EU sees sense and moves against Chinese solar tariff, a boost to adoption

EU nations have rejected a plan to extend tariffs on Chinese solar panels. Some 18 member states voted to reject the European Commission’s proposal to extend tariffs on Chinese solar. Many felt that the tariff had been stifling the adoption of solar panels in Europe, and had also been costly for European governments, trying to meet renewable energy generation targets.

The European Commission had originally placed tariffs on Chinese solar panels back in 2013, causing a large amount of tension between the world’s two largest trading blocs. The tariff split opinion amongst EU states and Europe’s solar sector. Solar advocates believe that the change will see increased adoption of solar panels, and complimentary smart grid technologies.

The other major cost of the tariff has fallen on governments trying to meet clean energy targets. The tariff has pushed up the cost of purchasing solar panels in Europe, meaning governments have had to spend more on solar subsidies – to boost solar adoption through other means to meet their clean energy targets.

China has invested heavily in the mass manufacturing of the technology. It appears now that European policy makers have woken up to the damage the tariff is causing. Currently, all solar panels and modules imported into the EU from China have to be sold at a minimum import price or else face an import tariff of 65%. This is one of the highest import tariffs in the history of the EU, and is the sticking point for many who believe that artificially raising the price has damaged solar adoption.

However, the case isn’t closed yet. The Commission’s plans will go to an appeal panel in February, where a decision will be made by Qualified Majority Voting, giving larger weight to countries like Germany, France and Italy. Germany is the largest manufacturer of Solar panels in the EU, for this reason the German government will be lobbying aggressively to see the tariff retained.

The tariff had artificially inflated the price of solar panels unnecessarily for European consumers, leading to a fall in the number of new installations. The volume of new PV grid connections peaked at 22.4GW in 2011 before declining each year to a low of 7.1GW in 2014.

Falling feed-in-tariffs (FIT) have also been partly to blame for the decline in new installations. The tariff on Chinese solar panels has also played a sizeable role in the slowdown of new installations.

The anti-dumping complaint was originally brought to the EU, from a group led by solar manufacturer Solar World in 2012. They complained that Chinese manufactures “had been selling panels below the cost of production, allowing them to dominate the European market.”

Based in Germany, Solar World is the only remaining fully European manufacture of solar panels in the EU. According to the company’s 2016 second quarter financial report, the company employs 2,176 staff – barely a fraction of the numbers who lost their jobs in the installation sector as of a result of the tariff.

Due to a lack of successful manufacturers, European consumers are reliant on imported solar panels. The minimum import price (MIP) has been set at $0.60 (€0.56) per watt, prices in many Asian markets prices have fallen to $0.43 (€0.40) per watt. Thanks to the MIP and lack of strong competition inside the EU, Asian solar manufactures selling into Europe have seen increased margins and become more profitable.

The impact of the tariff has been felt most painfully by installers of solar. Who during a time of falling feed-in tariffs were desperate for cheaper panels. In the UK 99% of solar job are installation and construction based. Virtually all of the panels installed are manufactured abroad. The UK solar industry has become one of the largest anti-tariff movements for this reason.