Analysis – Solar industry in crisis, Europe under pressure from Chinese imports By: Reuters

Written by Kate Abnett and Nina Chesney

STRASBOURG, France/LONDON (Reuters) – Europe’s green energy transition is caught between a rock and a hard place. Massive imports of cheap Chinese-made solar panels are driving record solar energy installations. But those same imports are crushing Europe’s few local solar producers.

Government and industry disagree on how to respond.

Europe has had a bumper year for green energy. European Union countries have installed record levels of solar power capacity, an increase of 40% compared to 2022. The majority of those panels and components are imported from China, in some cases up to 95%, according to data from the International Energy Agency.

But the green energy boom has not helped Europe’s few local solar panel manufacturers, which are threatened by cheap imports and oversupply. Production suspensions have been announced one after another, with the industry warning that half of its production capacity could be shut down within weeks unless the government intervenes.

Policymakers are scrambling to respond, but opinions differ on how to do so.

German Economy Minister Habeck sent a letter to the European Commission in November expressing concern that the EU executive was trying to impose trade restrictions on solar power imports from China, according to a letter seen by Reuters. .

“We have heard that the European Commission may intend to impose safeguard measures on imports of photovoltaic (PV) modules from China. We have very strong concerns about this,” the letter said. Stated.

Habeck warned that restricting imports from China could hamper Europe’s rapid expansion of green energy and make 90% of the solar power market more expensive. He said EU companies that use imported parts to assemble and install solar panels risk going bankrupt.

A spokeswoman for Germany’s Economy Ministry declined to comment on the letter.

Germany’s own plans to support the sector have been thrown into disarray due to the government’s financial crisis.

Elsewhere, Spain has not ruled out imposing tariffs on imports of solar panel materials. The Netherlands wants its solar power imports to be covered by the EU’s carbon border tax, a government official told Reuters. And Italy last week announced it would invest 90 million euros ($97 million) in a solar panel factory in Sicily.

price war

EU Financial Services Commissioner Mairead McGuinness offered no new support in her Monday speech on issues in the solar sector. He cited legislation already underway, including legislation expected to be finalized on Tuesday, aimed at speeding up permits for local manufacturing and giving an advantage to EU-made products such as panels in future clean technology tenders. He pointed to the EU measures.

Mr McGuinness struck a cautious tone regarding trade restrictions.

“Given that we currently rely on imports to a very significant degree to meet the EU’s solar PV deployment targets, any measures regarding the energy transition will fall short of the goals we have set for ourselves. “We need to consider it in light of this,” he said.

The industry itself is divided over solutions. Solar power manufacturers are calling on the government to intervene to buy up excess stocks of solar modules to ease the oversupply, and to consider trade barriers if this cannot be done quickly.

But the broader green energy industry opposes import restrictions.

“We cannot reduce our dependence on China in the short term, otherwise we will not build projects,” Miguel Stilwell D’Andrade, CEO of Portuguese utility EDP, told Reuters. he said.

He noted that solar panel prices are rising in the United States, which imposes tariffs on imports from China. “Inflation is having an effect…panels are more than twice as expensive as in Europe,” he said.

Even local manufacturers say they have little hope for a competitive local industry.

Gunther Erfurt, CEO of Swiss panel maker Mayer Berger (SIX:), said Europe was in a “price war” with China, and his company said he believes Europe is in a “price war” with China. The company said it was planning to close its loss-making solar module factory in Germany because of the lack of availability.

Europe is playing catch-up as some Chinese solar companies are able to sell for less than their production costs. “China’s solar power industry has received hundreds of billions of dollars of strategic subsidies over the years,” Erfurt told Reuters.

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