Solar industry in Europe warns against bankruptcies due to Chinese imports

Solar power manufacturers in Europe have warned that cheap Chinese imports are pushing some to the edge of bankruptcy and hampering EU efforts to boost the local production of green technology.

SolarPower Europe (a trade group representing the industry) wrote Monday to the European Commission that the “fierce” competition among Chinese manufacturers for market share in Europe and the soaring stocks had driven down prices of solar panels by over a quarter since the start of the year.

The letter stated that “this is creating concrete risk for companies to enter insolvency, as their significant stocks will need to devalued.”

Norwegian Crystals had filed for bankruptcy in the previous month. Norsun, a second Norwegian solar company, announced this month that it would stop production until the end the year.

The EU hopes that solar energy will become the largest generator of energy in the EU as it attempts to reach its target of 45 percent of energy being generated by renewable sources by 2030. This goal is set to be voted by the European Parliament this week. China’s dominance in the solar supply chain has led to the country’s products accounting for three quarters of solar power imported by the EU. This is similar to the EU’s dependence on Russian Gas before Moscow invaded Ukraine.

SolarPower Europe stated that the cost of producing a solar panel in Europe is double what it currently costs.

In 2012, the EU placed tariffs on Chinese imports after Beijing pumped massive subsidies into its solar sector. The EU lifted tariffs again in 2018, to encourage the installation of renewable energy. This was just one year before the European Commission declared China as a “systemic competitor”.

Brussels has not reinstated the sanctions since, despite recent efforts to “derisk” supply chains of European companies from China in an effort to reshore production amid increased geopolitical tensions.

A spokesperson from the commission didn’t immediately respond to an inquiry for comment.

In the letter, it was stated that the EU’s target to manufacture 30GW solar power in Europe by 2030 is now “in serious danger” due to the dramatic fall in prices. Similar calls have been made by the wind industry to Brussels, fearing that turbine makers are also being undercutted by Chinese competitors.

Western executives have warned that China is heavily subsidising and constructing battery plants for electric vehicles, far beyond the levels necessary to meet domestic demand. This trend could also undermine Europe’s ambitions to expand production of EV Batteries.

SolarPower Europe’s statement was echoed by a letter signed on Monday by over 40 solar companies, including the Swiss company Meyer Burger as well as German PV manufacturer Heckert Solar.

The second letter stated that European spending on solar components had risen from €6bn to €25bn. This led to an oversupply of Chinese solar panels in European warehouses. It said that the amount of Chinese photovoltaic panels in storage could cover Europe’s annual demand by two times. 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.

Both the solar industry letters recommended that the Commission make an urgent acquisition of European manufacturers’ inventories, and speed up a planned rule banning products produced with forced labor.

Human rights groups have accused the Chinese government of forcing muslim minorities to work in factories and detention camps. Beijing denies any abuses of human rights in the region.

Walburga Hemetsberger is the chief executive officer of SolarPower Europe. She said that she knew others would be petitioning the Commission. “We agree that unchecked prices are a serious risk to the industry, and EU leaders need to take immediate action.”