Shadows and Sunlight: Navigating the Ethical and Geopolitical Crossroads of Solar Power's Rise

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In the ninth edition of the James Bond series, The Man with the Golden Gun (1974), much of the script is centered around the “Solex Agitator”, a small yet powerful device that can harness rays from the sun to generate large sums of power. Set against the backdrop of the 1970’s energy insecurity, the device represented an innovative solution to the crisis at the time.  While the “Solex Agitator” ultimately got into the wrong hands during the film, audiences around the world were exposed to the magic solar power can provide.

Although we have known for some time about this marvel of technology (Thomas Edison was even quoted around a hundred years ago saying “I'd put my money on the sun and solar energy. What a source of power!”) It is only recently that solar has had its shining moment (pun intended). 

Solar power has now comfortably transcended the boundary from science fiction to reality, with 2023 being a record breaking year for solar photovoltaics (PV). The U.S. alone added a record 33 gigawatts (GW) of solar capacity in 2023 alone. This represents a massive leap from the 21 GW added in 2022, and represents the largest increase in history for the U.S. 

Most notably, this was accomplished despite a rising interest rate environment casting massive doubt over the acceleration of deployments. A report conducted by EnergySage found the average quoted solar loan APR more than doubled from 2.5% in 2022 to 6.1% in 2023. While the jury is still out on how this may impact solar growth on a larger time frame, 2023’s results are notable nonetheless. 

Part of the reason why solar power has been discussed in many circles as a smashing success is because of the massive drop in reduction in cost of electricity produced by solar power. 

The pursuit of cheap and abundant energy underpins our technological advancements, with solar energy now playing a pivotal role. Essential innovations, including desalination plants, CO2 direct air capture, vertical farming, and expansive HVAC systems, all depend on access to cost-effective energy. This array of technologies underscores the essential quest for limitless power as the bedrock of advancement, propelling us to tackle humanity’s most formidable challenges.

Yet, a core component of the techno-optimist thesis —affordable, boundless energy—faces a geopolitical twist. Solar PV, a crucial component of this vision, finds its fate intertwined not with the U.S. or its allies, but with a complex partner: China.

China’s Iron Grip

China has been able to methodically hollow out the West’s ability to produce and manufacture physical goods for cheap, completely undercutting the competition. It is a playbook that has been executed to perfection over and over again. 

Here is a simplified rundown of what it looks like: 

1. Do the dirty work (mining and processing of raw natural commodities) with cheap (sometimes forced) labor

2. Undercut competition even if it completely uneconomical

3. Penetrate global markets at scale

4. Rinse and repeat

The United States’ industrial base has been severely damaged by this strategy, and leaves the nation vulnerable should China decide to exert pressure for any given reason (yes, Taiwan I am looking at you). Their absolute control over many supply chains is a serious risk to many, both Americans and fellow allies, and should be treated as such. Otherwise we will all re-learn the power of leverage and all the privileges it provides (or lack thereof). 

Solar PV is one of many verticals that the Chinese have decided to deploy their strategy on. Let’s dig into what that currently looks like. 

Polysilicon, the high purity form of silicon, is the key raw ingredient for solar panels. Polysilicon is made by heating up sand (usually with coal), to get pure silicon and CO2. After a few more steps of refining and purifying the pure silicon (usually using more coal), the result is nice swiss cheese-esque looking blocks of polysilicon. 

According to the U.S. Department of Energy (DOE) report released in 2022 examining the solar PV supply chain, China holds 72% market share of polysilicon production, making it the largest producer in the world.

 There has been an aggressive push by the Chinese to further increase its grip over the polysilicon market to further establish itself as a strategic necessity to the solar industry. Much of this is taking place in Xinjiang, a region in northwestern China that is most widely known today for the large-scale imprisonment of ethnic minorities. Thousands of Uyghurs in the region have been methodically rounded up, and are held in what the CCP has defined as “re-education camps”. These prisoners are then forced into labor under inhumane conditions. 

The U.S. and other governments has been quick to label this as a “genocide”, and the U.N. human rights office have stated that the actions constitute crimes against humanity. Despite this, the global clean energy movement is still fully reliant on slave labor to meet net-zero goals. Safe to say this doesn't fit the bill of the “ESG” agenda. So what happens when pursuing climate goals clashes with the advancement of human rights efforts?

Biden took a stab at this issue at the end of 2021 with the passing of the Uyghur Forced Labor Protection Act (UFLPA).The bill prohibits “the importation of goods into the United States manufactured wholly or in part with forced labor in the People's Republic of China, especially from the Xinjiang Uyghur Autonomous Region”

As with many of the sanctions the Biden administration has imposed on any of our adversaries wayward practices, this legislation proved to be ineffective. A New York Times article that was published in December of 2022 highlights an investigation that found four of the largest solar producers were evading U.S. attempts to curb imports from Xinjiang. The investigation found that Chinese companies had been bypassing tariffs that the U.S. imposed by funneling their business through Cambodia, Malaysia, Vietnam, and Thailand. 

If the Biden administration decides to impose tariffs on entities located in these nations, he could risk tanking the domestic solar industry, and put his ambitious net-zero goals in jeopardy. The confluence of economic realities and desire to meet his environmental agenda forced his hand enough to veto further legislation to reinstate tariffs on Chinese manufacturers based in Southeast Asia. 

Going back to the solar supply chain, Chinese control only gets stronger downstream. The process of melting polysilicon into ingots, and then slicing them into wafers is completely dominated by the China. The two primary inputs for these processes are labor and energy, both of which are extremely cheap in western China. 

Unless the world opts to localize the solar supply chain, the fate of the solar industry and the race to net-zero will rest with China. Their aggressive market tactics, designed to undercut competitors at any cost, significantly reduce the effectiveness of Western countermeasures. Now, the U.S. may find itself compelled to heavily subsidize solar panel manufacturing indefinitely to remain competitive with China, introducing a whole new set of complex challenges.

In the transition from science fiction to the forefront of renewable energy, solar power's story is compelling yet complex — China’s control over its supply chain, spurred by labor practices that challenge the very essence of ethical progress.

This year, as we herald a new peak in solar achievements, the world is faced with a profound contradiction—our stride towards a net-zero future is ensnared in complexities that question the integrity of our journey. The challenge ahead is not just to harness the sun's boundless energy, but to illuminate the shadows of its production, ensuring our quest for clean power also champions the values of humanity.