Europe has a headache with cheap Chinese solar panels

European manufacturers are crying out for help as they struggle to compete with cheap Chinese solar panels, but how to respond is controversial.

The European Union (EU) had a bumper year for green energy, installing a record 40% more solar capacity than in 2022. But the green energy boom hasn’t helped local solar panel manufacturers, with the vast majority of panels and other components coming from China, sometimes as much as 95%, according to data from the International Energy Agency.

Crushed by cheaper imports and oversupply, some EU businesses are in crisis. Announcements of factory closures are piling up. The European solar industry warns that half of its manufacturing capacity could disappear unless governments step in.

Policymakers are scrambling to respond but have yet to agree on how to proceed. German Economy Minister Robert Habeck has written to the European Commission, expressing concern that EU officials may consider imposing trade restrictions on Chinese solar imports.

“I have heard that the Commission is considering imposing safeguard measures on imports of photovoltaic (PV) modules from China. I am very concerned about this,” Robert Habeck wrote in the letter.

A 300 MW solar park in Hjolderup, Denmark on February 21, 2023. Photo: Reuters — A 300 MW solar park in Hjolderup, Denmark on February 21, 2023. Photo: *Reuters*

Germany’s economy minister has warned that restricting imports from China could hamper the rapid growth of green energy in Europe and make 90% of the PV market more expensive. At the same time, companies assembling and installing imported solar panels in the EU are also at risk of bankruptcy.

Spain has not ruled out imposing tariffs on imports of raw materials for solar panels. The Netherlands wants to impose an EU border carbon tax on imported solar panels. Italy has announced a €90 million ($97 million) investment in a solar panel factory in Sicily.

While member states have differing views on how to deal with Chinese solar panels, the European Commission has been cautious. In a speech on 5 February, EU Financial Services Commissioner Mairead McGuinness merely reiterated existing EU measures, including a policy enacted in law to speed up the licensing process for domestic production and give domestic EU products an advantage in tenders for projects.

On trade restrictions, McGuinness struck a cautious tone. “We are currently largely reliant on imports to meet our solar targets, so any measures need to be considered,” she said.

The European solar industry itself is divided. Solar panel makers are calling on governments to buy their inventory to ease the oversupply. If that fails, they say trade barriers to imports should be considered quickly.

But the renewable energy industry is resisting. Miguel Stilwell d'Andrade, CEO of Portuguese utility EDP, argues that it is impossible to reduce dependence on China in the short term, or the projects will not be built. He points to the impact of US tariffs on Chinese solar panels on inflation there. "Panel prices (in the US) are double what they are in Europe," he says.

Even local manufacturers say the hope of improving competitiveness is slim. Gunter Erfurt, CEO of Swiss equipment maker Meyer Burger, said Europe was in a price war with China. The company plans to close its loss-making solar module factory in Germany, citing a lack of support policies in Europe.

European companies have accused some Chinese companies of selling their products below their production costs. “The solar industry in China has been strategically subsidized for hundreds of billions of dollars for many years,” Erfurt said.

Phien An ( according to Reuters )

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