Transitions are not linear and will require flexibility and a strategy.
• Technical, environmental, social, political and economic development goals need to be met while ensuring security of supply. 

There is a Chinese proverb that says: “Be not afraid of growing slowly, only of staying still.” In the 1950s the country followed a long-term strategic investment plan that delivered solar PV, semiconductors and more recently electric vehicles, and Africa with 1.2-billion people is now the market.

Africa’s transition should be premised on economic development and its resource endowments. SA, with one of the highest rates of unemployment and inequality and without a social compact, cannot afford to have unstructured transitions driven by narrow interests.  

• Mashele is an independent energy economist.