Solar industry calls for ‘emergency measures’ as manufacturers prepare to leave Europe

European solar panel manufacturers have warned they are “poised to shut down manufacturing lines” unless the EU takes emergency measures to save the sector, such as a buy-out of their inventories, which have piled up in recent years due to an influx of cheaper versions from China.

As part of its ‘Green Deal Industrial Plan’, the EU wants to boost the domestic production of key technologies such as solar panels, wind turbines and heat pumps, in order to reduce dependence on China, which currently accounts for almost 80% of global solar manufacturing.

By 2030, the European Commission wants to see 40% of the European demand for solar panels being produced in Europe, alongside other key technologies.

The target is set in the draft ‘Net-Zero Industry Act’ (NZIA), which will be further negotiated between the European Parliament and EU countries on Tuesday (6 February).

But these efforts could come too late, sector representatives have warned.

“We currently have a situation without precedent,” Žygimantas Vaičiūnas, policy director of the European Solar Manufacturing Council (ESMC), told Euractiv.

“This is a critical situation for the producers,” he said, as European manufacturers were on the brink of closing production in Europe. MeyerBurger, a Swiss solar producer, has already publicly threatened to close shop in Germany and move production to the US, if no political action is taken.

“The EU is now entering a pivotal phase where, over the next 4–8 weeks, major EU PV [photovoltaics] module producers and their European suppliers are poised to shut down manufacturing lines unless substantial emergency measures are promptly implemented,” the ESMC wrote in a letter sent to EU Commission president Ursula von der Leyen last week, seen by Euractiv.

On Monday (5 February) afternoon, the Commission is expected to make a statement on the “state of EU solar industry in light of unfair competition” during the plenary session of the European Parliament.

Buy solar panels like they were vaccines

While European producers are currently able to produce 6 Gigawatts (GW) of solar modules per year, in 2023 alone, the EU has installed a total capacity of about 56 GW.

Annual expansion is expected to increase further as EU countries decarbonise their energy system. This has led countries like Germany to warn that without Chinese modules, the targets to expand solar capacity – and thus climate targets – could not be reached.

However, over the last two years, solar modules have piled up in Europe, which has seen prices drop massively, sector representatives bemoan.

This was due to overproduction in China, Vaičiūnas said, which meant “that they were forced to push the prices down and to export this as much as possible.”

“There is currently a surplus of imported PV modules in stock in EU ports and warehouses estimated in a range of 70–85 Gigawatts (equivalent to at least 140–170 million PV modules),” his association wrote in the letter to von der Leyen.

“Companies from China sell PV modules below production costs,“ Vaičiūnas said. As a result, European producers are unable to sell their own modules.

European producers are therefore calling for a buyout of their “accumulated EU PV module inventories” through a special fund at the EU level.

This, Vaičiūnas said, would need to buy modules of around 800 megawatts (0.8 GW) which European manufacturers are not able to sell.

The European Commission could set up a “special purpose vehicle”, a new fund worth €200-250 million, Dries Acke of SolarPower Europe told Euractiv, resembling what the EU did when buying vaccines during COVID.

“We’re talking about important millions but not crazy millions,” Acke said.

No need to get defensive?

While Vaičiūnas said he would also support the EU to consider “trade defence measures”, i.e. new tariffs against solar panels from China, as a “last resort”, Acke however warned against this idea.

His association, SolarPower Europe, not only represents installers and European manufacturers, but also Chinese ones, which Acke says just reflects the “solar reality”.

“There is no pathway to 1.5 degrees or even two degrees [of global warming] with protectionism,” Acke said.

In the past, Europe had already used tariffs against Chinese solar panels, but “solar manufacturing in Europe still disappeared”, he added.

Production in China is currently around 35% cheaper compared to Europe, according to a report by the European Commission’s Joint Research Centre.

However, the sector representatives expect this gap to close over the next few years. “We expect that we are now at the bottom end of prices,” Vaičiūnas said, adding that “it’s clear that in the future, prices will increase” even for modules imported from China.

Both industry representatives put their hopes on the Net-Zero Industry Act, which would oblige EU countries to reserve a certain share of their subsidies for solar expansion to modules made outside of China, such as in Europe or the US.

“In two or three years, the situation will be completely different, because we have all these legislative initiatives in the pipeline,” Vaičiūnas said in reference to the NZIA as well as other EU legislation, which could see an import ban on products made with forced labour.

But the question was how European manufacturers could “survive during this really critical situation” in the meantime, while the NZIA would not take effect, he said.

“In case we will be losing these key capacities in the next months, and I’m talking about [a production capacity of] six GW in principle, then later it will be much more difficult to restore it,” Vaičiūnas said.

Cover photo: By 2030, the European Commission wants to see 40% of the European demand for solar panels being produced in Europe, alongside other key technologies. [IM Imagery/shutterstock]