It's generally assumed that it only takes a few years before solar panels have generated as much energy as it took to make them, resulting in very low greenhouse gas emissions compared to conventional grid electricity.
However, a more critical analysis shows that the cumulative energy and CO2 balance of the industry is negative, meaning that solar PV has actually increased energy use and greenhouse gas emissions instead of lowering them.
The problem is that we use and produce solar panels in the wrong places. By carefully selecting the location of both manufacturing and installation, the potential of solar power could be huge.
The Good News
There's nothing but good news about solar energy these days. The average global price of PV panels has plummeted by more than 75% since 2008, and this trend is expected to continue in the coming years, though at a lower rate. 12
According to the 2015 solar outlook by investment bank Deutsche Bank, solar systems will be at grid parity in up to 80% of the global market by the end of 2017, meaning that PV electricity will be cost-effective compared to electricity from the grid. 34
Lower costs have spurred an increase in solar PV installments. According to the Renewables 2014 Global Status Report, a record of more than 39 gigawatt (GW) of solar PV capacity was added in 2013, which brings total (peak) capacity worldwide to 139 GW at the end of 2013. While this is not even enough to generate 1% of global electricity demand, the growth is impressive. Almost half of all PV capacity in operation today was added in the past two years (2012-2013). 5 In 2014, an estimated 45 GW was added, bringing the total to 184 GW. 64
Meanwhile, solar cells are becoming more energy efficient, and the same goes for the technology used to manufacture them. For example, the polysilicon content in solar cells—the most energy-intensive component—has come down to 5.5-6.0 grams per watt peak (g/wp), a number that will further decrease to 4.5-5.0 g/wp in 2017. 2
Both trends have a positive effect on the sustainability of solar PV systems. According to the latest life cycle analyses, which measure the environmental impact of solar panels from production to decommission, greenhouse gas emissions have come down to around 30 grams of CO2-equivalents per kilwatt-hour of electricity generated (gCO2e/kWh), compared to 40-50 grams of CO2-equivalents ten years ago. 789101112
According to these numbers, electricity generated by photovoltaic systems is 15 times less carbon-intensive than electricity generated by a natural gas plant (450 gCO2e/kWh), and at least 30 times less carbon-intensive than electricity generated by a coal plant (+1,000 gCO2e/kWh). The most-cited energy payback times (EPBT) for solar PV systems are between one and two years. It seems that photovoltaic power, around since the 1970s, is finally ready to take over the role of fossil fuels.
Manufacturing of Solar Panels has Moved to China
Unfortunately, a critical review of the PV solar industry paints a very different picture. Many commenters attribute the plummeting cost of solar PV to more efficient manufacturing processes and scale economies. However, if we look at the graph below, we see that the decline in costs accelerates sharply from 2009 onwards.
This acceleration has nothing to do with more efficient manufacturing processes or a technological breakthrough. Instead, it's the consequence of moving almost the entire PV manufacturing industry from western countries to Asian countries, where labour and energy are cheaper and where environmental restrictions are more loose.
Less than 10 years ago, almost all solar panels were produced in Europe, Japan, and the USA. In 2013, Asia accounted for 87% of global production (up from 85% in 2012), with China producing 67% of the world total (62% in 2012). Europe's share continued to fall, to 9% in 2013 (11% in 2012), while Japan's share remained at 5% and the US share was only 2.6%. 5
Compared to Europe, Japan and the USA, the electric grid in China is about twice as carbon-intensive and about 50% less energy efficient. 131415 Because the manufacture of solar PV cells relies heavily on the use of electricity (for more than 95%) 16 this means that in spite of the lower prices and the increasing efficiency, the production of solar cells has become more energy-intensive, resulting in longer energy payback times and higher greenhouse gas emissions.
The geographical shift in manufacturing has made almost all life cycle analyses of solar PV panels obsolete, because they are based on a scenario of domestic manufacturing, either in Europe or in the United States.
LCA of Solar Panels Manufactured in China
We could find only one study that investigates the manufacturing of solar panels in China, and it's very recent. In 2014, a team of researchers performed a comparative life cycle analysis between domestic and overseas manufacturing scenarios, taking into account geographic diversity by utilizing localized inventory data for processes and materials. 13
In the domestic manufacturing scenario, silicon PV modules (mono-si with 14% efficiency and multi-si with 13.2% efficiency) are made and installed in Spain. In the overseas manufacturing scenario, the panels are made in China and installed in Spain.
For solar panels manufactured in China, the carbon footprint and the energy payback time are almost doubled
Compared to the domestic manufacturing scenario, the carbon footprint and the energy payback time are almost doubled in the overseas manufacturing scenario. The carbon footprint of the modules made in Spain (which has a cleaner grid than the average in Europe) is 37.3 and 31.8 gCO2e/kWh for mono-si and multi-si, respectively, while the energy payback times are 1.9 and 1.6 years. However, for the modules made in China, the carbon footprint is 72.2 and 69.2 gCO2e/kWh for mono-si and multi-si, respectively, while the energy payback times are 2.4 and 2.3 years. 13
At least as important as the place of manufacturing is the place of installation. Almost all LCAs—including the one that deals with manufacturing in China—assume a solar insolation of 1,700 kilowatt-hour per square meter per year (kWh/m2/yr), typical of Southern Europe and the southwestern USA. If solar modules manufactured in China are installed in Germany, then the carbon footprint increases to about 120 gCO2e/kWh for both mono- and multi-si—which makes solar PV only 3.75 times less carbon-intensive than natural gas, not 15 times.
Considering that at the end of 2014, Germany had more solar PV installed than all Southern European nations combined, and twice as much as the entire United States, this number is not a worst-case scenario. It reflects the carbon intensity of most solar PV systems installed between 2009 and 2014. More critical researchers had already anticipated these results. A 2010 study refers to the 2008 consensus figure of 50 gCO2e/kWh mentioned above, and adds that "in less sunny locations, or in carbon-intensive economies, these emissions can be up to 2-4 times higher". 17
Taking the more recent figure of 30 gCO2e/kWh as a starting point, which reflects improvements in solar cell and manufacturing efficiency, this would be 60-120 gCO2e/kWh, which corresponds neatly with the numbers of the 2014 study.
These results don't include the energy required to ship the solar panels from China to Europe. Transportation is usually ignored in LCAs of solar panels that assume domestic production, which would make comparisons difficult. Furthermore, energy requirements for transportation are very case-specific. It should also be kept in mind that these results are based on a solar PV lifespan of 30 years. This might be over-optimistic, because the relocation of manufacturing to China has been associated with a decrease in the quality of PV solar panels. 18
Research has shown that the percentage of defective or under-performing PV cells has risen substantially in recent years, which could have a negative influence on the lifespan of the average solar panel, decreasing its sustainability.
Solar PV electricity remains less carbon-intensive than conventional grid electricity, even when solar cells are manufactured in China and installed in countries with relatively low solar insolation. This seems to suggest that solar PV remains a good choice no matter where the panels are produced or installed.
However, if we take into account the growth of the industry, the energy and carbon balance can quickly turn negative. That's because at high growth rates, the energy and CO2 savings made by the cumulative installed capacity of solar PV systems can be cancelled out by the energy use and CO2 emissions from the production of new installed capacity. 161920
At high growth rates, the energy and CO2 savings made by the cumulative installed capacity of solar PV systems can be cancelled out by the energy use and CO2 emissions from the production of new installed capacity
A life cycle analysis that takes into account the growth rate of solar PV is called a "dynamic" life cycle analysis, as opposed to a "static" LCA, which looks only at an individual solar PV system. The two factors that determine the outcome of a dynamic life cycle analysis are the growth rate on the one hand, and the embodied energy and carbon of the PV system on the other hand. If the growth rate or the embodied energy or carbon increases, so does the "erosion" or "cannibalization" of the energy and CO2 savings made due to the production of newly installed capacity. 16
For the deployment of solar PV systems to grow while remaining net greenhouse gas mitigators, they must grow at a rate slower than the inverse of their CO2 payback time. 19
For example, if the average energy and CO2 payback times of a solar PV system are four years and the industry grows at a rate of 25%, no net energy is produced and no greenhouse gas emissions are offset. 19 If the growth rate is higher than 25%, the aggregate of solar PV systems actually becomes a net CO2 and energy sink. In this scenario, the industry expands so fast that the energy savings and GHG emissions prevented by solar PV systems are negated to fabricate the next wave of solar PV systems. 20
The CO2 Balance of Solar PV
Several studies have undertaken a dynamic life cycle analysis of renewable energy technologies. The results—which are valid for the period between 1998 and 2008—are very sobering for those that have put their hopes on the carbon mitigation potential of solar PV power. A 2009 paper, which takes into account the geographical distribution of global solar PV installations, sets the maximum sustainable annual growth rate at 23%, while the actual average annual growth rate of solar PV between 1998 and 2008 was 40%. 1621
This means that the net CO2 balance of solar PV was negative for the period 1998-2008. Solar PV power was growing too fast to be sustainable, and the aggregate of solar panels actually increased GHG emissions and energy use. According to the paper, the net CO2 emissions of the solar PV industry during those 10 years accounted to 800,000 tonnes of CO2. 16 These figures take into account the fact that, as a consequence of a cleaner grid and better manufacturing processes, the production of solar PV panels becomes more energy efficient and less carbon-intensive over time.
Between 2009 and 2014, solar PV grew four times too fast to be sustainable
The sustainability of solar PV has further deteriorated since 2008. On the one hand, industry growth rates have accelerated. Solar PV grew on average by 59% per year between 2008 and 2014, compared to an annual growth rate of 40% between 1998 and 2008. 5
On the other hand, manufacturing has become more carbon-intensive. For its calculations of the CO2 balance in 2008, the study discussed above considers the carbon intensity of production worldwide to be 500 gCO2e/kWh. In 2013, with 87% of the production in Asia, this number had risen to about 950 gCO2e/kWh, which halves the maximum sustainable growth rate to about 12%.
If we also take into account the changes in geographic distribution of solar panels, with an increasing percentage installed in regions with higher solar insolation, the maximum sustainable growth rate increases to about 16%. 2324
Although more recent research is not available, it's obvious that the CO2 emissions of the solar PV industry have further increased during the period 2009-2014. If we would consider all solar panels in the world as one large energy generating plant, it would not have generated any net energy or CO2-savings.
The Solution: Rethink the Manufacture and Use of Solar PV
Obviously, the net CO2 balance of solar PV could be improved by limiting the growth of the industry, but that would be undesirable. If we want solar PV to become important, it has to grow fast. Therefore, it's much more interesting to focus on lowering the embodied energy of solar PV power systems, which automatically results in higher sustainable growth rates. The shorter the energy and CO2 payback times, the faster the industry can grow without becoming a net producer of CO2.
Embodied energy and CO2 will gradually decrease because of technological advances such as higher solar cell efficiencies and more efficient manufacturing techniques, and also as a consequence of the recycling of solar panels, which is not yet a reality. However, what matters most is where solar panels are manufactured, and where they are installed.
The location of production and installation is a decisive factor because there are three parameters in a life cycle analysis that are location dependent: the carbon intensity of the electricity used in production, the carbon intensity of the displaced electricity mix at the place of installation, and the solar insolation in the place of installation. 16
By carefully selecting the locations for production and installation we could improve the sustainability of solar PV power in a spectacular way. For PV modules produced in countries with low-carbon energy grids -- such as France, Norway, Canada or Belgium—and installed in countries with high insolation and carbon-intensive grids—such as China, India, the Middle East or Australia—greenhouse gas emissions can be as low as 6-9 gCO2/kWh of generated electricity. 14151620 That's 13 to 20 times less CO2 per kWh than solar PV cells manufactured in China and installed in Germany. 25
Sustainable growth rates of 300-460% are possible when PV modules are produced in countries with low-carbon energy grids and installed in countries with high insolation and carbon-intensive grids
This would allow sustainable growth rates of up to 300-460%, far above what's even necessary. If solar PV would grow on average at a rate of 100% per year, it would take less than 10 years to meet today's electricity's demand. If it would grow at the 16% maximum sustainable growth rate we calculated above, meeting today's electricity demand would take until 2045—with no net CO2 savings. By that time, according to the forecasts, total global electricity demand will have more than doubled. 26
Of course, producing and installing solar panels in the right places implies international cooperation and a sound economic system, none of which exist. Manufacturing solar panels in Europe or the USA would also make them more expensive again, while many countries with the right conditions for solar don't have the money to install them in large amounts.
An alternative solution is using on-site generation from renewables to meet a greater proportion of the electricity demand of PV manufacturing facilities—which can also happen in a country with a carbon-intensive grid. For example, if the electricity for the manufacturing of solar cells would be supplied by other solar cells, then the greenhouse emissions of solar PV systems could be reduced by 50-70%, depending on where they are produced (Europe or the USA). 7 In China, this decrease in CO2 emissions would even be greater.
In yet another scenario, we could dedicate nuclear plants exclusively to the manufacture of solar cells. Because nuclear is less carbon-intensive than PV solar, this sounds like the fastest, cheapest and easiest way to start producing a massive amount of solar cells without raising energy use and greenhouse emissions. But don't underestimate the task ahead.
A 1 GW nuclear power plant can produce about 11 million square metres of solar panels per year, which corresponds to 1.66 GWp of solar power (based on the often cited average number of 150 w/m2). We would have needed 24 nuclear plants—or 1 in 20 atomic plants worldwide -- working full-time to produce the solar panels manufactured in 2013. 27
What About Storage?
Why does the production of solar PV requires so much energy? Because the low power density—several orders of magnitude below fossil fuels -- and the intermittency of solar power require a much larger energy infrastructure than fossil fuels do. It's important to realize that the intermittency of solar power is not taken into account in our analysis. Solar power is not always available, which means that we need a backup-source of power or a storage system to jump in when the need is there. This component is usually not considered in LCAs of solar PV, even though it has a large influence on the sustainability of solar power.
Storage is no longer an academic question because several manufacturers -- most notably Tesla—are pushing lithium-ion battery storage as an alternative for a grid-connected solar PV system. Lithium-ion batteries are more compact and technically superior to the lead-acid batteries commonly used in off-grid solar systems. Furthermore, the disincentivation of grid-connected solar systems in a growing number of countries makes off-grid systems more attractive.
In the next article, we investigate the sustainability of a PV-system with a lithium-ion battery. Meanwhile, enjoy the sun and stay tuned.
Kris De Decker (edited by Aaron Vansintjan)
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Solar Power & Energy Storage: Policy Factors vs. Improving Economics(PDF), Morgan Stanley Blue Paper, July 28, 2014 ↩↩
Deutsche bank anticipates 2015 global solar PV demand at 54 GW. Solar Server. January 2015. ↩
Renewable and Sustainable. Presentation at the Crystal Clear final event, Munich, M.J. De Wild-Scholten ↩
Update of PV energy payback times and life-cycle greenhouse gas emissions (PDF), In: 24th European Photovoltaic Solar Energy Conference. Hamburg, Germany. Fthenakis V., Kim, H.C., Held, M., Raugei, M., Krones, J. ↩
Life Cycle Inventories and Life Cycle Assessments of Photovoltaic Systems (PDF). IEA International Energy Agency, Report IEA-PVPS T12-02:2011. Vasilis Fthenakis. October 2011. ↩
Crystalline Silicon and Thin Film Photovoltaic Results—Life Cycle Assessment Harmonization. National Renewable Energy Laboratory, 2013 ↩
It should be noted that the latest data are not yet confirmed because they are not yet in the public domain, but we nevertheless assume the value of 30 grams CO2e/kWh. ↩
Domestic and overseas manufacturing scenarios of silicon-based photovoltaics: life cycle energy and environmental comparative analysis. Dajun Yue, Fengqi You, Seth B. Darling, in Solar Energy, May 2014 ↩↩↩
Technical Paper: Electricity-specific Emission Factors for Grid Electricity(PDF). Matthew Brander, Aman Sood, Charlotte Wylie, Amy Haughton, and Jessica Lovell. Ecometrica, August 2011 ↩↩
Life Cycle Inventories of Electricity Mixes and Grid, Version 1.3 (PDF). René Itten, Rolf Frischknecht, Matthias Stucki, Paul Scherrer Institut (PSI). June 2014. ↩↩
"Current State of Development of Electricity-Generating Technologies: A Literature Review", Manfred Lenzen, Energies, Volume 3, Issue 3, 2010. ↩
Solar Crisis: Cheap Chinese Solar Panels Prove Defective, Wolf Richter, Oil Price, May 2013 ↩
Optimizing Greenhouse Gas Mitigation Strategies to Suppress Energy Cannibalism (PDF). J.M. Pearce. 2nd Climate Change Technology Conference, May 12-15, 2009, Hamilton, Ontario, Canada. ↩↩↩
Towards Real Energy Economics: Energy Policy Driven by Life-Cycle Carbon Emission, R. Kenny, C. Law, J.M. Pearce, Energy Policy 38, pp. 1969-1978, 2010 ↩↩↩
A 2009 paper  sets the maximum sustainable growth rate at 32%, while a 2010 paper sets it at 41% . However, these figures are based on a solar insolation of 1,700 kWh/m2/yr, the average in Southern Europe, not on the actual geograhical distribution of solar panels. ↩
Energy Payback for Energy Systems Ensembles During Growth (PDF), Timothy Gutowski, Stanley Gershwin and Tonio Bounassisi, IEEE, International Symposium on Sustainable Systems and Technologies, Washington D.C., May 16-19, 2010 ↩
In 2013, China alone accounted for almost one-third of new installations worldwide, adding a record 12.9 GW and bringing total PV capacity to 20 GW.  Solar panels manufactured and installed in China save as much greenhouse gases as solar panels manufactured and installed in Europe; the carbon-intensity of manufacturing is higher than in Europe, but so is the amount of carbon displaced from the local electricity grid. Unfortunately, the second largest grower in solar PV in 2013 was Japan (7 GW new capacity), which has both a relatively clean energy grid and relatively little sunshine. For its calculations of the CO2 balance in 2008, the paper discussed above considered a weighted average solar insolation of 1,200 kWh/m2/yr (reflecting the large share of PV power installed in Germany) and a weighted average displaced carbon intensity of 500 gCO2e/kWh (reflecting the importance of the German electric grid). We made the same calculation for the year 2013 and arrived to an average displaced carbon intensity of of 583 gCO2/kWh (only 15% higher than in the 1998-2008 period) and an average weighted solar insolation of about 1,250 kWh/m2/yr (only slightly above the 1,200 kWh/m2/yr between 1998 and 2008). This results in a sustainable growth rate of 16% for 2013. This figure is an approximation, as we don't know the exact location of solar panel systems. Most notably, the solar insolation in China varies considerably throughout the country. If we would choose the maximum solar insolation (2,185 kWh/m2/yr) instead of the average solar insolation (1,577 kWh/m2/yr), the average weighted solar insolation of the global solar PV capacity added in 2013 would raise from 1,250 to 1,465 kWh/m2/yr. ↩
These numbers don't take into account the energy used for building the PV factories, which can be substantial at high growth rates. To make a fair comparison, the same should be done for electricity produced by fossil fuels. However, including these data would lower the comparative advantage of solar PV because it takes much more energy to manufacture a 1 GW solar system than a 1 GW fossil fuel plant—and the latter also has a longer lifespan. Furthermore, a higher CO2-intensity of the conventional grid would also raise the CO2-intensity of PV manufacture. ↩
For modules manufactured in China and placed in France or Norway, the CO2 balance is negative. ↩
This is not to suggest that solar PV should supply all electricity, because we also have other renewable power sources available. What we aim to show here is that energy and CO2 payback times define whether solar PV power is a solution or a problem, and to what extent. ↩
This calculation is based on an energy use of 5700 MJ for the manufacturing of one m2 of solar cells. Since the source for this number is from 1998 , we have halved this figure in order to compensate for technological progress. This is over-optimistic, but the energy efficiency of manufacturing will further improve, although with decreasing marginal results. ↩
Energy pay-back time of photovoltaic energy systems: present status and prospects, E.A. Alsema, in "Proceedings of the 2nd World Conference and Exhibition on photovoltaics solar energy conversion", July 1998. ↩