European officials are in a tangle over how to manage a flood of Chinese imports – cheap solar panels led to a surge of solar energy installations.
Europe enjoyed a bumper year for green energy, 40% over 2022, but the imports have been crushing the region’s few solar panel suppliers.
Governments and industry are split over how to respond. The vast majority of those panels and parts came from China – in some cases, 95%, International Energy Agency data show.
ALSO SEE: China Voices Concern Over US Chip Curbs, Cloud Moves, Tariffs
Yet solar panel manufacturers have hit crisis point because of the cheap imports and oversupply. Announcements of production closures are piling up, and the sector has warned that half of its capacity could shut within weeks unless governments step in.
Policymakers are scrambling to respond, but are split on how to do that.
German minister warns on risk of bankruptcies
German Economy Minister Robert Habeck wrote to the European Commission in November, expressing concern that the EU executive was about to slap trade restrictions on Chinese solar imports.
“I have heard that the Commission may be intending to impose safeguard measures against imports of photovoltaic (PV) modules from China. I have very strong concerns about this,” the letter said.
Habeck warned that restricting Chinese imports could kill off Europe’s rapid expansion of green energy and make 90% of the PV market more expensive. It risked bankruptcies among EU companies that assemble and install solar panels using imported parts, he said.
A spokesperson for Germany’s economy ministry declined to comment on the letter. Part of the problem stems from the fact a government budget crisis has undermined Germany’s planned support for the sector.
Elsewhere, Spain has not ruled out tariffs on imports of solar panel materials, while the Netherlands wants to cover solar PV imports with the EU’s carbon border tax, a government official said.
And Italy last week announced a 90 million euro ($97 million) investment in a PV panel factory in Sicily.
EU to fast-track permits for local suppliers
In a speech on Monday on the solar sector’s problems, EU Financial Services Commissioner Mairead McGuinness pointed to EU measures already underway, with a law due to be finalised on Tuesday that aims to fast-track permits for local manufacturing and to give products made in the EU, such as panels, an advantage in future clean tech tenders.
On trade restrictions, McGuinness struck a cautious tone.
“Given that we currently rely to a very important degree on imports to reach EU solar deployment targets, any potential measure needs to be weighed against the objectives we have set ourselves when it comes to the energy transition,” she said.
Industry divided on trade barriers amid ‘price war’
Industry itself is divided over the solution. Solar manufacturers have urged governments to step in to buy up excess inventories of solar modules to ease the oversupply – and, if this cannot be done fast, consider trade barriers.
But the broader green energy industry is opposed to import curbs.
“You can’t reduce dependency on China in the short-term or you don’t build the projects,” Miguel Stilwell d’Andrade, CEO of Portuguese utility EDP, said.
He noted that solar panel prices have climbed in the United States, which has duties on Chinese imports. “It is having an inflationary impact … the price of panels is more than double that of Europe,” he said.
Even local manufacturers say hopes of a competitive local industry are dim.
Europe is in a “price war” with China, said Gunter Erfurt, CEO of Swiss panel maker Meyer Burger, which plans to close its loss-making German solar module factory, citing an absence of supportive European policies.
With some Chinese solar firms able to sell even below production costs, Europe is playing catch up.
“The solar industry in China has been strategically subsidised with hundreds of billions of dollars for years,” Erfurt said.
- Reuters with additional editing by Jim Pollard
ALSO SEE:
China Wind, Solar Capacity Set to Outstrip Coal For First Time
China Solar Panel Costs Plunge in 2023, 60% Cheaper Than US
EU May Also Probe China Subsidies for Wind Turbines – FT
China to ‘Dominate’ Global Solar Supply Chain For Next Decade
Oil Producers, Carmakers Knew of Climate Risk in 1954 – Guardian
