Component prices continue to fall! Germany plans to restart solar tariffs

The latest news is that the German government is considering the possibility of setting up trade barriers on Chinese solar modules and power generation equipment imported into Europe, a move that has attracted the attention of the trade body SolarPower Europe.

According to Reuters, while subsidies and state aid are being considered, the European Solar Manufacturing Council (ESMC) has also issued an open letter calling on the EU to protect European manufacturers from "concentrated dumping by Chinese PV manufacturers" in the form of large quantities of Cheap products flooded Europe, driving down European prices and forcing European manufacturers to cut prices.

In the letter, ESMC made it clear that Chinese manufacturers had adopted a "dumping stance" against Europe, but did not call for the establishment of trade barriers or the imposition of US-style tariffs. Initiatives by European companies continue to ferment: Chinese components are accused of being dumped at low prices in Europe!

Instead, it outlined a number of "carrot" strategies, such as encouraging in-house purchases and approving acquisitions of European stocks, to offset forced price cuts by Chinese rivals. Additionally, it calls for a ban on the sale of components linked to forced labor, mainly from Xinjiang, China.

Trade body SolarPower Europe has also called for measures to protect solar photovoltaic product prices. The agency said the price of solar photovoltaic products has fallen by 25% in recent months, posing "real risks" to European manufacturers.

Germany is the first European country to formally study protectionist measures for solar manufacturing. In 2013, the EU imposed tariffs on Chinese photovoltaic products. At that time, in the field of solar modules and other products, the EU implemented anti-dumping and countervailing measures against Chinese companies for the first time.

Affected by this, China's photovoltaic products exported to Europe also have to withstand anti-dumping duties of up to 67.9%. But as a result, in the next five years, the number of photovoltaic products from China decreased significantly, and the pace of promoting solar energy deployment in Europe also slowed down.

With lessons learned from the past, European industry organizations are more rational this time. SolarPower Europe said in response to its statement: "Trade barriers are not the solution. History has proven that conducting investigations and implementing solar trade barriers is the ultimate win-lose strategy for Europe."

Instead, it calls for measures to reward and incentivize solar manufacturing. in particular:

-Adjustment of the EU State Aid Framework (Temporary Crisis and Transition Framework) to allow member states to support the running costs of factories, i.e. operating expenses;

- Allowing for specific flexi-tendering within member states under the rapidly adopted EU Net Zero Sector Act;

- Establishing an EU-level financing instrument such as a "Solar Manufacturing Bank" specifically for European-produced solar PV.

Aristotelis Chantavas, President of SolarPower Europe, said: “We need diverse, sustainable and resilient solar supply chains. Trade barriers are not the way to achieve this. We urge EU leaders to develop and implement a solar industry strategy that It should be as clear and ambitious as the U.S. Inflation Reduction Act (IRA). We are ready with balanced, effective measures."

Gunter Erfurt, Director of the Board of Directors of SolarPower Europe, added: "We must incentivize solar projects that originate from Europe's flexible solar capacity, rather than sanctioning the entire industry through tariffs. This way, while European solar manufacturing is growing steadily, solar applications are not hampered. interference."

Whether Europe's manufacturing renaissance can materialize remains to be seen; the US's IRA created significant incentives for companies to build factories here, while the EU's Green Deal scheme has not yet reached the same level.

Additional background: Recently, the European Commission launched an investigation that could lead to the imposition of tariffs to protect EU producers from cheaper Chinese electric vehicle imports. Reuters reports that following new energy vehicles, Germany and other EU countries are preparing to wield a "tariff stick" on photovoltaic products from China to protect local European photovoltaic companies.

Meanwhile, Germany is studying options including trade protection to protect local solar manufacturers from falling global prices, a government document seen by Reuters showed.

However, any trade barriers or incentives from Germany may require approval from the European Commission.