Europe finds itself at a crossroads in its green energy transition, navigating the influx of inexpensive Chinese solar panel imports while grappling with the plight of local manufacturers being squeezed out of the market, Reuters news report said.
In a year marked by a surge in green energy installations, European Union countries celebrated record levels of solar capacity, with a staggering 40 percent increase compared to 2022. However, the lion’s share of these installations relied on components imported from China, accounting for as much as 95 percent in some instances, according to data from the International Energy Agency.
Despite this flourishing green energy landscape, European solar panel manufacturers are facing a dire situation, besieged by the onslaught of cheaper imports and oversupply. With announcements of production closures mounting, the sector is on the brink of collapse, issuing warnings that half of its capacity could shutter imminently unless governments intervene.
Efforts to address this crisis have revealed divisions among policymakers. German Economy Minister Robert Habeck cautioned against imposing trade restrictions on Chinese imports, fearing it could stifle Europe’s rapid expansion of green energy and drive up costs significantly. Meanwhile, other European nations like Spain, the Netherlands, and Italy are exploring various measures, from tariffs to investments in local manufacturing, to mitigate the impact of the import surge.
Amidst these deliberations, EU Financial Services Commissioner Mairead McGuinness highlighted ongoing measures aimed at bolstering local manufacturing and promoting EU-made products in clean tech tenders. However, she struck a cautious tone regarding trade restrictions, emphasizing the delicate balance between import dependency and achieving energy transition goals.
Industry stakeholders are similarly divided on the path forward. While solar manufacturers advocate for government intervention to absorb excess inventories or consider trade barriers, broader segments of the green energy industry oppose such measures, citing potential disruptions to project development and increased costs.
Even local manufacturers acknowledge the challenges ahead, acknowledging Europe’s position in a “price war” with China. Gunter Erfurt, CEO of Swiss panel maker Meyer Burger, lamented the absence of supportive European policies and the strategic subsidies enjoyed by Chinese firms, which have allowed them to undercut prices and dominate the market.