The green energy revolution in Europe finds itself at a crossroads as it grapples with the influx of inexpensive Chinese solar panel imports, which are driving a surge in solar energy installations while simultaneously posing a threat to local solar manufacturers.
European Union countries experienced a remarkable year for green energy in 2023, witnessing record-breaking levels of solar capacity installations, marking a 40% increase compared to 2022. However, the overwhelming majority of these solar panels and components originated from China, accounting for as much as 95% of imports, according to data from the International Energy Agency.
Despite the boom in green energy, Europe’s indigenous solar panel manufacturers are facing a dire situation, besieged by the onslaught of cheaper imports and oversupply in the market. Reports of production closures are mounting, with industry stakeholders warning that half of the sector’s capacity could shutter imminently unless government intervention is swift.
Policy responses to this dilemma have been varied and contentious.
German Economy Minister Robert Habeck voiced his concerns to the European Commission in November, cautioning against imposing trade restrictions on Chinese solar imports. Habeck argued that such measures could stifle Europe’s rapid expansion of green energy and inflate costs, potentially leading to bankruptcies among EU companies reliant on imported parts for assembling and installing solar panels.
Amidst a budget crisis, Germany’s plans to support the solar sector have been disrupted, further complicating the situation. Meanwhile, Spain has hinted at the possibility of imposing tariffs on solar panel materials, while the Netherlands advocates for subjecting solar PV imports to the EU’s carbon border tax. Italy recently announced a substantial investment of €90 million ($97 million) in a PV panel factory in Sicily.
Addressing the challenges faced by the solar sector on Monday, EU Financial Services Commissioner Mairead McGuinness refrained from announcing new support measures. She underscored existing EU initiatives, including legislation aimed at expediting permits for local manufacturing and granting preferential treatment to EU-made products in future clean tech tenders.
Regarding trade restrictions, McGuinness adopted a cautious stance, emphasizing the need to balance any potential measures with the EU’s energy transition objectives and dependence on imports to achieve solar deployment targets.
The industry itself remains divided on the best course of action. While solar manufacturers advocate for government intervention to alleviate oversupply through inventory purchases or trade barriers, the broader green energy sector opposes import curbs, citing potential disruptions to project development and cost escalation.
Even among local manufacturers, prospects for a competitive industry are bleak. Gunter Erfurt, CEO of Swiss panel maker Meyer Burger, lamented Europe’s engagement in a “price war” with China and highlighted the strategic subsidization of the Chinese solar industry, making it challenging for European counterparts to compete.
As Europe navigates this complex landscape, the future of its green energy transition hangs in the balance, contingent upon finding a delicate equilibrium between fostering domestic industry and harnessing global innovation.