The World Trade Organization (WTO) and the International Renewable Energy Agency (IRENA) have launched a new booklet highlighting the need for open trade policies and harmonized product standards to support the deployment of solar photovoltaic (PV) technologies. According to the booklet, by assisting an expansion in solar energy, trade can contribute to environmental goals and support economic recovery in the aftermath of the COVID-19 crisis.

Solar PV has become a pillar of low-carbon sustainable energy strategies, with the cost of electricity generated by PV plants declining by 77% between 2010 and 2018, according to the publication titled “Trading into a bright energy future: The case for open, high-quality solar PV markets”.

The new booklet highlights that Trade and the globalization of the solar PV market have been major factors in driving the decrease in the prices of the technology as manufacturers are better able to source goods and services from competitive suppliers.

However, the new publication notes that further support from trade policies and harmonized product standards is needed to unlock additional cost reductions and job creation in the solar PV sector. In an example, the WTO and the IRENA stated that while average tariffs on solar PV goods are relatively low, large divergences remain among WTO members, with some applying tariffs as high as 15% on machines for PV panels.

Coherence in product standards

Furthermore, the booklet states that coherence in product standards is also crucial to a globalized PV market to promote safe and inclusive trade in solar PV goods and services. Meanwhile, the publication draws from the expertise of IRENA, which provides guidance to countries on the development and implementation of a quality infrastructure for trade in renewable energy technologies.

The authors highlighted that international cooperation, ranging from mutual recognition of standards and regulatory provisions in trade agreements to formal cooperation partnerships and regulatory harmonization can help companies seize trade opportunities and enable governments to develop sustainable energy systems.

Sustainable energy is particularly vital in light of the health and economic crisis stemming from the COVID-19 pandemic, according to the booklet. It adds that off-grid solar energy solutions can be ramped up quickly for healthcare centres; moreover, trade-led solar PV deployment can help to support economic recovery from the pandemic, not least by creating jobs, which are expected to reach over 40 million worldwide by 2050 in the renewable energy sector.

Rise in solar PV installed capacity

According to IRENA projections, the installed capacity of solar PV will continue to increase to more than 5,200 GW in 2030 and to 14,000 GW in 2050.

Looking ahead, the new publication indicates that further diversification of solar PV supply chains may be needed to improve their long-term resilience against exogenous shocks. According to the booklet, using trade policy to maximize the likelihood that more companies across more locations participate in solar PV supply chains could also help diversify solar PV supply chains and make them more resilient to disruptions caused by a future pandemic, extreme weather conditions, or other external shocks.

Despite Solar PV technology’s extremely high potential, the booklet highlights that there are many barriers besides those affecting trade that could hinder its deployment. Such barriers may include but not limited to technological, economic, policy related or regulatory in nature.

Overcoming these barriers while considering local conditions is crucial to achieving a just and inclusive transition, which in turn calls for innovation, investment, and an enabling and integrated policy framework focused on deployment. While such policies must be country-specific, the solutions may have an impact on a much broader scale and may influence global markets, says the new booklet.