Brussels considers support for solar panel makers as Chinese imports flood market

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Brussels is considering emergency support measures for Europe’s solar panel manufacturing industry as a flood of cheap Chinese imports threatens domestic production and industry figures warn the continent’s manufacturers are “on the brink”.

Four European factories have shut or announced plans to do so in recent weeks, just as the bloc prepares to announce a plan next month for cutting greenhouse gas emissions that will require it to plough increasing investment into renewable power. Industry representatives blame Chinese competition.

“There is huge global overcapacity and European manufacturers cannot sell the products without making huge losses. We need to deal with the Chinese threat,” said Johan Lindahl, secretary-general of industry group the European Solar Manufacturing Council.

EU officials told the Financial Times the European Commission measures could include an anti-dumping investigation against China — which could lead to punitive tariffs — or incentives to national governments to keep plants going.

The commission was “aware of the difficulties” faced by the solar power sector and Brussels was considering “all options” on trade measures, an official said.

But the industry is divided on whether such measures would help.

The ESMC said manufacturers were “on the brink” and that the bulk of Europe’s production could be shut within three months.

“Either [manufacturers] will be forced into bankruptcy or those that . . . have the resources will move to the US,” said Lindahl. Washington is offering hefty subsidies to companies investing in green technology in the US.

The ESMC held an emergency board meeting on Friday and is considering making an anti-dumping complaint, which the commission would have to investigate.

“We need to consider trade defence measures . . . because we haven’t seen any [other] actions being taken,” Lindahl added, but cautioned that no decision had been made.

However, SolarPower Europe, an industry body that counts Chinese telecoms company Huawei among its members, has publicly campaigned against trade measures.

“We have repeatedly warned that EU and national policymakers must rapidly act with real solutions,” said SolarPower Europe chief executive Walburga Hemetsberger. “State aid rules, resilience auctions and credit guarantees are some of the emergency measures decision makers should be considering.”

Another senior industry executive said history showed that trade barriers would create a “lose-lose situation” and leave the bloc’s climate goals “hanging in the balance”.

The EU applied anti-dumping measures on Chinese solar cells, wafers and panels in 2013, only to lift them five years later to increase supply and meet renewable energy goals.

Europe produces fewer than 3 per cent of the solar panels needed to hit the bloc’s 2030 solar power targets. Developers fear implementing trade measures could hit supply and hold up projects.

Henning Rath, chief supply chain officer at German solar installer Enpal, which sources solar panels from China, said the reintroduction of protectionist measures would disrupt the market. “Today the Chinese are not only the most competitive on price but also on quality,” he said.

Europe lacked a “long-term industrial strategy” for renewable power manufacturers of the kind implemented by countries such as China and India, he added.

Swiss company Meyer Burger said this month that it would shut its German solar module plant — one of Europe’s biggest by volume — in April and expand US manufacturing unless it received government support. About 500 jobs would be affected, it said.

“A sharp increase in Chinese production overcapacity and trade restrictions imposed by India and the US [on China] resulted in significant oversupply and unprecedented distortion in the European solar market in 2023,” the company said in a statement.

The European Commission last October announced a “wind power package’” that set out accelerated permitting procedures and financial guarantees for wind turbine manufacturers through the European Investment Bank. The guidance was published in response to concerns that wind energy developers were being undercut by cheap Chinese imports. The solar industry has argued it needs similar measures.

EU officials have said solar was addressed in a strategy set out in 2022, which lifted targets for its deployment in the bloc to 320GW by 2025, a 43 per cent rise compared with previous targets set in 2019.

The sector has been growing fast, with annual growth levels of installed capacity of about 40 per cent for three years in a row, according to SolarPower Europe’s latest market report.

However, the report warned growth this year would drop to 11 per cent because of a lack of grid connection capacity and permitting issues.