Main Image Credit Fragile supply: a British soldier uses a portable solar panel device during training exercises. Image: Defence Imagery / OGL v3.0
The UK government must consider the significant geostrategic and technological security issues arising from solar panel supply chains used by defence, and act to protect their use in both military and civilian domains.
The UK’s 2021 Integrated Review of Security, Defence, Development and Foreign Policy (IR) prioritises sustainable growth, driving the use of natural resources and supporting climate change mitigation work in other countries. The ultimate aim is to become a global superpower in the area of climate change and sustainability. The Ministry of Defence’s (MoD) Climate Change and Sustainability Strategic Approach (CC&SSA), published shortly afterwards, describes a whole-force transition to net zero by 2050. However, significant work is required to reduce dependency on the UK national grid and international fuel suppliers, reduce utilities expenditure, improve resilience and security on deployments, and reduce carbon emissions.
The CC&SSA is split into three stages (or epochs) of work. Epoch one instructs defence to follow available technologies now, while identifying areas for innovation during epoch two. As most green technologies sit within civilian industry, this means that much of the focus is currently on the estate, alternative fuel sources, adapting existing capabilities, and designing or adapting military platforms.
Defence remains too dependent on energy from fossil fuels and needs to invest heavily to achieve its targets. Solar panels play a heavy role in civilian and military climate change projects, yet the MoD and the wider government have not addressed significant national security risks associated with solar panels. A failure to provide an adequate response to these risks will have serious consequences for the integrity of domestic industry, national security, great power competition, and ultimately, defence capabilities.
Photovoltaic (PV) solar panels capture sunlight to convert into energy using semiconducting materials. The vast majority of PVs are made from polysilicon, a pure form of silicon. The production of polysilicon has, in the last 10 years, shifted dramatically to China, where the top 3 companies producing polysilicon are based. Diverse supplies of polysilicon are urgently needed to prevent significant vulnerabilities to price fluctuation and to stop geopolitical events from impacting supply in order to meet defence and civilian demand. Solar panels will be vital for defence to achieve the aims of the IR but are not yet available at the scale required without becoming dependent on insecure or fragile supply.
Chinese Solar Panel Dominance: A National Security Risk or a Risk for Defence?
The UK is a known innovator and adopter of net zero technologies, along with Japan, Germany and the US. However, over the last 12 years, China has steadily become the dominant supplier for many net zero technology components, particularly solar panels. The International Energy Agency (IEA) has reported that China’s share of solar panel manufacturing exceeds 80% of global capacity, with predicted stakes of over 95% by 2025.
Chinese expansion is not simply the result of an opportunistic industry, but the consequence of long-term government investment. Chinese investments make up nearly two-thirds of the total spending for large-scale solar investment, reaching $141 billion in the first half of 2022. Since 2011, China has created more than 300,000 jobs across the PV industry, investing heavily in research and development. Its investment has been instrumental in upscaling, which has reduced the cost of solar panels by over 80%.
Without intervention to invigorate domestic production, the UK risks being unable to source required solar technologies, which may pause, delay or ultimately derail projects designed to meet climate change and sustainability goals
By 2021, production of key PV components exceeded demand by over 100%. In theory, oversupply should reduce costs further; however, production of polysilicon is bottlenecked internationally, with prices continuing to rise. A lack of diverse PV supply increases overreliance on products with many components produced by a single country. This supply issue is particularly painful during a time of increasing civilian and military demand, ever-strained budgets and increasing concern over reliance on Chinese components for technologies.
The cyber security risks associated with PV hardware and software must be examined more closely, given their fundamental involvement in the UK’s defence and civilian infrastructure. An in-depth examination of the security controls that manufacturers, suppliers and operators use throughout the supply chain is required. This is necessary to protect PV infrastructure from malign interference by those who may seek to disrupt the energy supply for defence. It will also protect deployed forces making use of solar panels within their platforms or utilising solar farms. The UK recently undertook a large-scale analysis of its telecommunications infrastructure, which resulted in the Telecommunications Security Regulations. Similar regulation for PVs, wind and other areas of the renewable power sector would increase confidence in their cyber resilience.
At present, demand for PVs in Europe and North America exceeds 33% of global demand, yet the combined manufacturing capacity of both regions sits at under 6% of global production. The contrast between domestic supply and demand is striking even before defence’s needs are considered. UK production is unable to meet demand, risking increasing dependency on China due to a lack of sustainable investment.
Defence is starting to engage with existing civilian technologies, but demand will only increase as work on the estate and on capabilities and energy capacity progresses. Recognising the demand from defence, the MoD has invested in new energy solutions such as bio-batteries. However, without intervention to invigorate domestic production, the UK risks being unable to source required solar technologies, which may pause, delay or ultimately derail projects designed to meet the aims of the CC&SSA.
The MoD must co-ordinate the single services to determine the overall quantity of solar panels required to achieve the CC&SSA, as a means to develop a procurement strategy which reduces the potential for overreliance on an adversary. The procurement process for the project which became Ajax demonstrates that defence can and will intervene to prevent supplier dominance where it sees fit. However, the same considerations do not yet feature within climate change discourse, despite the fact that production sits outside of defence’s typical industry base.
There is also a human cost to Chinese PV dependency. This September, Republican lawmakers in the US requested a review of Chinese-manufactured solar panels purchased by the Virgin Islands, which are believed to have been produced using the forced labour of Uighurs in the Xinjiang region. In December 2021, the US passed legislation which made it illegal to purchase or import goods produced in Xinjiang using forced labour.
The UK must wake up to defence’s role within international supply chains and take responsibility for the impact of its purchasing on domestic prosperity and international power competition
The UK has not yet produced such legislation, but the UK armed forces are bound by the 2015 Modern Slavery Act, which features a provision for transparency within supply chains. The MoD acknowledges its responsibility to ‘ensure taxpayers’ money does not inadvertently fund criminal activity in our supply chains’, launching a new Supply Chain Resilience Programme in 2021 to better understand its supply chain. Upon programme completion, the MoD plans to roll out its findings across all critical supply chains. The MoD must consider the supply chain risks associated with solar technologies, and this information must inform its procurement strategy to avoid legal challenges over the potential funding of slave labour.
What Next? A Long-Term Plan
The UK and its allies must act in the interests of their future energy supply, as much as they respond to the short-term issues in supply resulting from the war in Ukraine. Solar technologies have developed quickly to become lightweight and durable. Often, they incorporate composite materials, though such practices will be limited by the current global shortage of these materials. Organic solar cells could be one solution, helping to reduce the dependency on China for materials or parts, but organic technologies are not yet available at the scale defence requires. Defence will need huge quantities of solar panels in order to meet its requirements but has not yet recognised the limitations of the supply chain.
In the immediate term, raising awareness and developing cross-sector working groups to address various areas of insecurity in the supply chain is imperative. These working groups should include private-sector and industry analysts and academics who observe larger market trends. Defence must recognise the impact of its spending on domestic and international supply chains, developing and communicating a plan as to how defence expenditure will benefit the UK’s economy by improving relationships with industry and creating jobs within society.
In the medium term, defence should heed the advice of Lieutenant General Richard Wardlaw (Chief of Defence Logistics and Support) and consider a new approach to the MoD’s equipment lifecycle model, transforming CADMID (Concept, Assessment, Demonstration, Manufacture, In-service, Disposal) into CADMIR – moving to a model of ‘Recycling’ rather than ‘Disposal’. This will help to minimise the impact of international shortages of microchips and composites, among other materials, and will help to reduce defence spending and minimise waste. The government should work with industry to develop domestic capacity in order to reduce dependency on adversaries, and should fund research into areas such as organic solar and sustainable alternatives for scarce composite materials.
In the long term, the UK and its allies must develop a circular economy for solar panels and create an end-of-life strategy for infrastructure to embed resilience in the supply chain and prevent unnecessary wastage. A key requirement for defence is to invest further in net zero technologies and ensure supply for both defence and civilian domains. For the next 10–20 years, defence will have to go through intense infrastructure changes to meet government-mandated goals for net zero. This long-term view must be communicated to industry to meet demand from the defence sector, creating more jobs, innovation and prosperity in the UK in both defence and civilian areas.
A failure to respond to the risks to PV and other net zero technology supply will likely result in an inability to access parts required to deliver planned projects and benefit from cost savings associated with renewable energy. On a national scale, it risks a failure to hit the net zero 2050 goal. On a global scale, defence will limit the growth of the UK PV industry by financing Chinese dominance of the supply chain and the erasure of domestic competition. The UK must wake up to defence’s role within international supply chains and take responsibility for the impact of its purchasing on domestic prosperity and international power competition as a means of managing a national security risk.
The views expressed in this Commentary are the authors’, and do not represent those of RUSI or any other institution.
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Dr Sarah Ashbridge
Former Research Fellow