Global Photovoltaic Cost: China Ranks First, Vietnam Second

Amid the accelerated restructuring of the global photovoltaic industry and the strong push for “local manufacturing” in Europe and the United States, who truly reigns as the “cost king”? A latest heavyweight report from the International Renewable Energy Agency (IRENA) unveils the cost dynamics of global PV manufacturing. The data is sobering: aside from China, Vietnam is the country with the lowest photovoltaic module production costs globally. Meanwhile, developed nations attempting to protect their domestic industries through trade barriers, such as Germany and Australia, struggle to compete in the face of overwhelming cost gaps.

I. Global Rankings Revealed: Vietnam Secures the “Second Place”
Excluding data from mainland China (the undisputed cost leader), IRENA conducted a comprehensive analysis of the full supply chain production costs of TOPCon modules across major global PV manufacturing hubs.

1. Cost Tiers Overview (Cost per Watt)
   🇻🇳 Vietnam: $0.180 / W (approximately ¥1.29 RMB)
   🇮🇳 India: $0.191 / W
   🇦🇺 Australia: $0.256 / W
   🇩🇪 Germany: $0.284 / W
2. How Significant Is the Gap?
   The data vividly illustrates the harsh realities of manufacturing:

• Vietnam is approximately 6% cheaper than India.
• Vietnam is about 58% cheaper than Germany.

This means that producing the same photovoltaic module in Germany costs nearly 1.6 times what it does in Vietnam. In a price-sensitive market like photovoltaics, such a cost chasm effectively dooms local manufacturing in high-cost regions.

II. Why Vietnam? The Triumph of Electricity Prices and Labor
Why has Vietnam become the preferred destination under the “China+1” strategy? The IRENA report pinpointed two core drivers: electricity prices and labor.

1. Energy Cost Dominance
   The upstream PV sector (polysilicon, crystal pulling) is highly energy-intensive.

• Germany’s Pain: Germany’s high manufacturing costs are almost entirely driven by electricity expenses. Amid Europe’s energy crisis and the growing pains of its green transition, high electricity prices have become the biggest obstacle to reviving Germany’s PV manufacturing industry.
• Vietnam’s Advantage: Thanks to relatively low industrial electricity prices, Vietnam has successfully attracted a complete production chain, from polysilicon to modules.

2. Demographic Dividend
   Although automation is increasing, module assembly still requires significant manual labor. Vietnam’s young and low-cost workforce further reduces OPEX (operational expenditures).

III. The Deeper Truth: The Soul of Vietnamese Manufacturing Remains “Chinese Core”
The most thought-provoking part of this report lies in its revelation of the significant cost difference between “fully localized production” and “importing Chinese intermediate goods.” While Vietnamese manufacturing is cheap, it becomes even cheaper when relying on Chinese supply chains.

1. Cost Reduction from Importing Chinese Products
   IRENA simulated the module costs in Vietnam under different supply chain scenarios:

• If importing Chinese polysilicon: Module costs decrease by 7%.
• If importing Chinese wafers: Module costs decrease by 19%.
• If importing Chinese cells: Module costs decrease by a staggering 31%!

2. Supply Chain Dominance
   This data is highly revealing and highlights two facts:

• First, even accounting for cross-border logistics and potential tariffs, Chinese-manufactured cells are still more than 30% cheaper than those produced locally in Vietnam.
• Second, the optimal survival model for Vietnam’s PV industry is not complete independence but rather “Chinese core components + Vietnamese assembly.”

This once again confirms the absolute dominance of China’s photovoltaic supply chain on the global stage. Vietnam’s “low cost” is, to a large extent, built on the foundation of China’s highly efficient and inexpensive upstream supply.

IV. The Awkward Case of the U.S.: Absent Data
While data for Vietnam, India, Australia, and Germany were provided, the cost of local manufacturing in the United States—a major global PV market—is notably “absent” from the report.

The reason is striking: The report states that the raw material costs in the U.S. fall between those of Australia and Germany (i.e., at the high end of $0.25–$0.28/W) but does not provide an exact figure for domestic module production costs. IRENA candidly notes: “This may be because the U.S. currently lacks such capabilities (for full supply chain local manufacturing).”

Even after several years of implementing the IRA Act, the U.S. still struggles to break free from its reliance on overseas supply chains, exposing the “hollowing out” of its domestic manufacturing industry in the face of hard data.