EU solar PV Anti-dumping Case
So. what is the EU solar PV anti-dumping case that I keep hearing about?
Despite being a very active member of the UK solar PV market, it must be said that I’m hardly a world export on EU trade law.
Surprising I know.
Because of that I initially pushed the rumours (and then confirmation) of a case being proposed at the European Trade Commission against Chinese PV manufactures for “Anti Dumping” from my mind. It’s fair to say that to start with I quite literally didn’t know what it meant. I assumed that it was something to do with pollution and knowing that our supplier’s environmental credentials were impeccable, decided not to worry too much about it.
Ok, so, maybe I shouldn’t have done that. It turns out that “Dumping” in the context of European trade law means selling a product at lower than cost price in the EU, and this action is being taken under laws to protect European manufacturers from unfair competition from outside our borders. Now, anyone having kept track of the huge reductions in price of PV over the last couple of years in particular will certainly have suspected, as I have, whether a real war of attrition was going on between solar PV manufacturers, particularly those from China. Given the number of manufactures failing recently, including Suntech, the previous biggest player in the industry, it’s starting to look like plausible idea.
So, is this actually something to be worried about or are we staring down the barrel of a storm in a teacup, or some other equally mixed metaphor?
I have recently started asking around and it seems that several of the big Chinese manufacturers have probably been operating at a significant loss for some time (hence Suntech) but that a chosen few have been guaranteed survival by the Chinese government as they want to thin the herd, but ultimately keep the industry alive. Quite what this would mean for the outcome of the case I have no idea, but it does sound like there may be some truth to it?
In any case, Now that Chinese panels have to be registered upon entering the EU, and there is the possibility, however remote, of retrospective import levies being imposed we’re potentially entering another damaging period of uncertainty in the PV industry. I’ve certainly started taking note now, and we have started having to be much more careful in our choice of modules. We’ve always tried to only chose top quality modules for our customers, but now that big players are going out of business, that is getting harder and harder. We do have the option of using only non Chinese modules, but in this hopeful but still sluggish market (outside of solar farms anyway) that could put us at a serious competitive disadvantage. Plus, just because you chose a non-Chinese manufacturer doesn’t eliminate uncertainty around the future of the company, they still go out of business and may leave you with a potentially worthless warranty.
Supplies of Chinese made panels are already drying up and prices are rising. With the FIT digression rates assuming that prices are ever falling, and only therefore ever moving in one direction this is potentially a huge problem.
Predictably, there have been complaints to the EU, predominantly from PV installers who are justifiably fearful of rising prices. So the field is polarised. EU manufacturers are fighting to survive and can’t compete with China on what may be uneven ground, but installers who make up the vast majority of employment in the solar market, could be damaged badly, lowering demand. There are already huge numbers of UK PV installers falling off of the MCS register at the moment. So, where do I sit in the debate? Well, it’s easy to see merit in the arguments from both sides. It is hardly new for Chinese, government backed, manufacturers to aggressively undercut smaller manufacturers and effectively drive them out of business. This can lead to effective monopolies, which tend to lead to prices ultimately rising, and to the stagnation of innovation. I therefore feel for the plight of the EU PV manufacturers.
From the other side of the fence though, rising prices, especially at a time of prevalent weakness in the market, isn’t likely to help anyone in the long run. Given that size of the comparable employment markets though, I think I have to side with the installers. Without demand, the EU companies will ultimately fail in any case.
I think that EU manufactures may just have to do their best to survive the current price war, and to hope that Chinese workers increasing demands for fair pay (particularly in high tech industries) will result in an eventual equalisation of the playing field. I personally think that there is a very good chance that the next big challenge will come from the US in any case, due to their rapidly falling energy prices they are beginning to outcompete China in a lot of high energy manufacturing, such at the manufacture of high grade silicon wafers used in PV. Even If EU companies can manage to find a way to hold off Chinese manufactures with import levies I think that will have a much harder time doing that with American imports. That is pure speculation at the moment though. I very much don’t want to see the end of European PV manufacturing, but I do hope that they don’t end up taking the rest of us down with them.
Anyway, I guess that one advantage of my having come late to this particular debate is that I get to have a bit of a look around and see what effects have actually been? So far it’s looking like the storm in a teacup may be the right interpretation? For one thing, thanks to the massive falls in module prices of late, they now make up a smaller proportion of the cost of a PV system, making module prices a less important factor in the overall price. Also, FIT rates are pretty generous at the moment and I’m still seeing returns of 20% or more for good systems even with the higher module prices. We’re certainly seeing more orders now and more activity in the wider industry than I’ve seen for some time.
This has at least made me poke my head out into the wider world a little more than normal, and my conclusion is that all in all, and despite this little drama, 2013 is actually looking like a very positive year for those who have managed to stick out the PV drought of 2012.
If you have any questions I’d love to hear from you, please leave a comment or send an email.