The sandy deserts of the Al Dhafra region in the United Arab Emirates might be a place you’d like to visit for a four-wheel drive safari or to drink tea at an oasis. Yet, within 90 square kilometres of this desert, an extraordinary energy disruption is underway.
Heavy vehicles and workers are shifting sand deep into the Emirati afternoon and night, preparing for the largest hybrid solar photovoltaic (PV) and battery energy storage system (BESS) in the world – Masdar’s gargantuan US$6 billion, 5.2GW solar PV and 19GWh BESS project scheduled to become operational in 2027.
This BESS is eleven times the size of NSW’s Waratah Super Battery, currently the largest operating BESS in the southern hemisphere. Masdar’s will be operational within two years.
Masdar’s project symbolises a remarkable period in solar and BESS technologies worldwide. Climate Energy Finance’s new report, International Solar PV and BESS Manufacturing Trends, has delved into developments across China, the European Union, the United States, India, Australia, and the Middle East through early 2025.
CEF observes continued price deflation in solar PV and batteries – prices dropped 20% for batteries, and Chinese panels plummeted by 37 to 46% in 2024. This cost reduction has turbocharged deployment rates, with almost 600GW of solar PV installed in 2024.
Assuming continued growth in China deployments, 700GW this year seems likely, and CEF projects this will rise to 1,000GW per annum by 2030. BESS installation rates are expected to treble in this timeframe. With solar modules and battery manufacturing capacity at three times the current global installations, expectations of plateauing installations are entirely unlikely.
Deployment will be accelerated by breakthroughs, including major advances in perovskite cell technology (on a 5-10 year view), higher battery densities, and vehicle-to-grid technology.
These technologies are unstoppable in partnership. In 2024, we saw over 30% of all BESS deployed globally paired with solar PV. The hybrid deployment of BESS with solar PV maximises both technologies’ utilisation and economic value. It enables solar PV to discharge in the most profitable time for fossil fuel generation – night.
Solar PV and BESS hybrid systems are now cost-competitive with fossil gas generation in Germany and coal-fired generation in India. This trend will undermine the business case for fossil fuel generation across most markets in the next ten years.
This shift was exemplified by gas giant Engie withdrawing applications for loans for two fossil gas-peaking plants through the Texas Energy Fund. Despite $US5 billion in public loan subsidies and the cheapest gas in the developed world, these project proposals are economically challenged in this new age of solar+BESS.
Engie is now doubling its variable renewable energy investment to 95GW by 2030. Rio Tinto’s announcement of Australia’s largest PPA for 600MW solar PV and 600MW/2,400MWh of BESS highlights that companies are seeking affordable, fast-to-deploy zero-emissions energy solutions now rather than costly fossil fuel generation or waiting a couple of decades for mythical small modular reactors.
At the centre of this momentum is China’s clean technology manufacturing ‘gift horse,’ which is regularly criticised but galloping away from the global pack with unprecedented industrial value.
Decades of industrial policy have led to unparalleled scale, vertical and horizontal integration, expertise, an uncatchable technological edge and cost advantages for Chinese manufacturers.
For instance, Masdar’s giant UAE project is almost entirely supplied by Chinese companies: batteries from CATL, panels from Jinko Solar and JA Solar, and engineering and construction in partnership with Powerchina. The same holds for the Philippines’ 3,500MW solar PV and 4,500MWh BESS Terra Solar project, which features batteries supplied by Huawei and construction by Powerchina.
Chinese companies dominate 80-95% of the global supply chain in solar PV and BESS production, including 1.2TW of 1.4TW module manufacturing worldwide. By the end of January, Chinese firms had already progressed plans to add 163GW of additional solar PV manufacturing capacity, even as Western suppliers collapse under unprecedented price competition. China not only possesses the gift horse; it essentially owns the racetrack.
The bankruptcy of European manufacturers such as NorSun and NorthVolt highlights the challenges facing Western manufacturers as they struggle to survive under relentless competition from Chinese suppliers.
Chinese panels are so inexpensive that they are driving a total restructuring of Pakistan’s energy market. The country has been infused with almost 17GW of panels imported by frustrated consumers dissatisfied with unreliable and expensive imported coal-fired electricity from the grid—all occurring without any policy driving it.
While other nations such as the United States attempt to close the stable door on China through escalating tariff barriers, China’s outbound foreign direct investment is moving strategically into emerging markets like the Middle East and Southeast Asia with projects like the US$150m 2GW per annum cell and module factory in Egypt’s ‘Suez Canal Economic Zone.’
China aims to secure a foothold in regions with the greatest potential for future growth. Host countries are drawing investment with financial incentives, regulatory relief, trade deals, and extensive infrastructure in industrial precincts and zones.
Where does this leave Australia? With a choice. This investment will go somewhere; it is our choice whether at home or abroad.
Don’t look a gift horse in the mouth! Australia should hitch our wagon in partnership with our largest trading partner, which dominates the global clean technology race.
This does not mean abandoning our values, institutions, and principles; it means utilising smart and innovative policies safeguarded with robust and enforceable investment guidelines to draw aligned inbound investment.
The supply chain upheaval unleashed by the Trump administration’s trade manoeuvring has highlighted that sovereign capacity is necessary to protect our domestic energy transition.
Australia is vulnerable, with 99% of our solar panels imported, while coal-fired generation needs to be replaced quickly. Domestic production capacity is an opportunity to learn from the best, draw in new capabilities in advanced manufacturing and robotics, and opens a pathway for further expansion through co-developing breakthrough technologies.
Credit where credit is due – the Albanese government has started to embrace the massive opportunities for zero-emission industries of the future, including with Arena’s Solar Sunshot. Sundrive’s proposed partnership with Trina Solar shows that there is commercial willingness.
We should expand on these initiatives by accelerating our renewable deployment, expanding Future Made in Australia’s Production Tax Credits to solar PV components, designating renewable energy industrial precincts, and requiring local content in domestic solar PV projects.
It is time to double our efforts before we are left entirely behind with the race over before we really start.
Harry Martin is a project consultant at Climate Energy Finance. Tim Buckley is Climate Energy Finance founder and director.
