Recently, there has been a strong call for “revitalizing the solar manufacturing industry” in Europe, but the reality is that European solar products have high production costs, sales difficulties, inventory backlog, and reduced production capacity. The European Solar Manufacturing Commission recently released data showing that in the first eight months of this year, 15 major European manufacturers produced a total of 1 gigawatt of solar modules, only 11% of the same period last year. At present, the European solar manufacturing industry is almost at a standstill. The European Solar Manufacturing Commission has warned that if the EU and European governments do not take action again, the European solar manufacturing industry will face a wave of bankruptcy.
High cost and limited production capacity
In recent years, after facing an energy crisis, Europe has shifted its focus on energy transformation to solar energy. The European Union has clearly expressed its support for the development of the solar energy industry and has created a local supply chain. According to the current target, the EU plans to achieve a domestic solar manufacturing capacity of 30 gigawatts in Europe by 2030.
The CEO of the European Photovoltaic Industry Association, Wolfgang Heimeisenberg, stated that energy transformation requires diversified supply chains, and to this end, the European solar manufacturing industry needs to be revitalized. At the same time, countries around the world hope to have competitive technologies and products, and Europe must also join this competition. Gantt Elford, director of Meyer Burger, a Swiss photovoltaic company, confidently stated, “European photovoltaic manufacturing companies can achieve good energy costs and product prices will be very close to imported products
However, this is not the case. The European solar manufacturing industry does not actually have international competitiveness. According to data from consulting firm Ruizide Energy, the manufacturing cost of solar products in Europe is relatively high. Taking solar panels as an example, the manufacturing cost in China is only two-thirds of that in Europe. According to data from the European Photovoltaic Industry Association, the price of solar modules manufactured in Europe is more than twice the spot price on the market.
At the same time, the production capacity of solar products in Europe is very limited. Data shows that in 2022, a total of 41.4 gigawatts of photovoltaic power generation systems were installed in EU countries, but EU manufacturers only produced 1.7 gigawatts of silicon wafers, 1.37 gigawatts of battery cells, and 9.22 gigawatts of components.
Due to the inability of local supply chains to meet market demand, Europe is particularly dependent on imported solar products. In the past five years, Europe’s expenditure on solar energy product imports has almost quadrupled, soaring from 5.5 billion euros in 2018 to over 20 billion euros in 2022.
The European Photovoltaic Industry Association believes that the high prices of local photovoltaic products are becoming an important factor hindering the development of the European solar manufacturing industry.
Enterprises face bankruptcy risk
Since the beginning of this year, the European Union has repeatedly issued supportive policies, but the market response has been mediocre. In February, European Commission President von der Leyen announced the EU Green Agreement Industrial Plan, which aims to support the green transformation of European manufacturing industry, improve the capacity of European manufacturing enterprises to produce green products, and promote European manufacturing industry to be more competitive in the world. In March, the European Commission revised the “Interim Crisis and Transition Framework” to allow EU countries to subsidize solar product manufacturing projects.
However, in the situation where the prices of solar products in Europe are much higher than those in countries such as China and the United States, how can factories survive before the scale of European domestic manufacturing reaches development goals and product prices become competitive?
John Lindal, the European Solar Manufacturing Council, revealed a set of data: “Currently, the average capacity utilization rate of European solar product manufacturing factories is about 35%. Due to high prices, some factories have a serious inventory backlog
Christopher Atasi, a staff member of Gonvarri Solar Steel, a Spanish photovoltaic company, bluntly stated, “European (solar) products are too expensive, and customers do not have the motivation to choose European products
Gonzalo Della Vina, President of China’s solar energy company Trina Solar for Europe, the Middle East and Africa, revealed at a solar industry event held in Madrid, Spain that currently, European solar manufacturing projects are difficult to make a profit.
The Financial Times also pointed out that the competitiveness of green manufacturing technology in the European Union is insufficient. The European Photovoltaic Industry Association stated in a letter to the European Commission that since the beginning of this year, global photovoltaic manufacturers have faced fierce competition to seize the market, resulting in lower prices for imported solar products and continuously setting new low price records. This may lead to more and more European photovoltaic manufacturing companies going bankrupt. As business risks intensify, related products and company stocks may depreciate. In August, Norwegian Crystals, a Norwegian silicon company, filed for bankruptcy; In September, another Norwegian photovoltaic company also stated that it would suspend production by the end of this year.
No substantial incentive measures yet
To cover up the fact that the prices of local solar products are too high, some European solar industry organizations have proposed raising tariffs on imported photovoltaic products. Regarding this, the US news website Politico commented that Europe had raised tariffs 10 years ago and hoped to promote the development of the local photovoltaic industry through this policy, but this has actually led to a decline in the European solar industry. If Europe continues to take this as a response measure, the results may be counterproductive.
A director of the European Photovoltaic Industry Association put forward the same viewpoint: “Tariffs cannot effectively solve the current problems of the European solar industry, and the entire photovoltaic industry should not be sanctioned through tariffs. We need a policy that will not suppress the growth of solar power installation to ensure the steady development of the European solar industry
Aristotelis Chantavas, President of the European Photovoltaic Industry Association, also stated, “We need a diversified, sustainable, and resilient supply chain for the photovoltaic industry. Raising tariffs is not the solution. We need to urge EU leaders to propose and implement new solar industry strategies and introduce balanced and effective measures
In fact, there are currently no substantial incentives in Europe in terms of taxation, loans, land use, etc., which is not enough to attract companies to build factories in Europe. In September, Elin Energy, Europe’s largest solar panel manufacturer, plans to build a factory in the United States. Meyer Burger recently announced that it will build a factory in the United States, and the company publicly acknowledges that the $1.4 billion tax credit promised by the United States is an important factor in its decision.
More and more European solar industry organizations and related analysis institutions are proposing that although Europe has set ambitious goals, the current European solar supply chain is incomplete, production costs are high, and Europe is losing its international competitiveness in solar product manufacturing. It is very difficult to achieve the domestic manufacturing target of 30 gigawatts without sufficient financial support.
The European Photovoltaic Industry Association bluntly stated that from the current situation, the achievement of the above goals faces serious risks. Martin Barthes, one of the founders of photovoltaic finance company Ecoligo, said that the European Union and European governments need to accelerate action, not just talk.