Europe’s solar industry warns of bankruptcies over Chinese imports

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Europe’s solar power industry has warned that a glut of cheap Chinese imports has pushed some manufacturers to the brink of bankruptcy, hampering EU’s efforts to boost local production of green technologies.

SolarPower Europe, a trade group for the industry, wrote to the European Commission on Monday that soaring stockpiles and “fierce competition” among Chinese manufacturers to gain market share in Europe had pushed down the prices of solar modules by more than a quarter on average since the beginning of the year.

“This is creating concrete risks for companies to go into insolvency as their significant stock will need to be devalued,” the letter said.

Norwegian Crystals, a producer of the ingot used in solar cells, had already filed for bankruptcy last month, it added. Norsun, another Norwegian solar company, this month said it would suspend production until the end of the year.

The EU is hoping that solar power will become the biggest generator of energy within the bloc as it tries to reach a target of having 45 per cent of energy generated by renewables by 2030 — a goal set to be voted on by the European parliament this week.

Aerial view of solar panels at ski park in Germany
China’s dominance of the solar supply chain is prompting fears that the EU is developing a reliance on Beijing akin to its dependence on Russian gas © Ina Fassbender/AFP via Getty Images

But China’s dominance of the solar supply chain means that its products account for around three-quarters of the bloc’s solar power imports, prompting fears that the EU is developing a reliance on China akin to its dependence on Russian gas until Moscow’s full-scale invasion of Ukraine.

The cost of manufacturing a solar module in Europe is more than double the current spot price, SolarPower Europe said.

The EU has already sought to limit unfair competition from China by placing tariffs on Chinese imports in 2012, after Beijing ploughed massive subsidies into its solar industry. But the bloc lifted them again in 2018 in order to boost installations of renewable energy, just a year before the commission declared China a “systemic rival”.

Brussels has not reinstated them since, despite recently pushing European companies to “de-risk” their supply chains from China as part of a wider effort to reshore manufacturing amid heightened geopolitical tensions.

A spokesperson for the commission did not immediately respond to a request for comment.

The dramatic drop in prices meant the EU’s goal to manufacture 30GW of the solar power supply chain in Europe by 2030 was now “at serious risk”, the letter said. The wind industry has made similar calls to Brussels fearing that turbine manufacturers are also being undercut by Chinese rivals.

Western executives have also warned that China is massively subsidising and building battery plants for electric cars, far beyond levels needed to meet domestic demand — a trend that could also scupper Europe’s ambition to expand its production of EV batteries.

SolarPower Europe’s statements were echoed in a separate letter on Monday signed by more than 40 solar companies including Swiss company Meyer Burger and German PV manufacturer Heckert Solar.

European spending on solar power components had increased from €6bn in 2016 to more than €25bn last year, leading to a glut of Chinese solar panels that were now sitting in European warehouses, the second letter read. The amount of Chinese photovoltaic cells in storage was enough to cover Europe’s overall annual demand twice over, it said.

Line chart of Euro cents per watt showing Monthly European spot prices for solar modules

Chinese companies had now taken “a dumping stance in the European market”, offering two-year contracts with prices “consistently undercutting” spot market prices. Such deals usually included clauses that demanded minimum orders and exclusivity, it added.

The solar industry letters both recommended that the commission makes an emergency acquisition of European solar manufacturers’ inventories and accelerates a planned regulation banning products made with forced labour.

Around two-fifths of global production of polysilicon, the main raw material for solar panels, comes from the western region of Xinjiang where the Chinese government has been accused by human rights groups of forcing Muslim minorities to work at factories in detention camps. Beijing rejects carrying out any human rights abuses in the region.

Walburga Hemetsberger, chief executive of SolarPower Europe, said she was aware that others in the sector would also be petitioning the commission. “We all agree that the unchecked price drops are a critical risk for the sector, and EU leaders must take urgent action.”

Financial Times

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