Brief history of the solar industry (1st installment)

The solar industry can be classified as a “modern renewables” industry, in contrast to “traditional renewables” such as hydropower and biomass. Today the industry is booming and well positioned because it will be one of the main drivers for achieving the climate goal of transitioning from CO2-emitting power generation to carbon-free power generation.

However, although the solar industry can be considered modern, it has been in existence for more than half a century. The theoretical basis for today’s photovoltaic solar panels was given to us by none other than Albert Einstein in 1905, through his research “Concerning the Production and Transformation of Light”. Light from the sun, he said, is made up of photons, or packets of energy that can be released by electrons around the nucleus of an atom, creating an electrical current. And thanks to this research Einstein won the Nobel Prize in Physics in 1922 for his discovery of the Law of the Photoelectric Effect. But it was not until 1953 that the photovoltaic effect was really validated at Bell Laboratories in New Jersey, United States.

The modern solar industry was really born in 1973 with the launch of two initiatives, one of them in the EXXON company and the other through two scientists with experience in the US space program, Joseph Lindmayer and Peter Varadi. Personally, and just at the end of that same decade, I remember very well my first experience with this technology with the pocket calculators that I used in school.

But what fueled the industry’s growth was the link between German environmental policy and Chinese manufacturing prowess. Starting in the 1990s, Germany drew up legislation to promote renewable sources, causing the great energy revolution known as “Energiewende”, which sought to replace conventional energy with wind and solar energy. Hefty subsidies brought about this change like no other country in the European Union, but the law did not tie panel production specifically to Germany. So, over time, most solar products began to be imported more and more from China until they eventually displaced German manufacturers.

By 2006 China was still in its infancy as a solar panel manufacturer. But the government began to encourage production, together with entrepreneurs from that country, through low-cost loans and subsidies. This coincided not only with the industry push in Germany, but also with the solar power push in Italy and Spain. By 2010, there were already 123 solar panel manufacturers in China.

Now, between 2010 and 2018, China’s solar production capacity increased 5 times, far beyond global demand. This caused a general decrease in prices and even the disappearance of many of these Chinese companies that did not survive the crisis. To alleviate the situation, the government decides to stimulate the local market, in order to also alleviate pollution in large cities caused by coal-based energy. Some of the old coal plants were even replaced by massive solar farms. By 2013, China had surpassed Germany as the largest producer of solar panels in the world, and by 2017 that country had come to represent half of the world market for photovoltaic production. Today China produces about 70% of the solar panels on the planet. And if we add other Chinese companies located in other countries, the figure rises to 80%.

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Brief history of the solar industry (1st installment)