Middle and low income countries are quietly enjoying a solar power boom, fuelled by imports of panels from China.
According to thinktank Ember, countries in the Global South imported more solar panels from China than the North last year, after imports more than doubled in two years.
Gerben Hieminga, senior sector economist for energy at ING, said Africa’s “total imports of solar panels grew 60% in the past 12 months, equivalent to the capacity of 15 to 20 large scale gas or coal-fired power plants. You cannot build these plants in a year.”
Pakistan’s transformation is particularly striking. Its panel imports jumped from 3.3GW in 2022 to 17GW in 2024, Ember said. This year’s are expected to be even higher.
The vast majority were imported by private individuals rather than utilities, which Singh said “has created a serious technical challenge for the country’s grid”.
Vikram Singh, senior director at RMI, said there was “no one-size-fits-all approach” to the energy transition. “In simplistic terms, there is a top-down policy and enabling environment approach,” he said. ”At the other end of the spectrum, in countries like Pakistan, there has been a rapid bottom-up approach, whereby the loosening of import duties for solar PV via private channels has enabled tremendous scale and speed.”
The drivers of the solar boom are manifold, including tax incentives. But at its core, Hiemanga argued, is “China’s severe overcapacity in solar manufacturing”.
Goldman Sachs says China’s production potential alone covered 200% of global solar panel demand in 2024.
Overcapacity has driven panel prices to record lows. According to the International Energy Agency, the average annual global wholesale spot price (excluding tariffs and non-market costs) for PV modules declined nearly 45% year-on-year in 2024, to $0.09/W.
Fossil fuel imports could fall
The full impacts of this rapid shift are only just coming into view. Hieminga believes rapid growth in solar generation could lead countries to import less fossil fuels.
In the short term, he said, this will occur “only via less imports from the energy sector, mostly impacting coal and gas demand.”
That is because “Electrification in demand sectors, like electric vehicles, heat pumps and air conditioning, takes a lot more time. Manufacturing is much harder to electrify, as its processes depend on molecules like oil and gas. In these areas, solar panels are not as transformative as in the power sector.”
According to an International Energy Agency analysis, renewables have saved fossil fuel importers $1.3tr since 2010.
China steps in
The shift could also have geopolitical consequences. Budget cuts in several low and middle income countries, compounded by falling aid, have left few resources for utility scale renewable projects.
In Pakistan, the solar boom has coincided with a severe economic crisis and International Monetary Fund programme.
This has opened up room for China to grow its presence in LMICs, including by exporting cheap solar panels.
There is still much room for imports to grow. According to the Climate Vulnerable Forum and V20 finance ministers, a group of 74 countries most affected by climate change, from 2015 to 2023, renewable energy products accounted for just 5.4% of trade between China and the group’s countries.
They say 90% of installed renewable power capacity in 2024 was in G20 countries.
Last month, the group called for “deeper collaboration with China” to advance its climate investment goals, including through joint ventures and creating green jobs.
“China’s ties with Africa will likely strengthen as the trade war continues,” said Hieminga. “China already has significant interests and a strong position on the continent due to its stakes in mining companies and its ambition to control rare earth supply chains.
“Its focus is now expanded to the power sector through solar panels. African consumers can benefit as solar is the cheapest form of power generation, particularly in the sunniest parts of the world.”
For Singh, “the economics of the energy transition are without question. Today renewables represent the cheapest source of new electricity for 90% of the planet.
“And so market forces have been unleashed and what we are witnessing is as a result of the fundamental energy security which local sources of power can create for countries and communities — and their comparative advantage for economic development and prosperity.”