Historic First! Solar Surpasses Oil, China Overtakes the West

Solar Surpasses Oil, China Overtakes the West
Published on: Jun 19, 2024

The onset of the Second Industrial Revolution in the late 19th century was closely tied to oil. This fossil fuel accelerated industrial production and transportation, greatly advancing the process of the Second Industrial Revolution. It also led to the dominance of the seven major oil companies from the Western world, known as the “Seven Sisters.” However, in the 21st century, solar energy may become the primary energy source of the Fourth Industrial Revolution, potentially led by China.

Recently, Bloomberg reported that the energy supplied by China’s seven major solar companies has surpassed that of the Western “Seven Sisters.”

Specifically, the seven global oil giants—Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Shell (NYSE:SHEL), TotalEnergies SE (NYSE:TTE), BP (NYSE:BP), ConocoPhillips (NYSE:COP), and Eni (NYSE:E)—collectively extract about 40 exajoules of oil energy from the ground annually, equivalent to nearly 18 million barrels of oil per day. In contrast, the seven major solar companies—Tongwei, GCL Technology Holdings (OTCPK:GCPEF), Xinte Energy, Longi Green Energy Technology, Trina Solar, JA Solar Technology, and Jinko Solar (NYSE:JKS)—produce solar panels generating 5 exajoules of electricity annually, and all these solar companies are based in China.

At first glance, the “Big Oil” easily outstrip the “Big Solar”. However, this figure does not account for the losses incurred when burning oil. Rough estimates indicate that only about a quarter of the energy extracted by oil companies’ wells is converted into useful energy. Additionally, these numbers do not consider the lifetime electricity generation of solar panels, only their annual output. Most solar panels come with a 25-year warranty, whereas oil extracted by oil companies is burned up within a few months.

Focusing on individual companies, after the Inner Mongolia 400,000-ton polysilicon factory goes into production, Tongwei, the world’s largest solar panel manufacturer, will provide over 9 exajoules of energy annually, surpassing Exxon’s 8.3 exajoules.

Last year, the International Energy Agency (IEA) predicted that capital investment in the solar industry would surpass that in oil production for the first time in 2023. IEA Executive Director Faith Birol stated that the gap between investment in fossil fuels and clean energy is widening, with the ratio being approximately 1 to 1.7. The speed of clean energy development has exceeded many people’s expectations.

One significant reason for this evident investment trend is the substantial reduction in solar costs. A report released by EY last year pointed out that solar energy remains the cheapest source of new-build electricity. The report stated that the global weighted average levelized cost of electricity (LCOE) for photovoltaics has rapidly declined from over $400 per megawatt-hour in the early 2010s to about $49 per megawatt-hour in 2022, a reduction of 88%. This is 29% lower than the cheapest fossil fuel alternatives, with wind power’s LCOE decreasing by about 60% during the same period.

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