Advanced search

EU threats could strangle solar growth

“Subsidies” is a bit of a dirty word for many readers of The Engineer, particularly when it relates to the grants and tariffs designed to prop up and stimulate the renewables sector.

The solar sector has come in for particularly harsh criticism over the past few years, with the government’s now radically scaled-back feed-in-tariffs (FITs) viewed by some as a striking example  of unsustainable state assistance.

But as we report in our latest feature on the topic, the rapid growth of the UK’s solar sector has at least as much  - if not more - to do with the plummeting cost of solar modules manufactured in the Far East as it has to do with subsidies. Indeed, as the cost of the technology has come down the subsidies have dropped and the industry is now approaching the point where it can stand on its own feet.

For advocates of a power source that’s created plenty of jobs and opportunities for UK firms - and which promises a plentiful supply of renewable energy - this is largely seen as a good thing.

But it seems that the EU doesn’t quite view things the same way. And in an effort to reverse what it views as a Chinese assault on the European solar market it’s preparing to slap so called anti-dumping tariffs of up to 67 per cent on solar panels imported from China. 

Exporting around €21bn of solar panels to the EU every year, and accounting for 80 per cent of sales, Chinese manufacturers currently dominate the European solar panel market.

European manufacturers - many of whom have been driven out of business - say that Chinese firms have only been able to achieve this thanks to unfair assistance from their government in the form of things like tax rebates, free land for factories and other policy support. 

The proposed new tariffs will, claims the EU, help create a level playing field in which European manufacturers can once again compete. 

On the surface it sounds plausible. But with very few European solar manufacturers left, imposing punitive tariffs now is rather like shutting the stable door after the horse has bolted.

What’s more, it risks destroying an industry that still has much to offer UK businesses and consumers.

Indeed, over 1,000 companies have reportedly written to the EC warning that imposing import duties at a time when subsidies are coming down will drive up the price of the technology and make it unattractive to investors and consumers. 

Many in the industry think it’s too late for Europe to compete on a grand scale.

Ray Noble, one of the driving forces behind the UK’s recently launched national solar centre, told us that industry only has itself to blame, that European solar firms failed to invest in growth and left the door open for Chinese manufacturers to take over the European market.

Describing the EU’s present stance as “sabre rattling” Noble predicts that rather than start a trade war, the EU will do a deal that sets a minimum price for solar modules that could in theory make manufacture feasible for European manufacturers.

Longer term though, he expects the industry to follow a pattern seen in other sectors, and for Chinese manufacturers to begin establishing their own operations closer to their markets in Europe.

Critically though, Noble also spies plenty of good opportunities for European and UK firms downstream of module manufacture, on the installation side and in the development of energy storage technologies that will help even out supply and demand.

It’s a point that was echoed by Noble’s fellow solar industry veteran Tim Bruton, who told The Engineer that Europe is in a good position to build on its powerful solar research base and drive the development of the next stage of PV technology.

Galling as it may be to see European manufacturers lose out to low-cost rivals in the Far East, it’s hardly an unusual trend. And it’s surely better to have a thriving solar industry  - with all of the domestic opportunities that creates -  than have no industry at all.

Rather than squash a sector that hasn’t quite worked out as planned, the EU must swallow its pride, step back from a trade war, and learn from its mistakes by investing now in the areas of solar technology where it could still secure a lead. 

Readers' comments (27)

  • When I see how much extra I have to pay for the subsidies to the Renewable sector then the EU stance is nothing but a joke. Shurly the EU/UK is just as guilty when it gives tax breaks (Star wars?) subsidies (Southampton Ford transit close down)

    The EU is the pinnacle of unfair competition policy, dare I mention the farming subsidies.....

    Unsuitable or offensive? Report this comment

  • Not suprised the UK is requesting a new agreement with the EU! Seems the EU would rather pontificate while the solar uptake dies away, rather than seize an opportunity that could benefit millions. Mind you I hope the quality of the solar products is better than my decking LED lamps which gave up after 13 months!

    Unsuitable or offensive? Report this comment

  • Solar power is not really practical in the UK for anything other than small scale electricity generation. The acreage required for a solar "power station" is simply prohibitive.
    Anything that holds back the waste of investment in this tecnology, and forces the earlier build of nuclear plants is welcome.

    Unsuitable or offensive? Report this comment

  • The best end game is that Chinese solar panels are so heavily subsidised by the Chinese government, that we get them for nothing.
    The jobs lost in our solar panel factories will be offset many times by other jobs created in the distribution and installation sectors. Thus the Chinese work for us for nothing and we get lower fuel bills.
    Then we invent new technologies and sell, not give it to others who will make it for us for next to nothing.

    Unsuitable or offensive? Report this comment

  • Solar is silent and clean at the point of use with no long term waste commitment. But the interesting thing to me us that it scales perfectly to the typical uk dwelling, in that the average domestic roof area would generate enough to power to maintain a reasonable energy use for the occupants. That means there is the opportunity to create a decentralised liw impact energy pattern which is far more secure and fail safe than the grid. That said the solar industry needs to discover technology which is cheaper in energy and environmental terms. Currently Solar is really a way of stretching fossil energy reserves, as the energy return on investment does not really compete with wind or nuclear.

    Unsuitable or offensive? Report this comment

  • "the average domestic roof area would generate enough to power to maintain a reasonable energy use for the occupants"

    Rubbish! Solar generates most power in the summer and little or no power in the winter evenings and nights. So the heavily subsidised homeowner has to rely on the already overloaded system.

    It is a monstrous rort that robs the poor to pay for the subsidies given to the rich. Disgraceful!

    Unsuitable or offensive? Report this comment

  • If all subsidies that are flowing to oil and nuclear energy would be used to develop thin film flexible PV alternatives European industry would not need a trade war with China with their panels heavy with Silicium wafers

    Unsuitable or offensive? Report this comment

  • Has no-one heard of the long game?

    China has embarked on a campaign of support for its solar industry that allowed companies with $200Mn in revenues and $5Bn in debts to continue to trade, and the price of the modules on sale these days is far below the cost of manufacture. It is not a case of efficiencies in their production lines, they are genuinely dumping the product. For those who say that the deed has been done so no action is useful miss the point entirely. What next? If nothing is done to prevent this kind of behaviour all of our industries are fair game for this treatment.

    The subsidies paid to the renewable sector in general pale into insignificance compared to those paid into other energies - strike price for EDF nuclear anyone? All power generation gets paid for in part by the taxpayer, and the share given to renewables and solar in particular is miniscule.

    Oh, and with changes in habits so that power using devices such as dishwashers and washing machines are used during the day, together with smart meters, the output of a solar system is very nice thank-you. And while in this country we may not be the best location, try to think globally. Germany recently generated 50% of its electricity needs by solar.

    Unsuitable or offensive? Report this comment

  • I would not worry too much about cheap Chinese solar panels putting UK PV companies out of business, we haven't any. The only company I know that produces PV panels in this country is Sharp, which is Japanese. We have no solar industry except for the installation of other countries products - which is like saying we have a TV producing industry because we have people putting up dishes and ariels.

    We are not Germany, which makes PV panels and produced 3% of its electricity with them last year - and Germany doesn't lie on the equator, Brian Leyland.

    Unsuitable or offensive? Report this comment

  • Apart for the UK jobs supported by Sharp you have Narec in the north (now rebranded Solar Capture Technologies), Crystalox in Oxfordshire and Dupont in Bristol, just off the top of my head.

    Unsuitable or offensive? Report this comment

View results 10 per page | 20 per page | 50 per page

Have your say


Related images

My saved stories (Empty)

You have no saved stories

Save this article