China is producing more cheap solar panels, wind turbines and batteries than it needs.

This is good news for the energy transition, but a headache for Western governments’ efforts to strengthen their own supply chains, reports Recharge News, citing a report from Bloomberg New Energy Finance (BNEF).

”Cyclical overcapacity is permeating the entire Chinese economy,” writes BNEF, which calls the surplus of clean-tech production ”unprecedented”.

BNEF predicts that over the next two years, China’s production capacity for solar modules and battery cells will be around twice the global demand.

Falling prices for everything from solar modules to batteries can help accelerate the green transition.

”But a world awash with cheap, cutting-edge technology made in China is a world where it’s harder to make the case for producing things elsewhere,” writes BNEF.

With simultaneous efforts in the US, India and among EU countries to shore up their own supply chains, ”the timing couldn’t be worse”, the assessment goes.

The US has improved the conditions for building a local supply chain with the Inflation Reduction Act, as has the EU with its schemes and India with protectionist measures.

But reorganizing supply chains is harder to justify, says BNEF, ”when the world is already flooded with cheap, high-quality exports.”

(Translated using DeepL with additional editing by Catherine Brett)