Europe’s Solar Industry at Risk of Bankruptcies Due to Influx of Cheap Chinese Imports

Europe’s burgeoning solar power industry is facing a daunting challenge as it contends with an overwhelming influx of low-cost Chinese solar imports. The surge in these imports has pushed some European manufacturers to the brink of bankruptcy, casting a shadow over the European Union’s ambitious plans to boost local production of green technologies.

SolarPower Europe, a prominent trade group representing the solar industry, sounded the alarm on Monday, expressing concern over soaring stockpiles and cutthroat competition among Chinese manufacturers vying for a slice of the European market. This intense competition has resulted in a staggering 25 percent drop in the average prices of solar modules since the start of this year.

In a letter addressed to the European Commission, SolarPower Europe emphasized the concrete risks faced by European companies as their substantial stockpiles face devaluation. They pointed out that Norwegian Crystals, a key producer of ingots used in solar cells, had already filed for bankruptcy the previous month. Additionally, Norsun, another Norwegian solar company, recently announced a suspension of production until the end of the year, further highlighting the industry’s precarious situation.

The European Union has set an ambitious target of having 45 percent of its energy generated by renewables by 2030, a goal currently under consideration by the European Parliament. Solar power is expected to play a central role in achieving this target, yet China’s dominant position in the solar supply chain presents a formidable challenge. Approximately three-quarters of the EU’s solar power imports come from China, raising concerns of a dependency on Chinese imports akin to the EU’s previous reliance on Russian gas.

SolarPower Europe pointed out that the cost of manufacturing a solar module in Europe is more than double the current spot price, making it difficult for European manufacturers to compete with their Chinese counterparts. While the EU imposed tariffs on Chinese imports in 2012 to counter unfair competition fueled by Beijing’s massive subsidies to its solar industry, these tariffs were lifted in 2018 to promote the adoption of renewable energy.

Despite recent efforts to encourage European companies to reduce their supply chain reliance on China amid heightened geopolitical tensions, the EU has not reinstated tariffs on Chinese solar imports. A spokesperson for the European Commission did not immediately respond to requests for comment.

The drastic price reductions in solar modules have now placed the EU’s goal to manufacture 30GW of the solar power supply chain in Europe by 2030 “at serious risk,” according to the letter from SolarPower Europe. This warning echoes concerns from the wind industry, which fears that Chinese rivals are undercutting European turbine manufacturers.

Moreover, there are growing concerns about China’s substantial subsidies and the construction of battery plants for electric cars, which could potentially disrupt Europe’s ambition to expand its production of electric vehicle (EV) batteries.

SolarPower Europe’s concerns were echoed in another letter signed by more than 40 solar companies, including Swiss firm Meyer Burger and German PV manufacturer Heckert Solar. The letter highlighted a significant increase in European spending on solar power components from €6 billion in 2016 to over €25 billion last year, resulting in a surplus of Chinese solar panels currently stored in European warehouses. These excess Chinese photovoltaic cells are estimated to cover Europe’s annual demand twice over.

The letter further noted that Chinese companies have adopted a “dumping stance in the European market,” offering two-year contracts with prices consistently undercutting spot market prices. These contracts often include clauses mandating minimum orders and exclusivity.

To address the urgent crisis, both letters from the solar industry have recommended that the European Commission urgently acquire European solar manufacturers’ inventories and accelerate planned regulations prohibiting products made with forced labor. It’s worth noting that approximately 40 percent of global polysilicon production, a crucial raw material for solar panels, originates from Xinjiang, where human rights groups have accused the Chinese government of using forced labor in detention camps. Beijing has consistently denied these allegations.

Walburga Hemetsberger, Chief Executive of SolarPower Europe, emphasized that many in the sector are also petitioning the commission, united by the belief that unchecked price drops pose a critical risk to the industry, and that EU leaders must take immediate action to safeguard Europe’s solar future.

As Europe grapples with the consequences of its solar industry’s current predicament, the urgent need for strategic interventions and safeguarding domestic production becomes increasingly evident. The outcome will shape the future of the European solar sector and significantly impact the EU’s green energy aspirations for the next decade.

Leave a Comment