How China became solar royalty
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Cate Blanchett, Andrew Upton and Dr Zhengrong Shi posing on the rooftop of the Sydney Theatre Company in 2010
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When Shi Zhengrong started making solar panels at the turn of the century, there was basically no solar industry in China. But in the decades that followed, the nation started heavily investing in renewables. Today, we dig into how China became a leader in solar power while following the story of one man: the Sun King.
Related episodes:
Rooftop solar's dark side (Apple / Spotify)
The debate at the heart of new electricity transmission (Apple / Spotify)
For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org.
Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter.
Copyright 2024 NPR
When Shi Zhengrong started making solar panels at the turn of the century, there was basically no solar industry in China. But in the decades that followed, the nation started heavily investing in renewables. Today, we dig into how China became a leader in solar power while following the story of one man: the Sun King.
Related episodes:
Rooftop solar's dark side (Apple / Spotify)
The debate at the heart of new electricity transmission (Apple / Spotify)
For sponsor-free episodes of The Indicator from Planet Money, subscribe to Planet Money+ via Apple Podcasts or at plus.npr.org.
Music by Drop Electric. Find us: TikTok, Instagram, Facebook, Newsletter.
Transcript
SYLVIE DOUGLIS, BYLINE: NPR.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
ADRIAN MA, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Adrian Ma.
EMILY FENG, BYLINE: And I'm Emily Feng, one of NPR's international correspondents. I cover China, Adrian, and I wanted to explore with you this incredible transformation that happened while I was living in China. It used to be this country that was completely dependent on coal-fired electricity and other fossil fuels.
MA: Oh. I mean, I have visited Beijing a few times. And I remember, when I first went in the '90s, it seemed so smoggy there. I can't help but wonder if part of the reason was all those fossil fuels you just mentioned.
FENG: Absolutely. And while coal is still No. 1 there, we are seeing things begin to change because China as a country now actually dominates the world in solar energy.
SOPHIE LU: It doubled five times in the past 10 years from about 11 gigawatt in 2013 to 350 gigawatt in 2023.
(SOUNDBITE OF MUSIC)
MA: This is Sophie Lu. She's a researcher at Global Energy Monitor, which is a nonprofit that tracks global energy. And Sophie says China is now the world leader in solar. On today's show, we'll find out how that happened and how China changed the global energy market. That's coming up after the break.
(SOUNDBITE OF MUSIC)
FENG: To tell the story about the rise of China in terms of solar, I wanted to start with someone the industry has nicknamed the Sun King.
SHI ZHENGRONG: I have been, you know, working towards my goal of solar everywhere. This is, like, my dream.
MA: The Sun King is an amazing nickname. Does the Sun King, though, have a have a real name? I hope he kind of doesn't.
FENG: Sorry to disappoint you, Adrian, but the Sun King does have a real name. His name is Shi Zhengrong, and he's seen it all in the solar industry. He's seen the boom and the bust and then the boom again of China solar. And I first met him several years ago, actually, in Shanghai at this noisy solar industry exhibition. And he described to me then just what it took to create this industry in China from basically nothing. Because, when he first started his company, Suntech Power Holdings, in 2001, solar was dominated by Japan, the U.S. and Germany.
SHI: Yes, there's markets in Europe and the U.S, but not here. And also, there was no supply chain - all right? - and no capital. I mean, only back 20 years, and there was - it was so difficult to raise any money here.
FENG: But Shi starts meeting with local governments in China, and they're all eager for high-tech manufacturing. So they ask him for a business plan, which he admits he'd never written before. In 2001, Shi does get investment from a small city called Wuxi, and Suntech starts making panels there within a year and a half.
MA: Suntech grows fast, but they get an extra boost in 2006. That's when China launches an important strategy - its 11th five-year plan. And in it, China declares renewable energy, and particularly solar, to be key economic priorities.
FENG: That means there is now billions of dollars in state money to go to research and development on solar panels, and China starts giving basically free land and electricity and also tax breaks to solar companies like Suntech. And Suntech starts expanding even faster. But they have a problem.
SHI: We realized the supply chain got a problem. We couldn't have enough to supply the industry at the pace of expansion, especially polysilicon.
FENG: So polysilicon is this silicon, crystalline-like material that you melt down and you make panels with. And Suntech was actually growing so quickly they could not get enough of it. Shi tells me wait times were, like, one to two years for him to get big batches of polysilicon from the United States. So Shi eventually helps cultivate a network of new Chinese companies that, today, make about 80% of the world's polysilicon and solar wafers.
MA: And building your supply chain locally like this has a huge advantage. It keeps costs low, further driving down the price of Chinese solar panels, and it helps China maintain its stranglehold on all parts of the solar industry.
FENG: Shi's company, Suntech, does really well through all of this. It listed on the New York Stock Exchange, and, at its peak, it was valued at $16 billion. Shi becomes a mega-millionaire overnight. And then China takes another step - it gives solar power a preferential rate.
MA: What a preferential rate means is that the Chinese government starts paying more for solar energy that is sold to the grid than, say, energy derived from coal or nuclear power. So people who are generating solar energy and selling it to the grid are now making a lot more money.
FENG: Lots of people living in China see an opportunity. They want to sell power to the grid, too, and demand for solar panels that they can put on their roofs takes off.
MA: And this, in turn, leads to more opportunity for Chinese manufacturers. More domestic solar panel makers pop up and begin cranking out panels, and this disrupts the global market in a big way.
FENG: Remember, before China came on the solar scene, Japanese, American and German companies dominated, and they were starting to see real results. But almost overnight, Chinese panels became so cheap. And they were being made in such volume that these companies could not compete, and they went bankrupt.
MA: And, of course, the U.S. wasn't trying to let that happen to them.
FENG: And that's why, in 2012 and 2014, the U.S. Commerce Department slaps tariffs on Suntech because it alleges the company was getting too much state support from the Chinese government, and they were, therefore, unfairly outcompeting American producers.
MA: But these tariffs didn't really work. Sophie Lu of Global Energy Monitor says China rocketed to the top of the global solar charts, where it remains today.
LU: Today, the operating utility-scale solar capacity is about more than half of the world's combined operating solar capacity. This capacity is nearly five times more than that of the U.S.
MA: So what about the Sun King? What does he have to say about all this?
FENG: So I caught up again with him recently. And Shi defends this price war. You know, he argues, with some controversy, that it was only China that had the scale to make solar energy cost-competitive with fossil fuels. And he argues that if solar did not become as cheap as it is now because of China, we would not be seeing the global solar revolution that we have today.
SHI: The global citizen, you know, should thank the Chinese entrepreneurs, you know, engineers. And, yeah, without this, really, we don't know - how can we deal with climate change?
MA: But, you know, this is not an overwhelmingly positive story for Shi and Suntech and even solar.
FENG: No, it is not. The solar industry in China - it almost gets too successful. There's too much being made for way too cheap, and it leads to a big bubble that eventually pops. Shi's company defaults. Suntech is more than $2 billion in debt, and the board of his own company strips Shi of his leadership title. It's a bit of a mess.
SHI: There's ups and downs. And, you know, sometimes you need luck, right? If, you know, all unlucky things happen to you simultaneously, it probably is hard for you to deal with. So we - sometimes we call solar industries, like, a, you know, roller-coaster.
MA: Shi's career with Suntech may be in ruins. But now that the dust has cleared, he can see his legacy.
FENG: That supply chain for polysilicon, the preferential government policies, the cut-rate prices that companies in China are able to deliver - that's still all in place today. And entrepreneurs like Shi helped lay that groundwork for China's solar revolution.
MA: But that's not the end of the story - not for the Sun King.
FENG: No, not for the Sun King. He has started a new company making a flexible, lightweight panel he's invented, and he's building a new factory - not in China, but in Indiana, because building in the U.S. has an advantage now. This year, President Biden doubled U.S. tariffs on Chinese solar panels from 25% to 50%. And so made in America, at least to the Sun King, is looking way more attractive.
(SOUNDBITE OF MUSIC)
MA: This episode was produced by Cooper Katz McKim with engineering by Cena Loffredo and Sophie MacArthur. It was fact-checked by Sierra Juarez. Kate Concannon edits the show, and THE INDICATOR is a production of NPR.
(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.
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