China to invest in Maltese module assembly

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A Chinese PV manufacturer could begin assembling modules in the EU after an agreement was signed with the Maltese state energy company.

The Mediterranean island nation has signed a memorandum of understanding (MoU) with China that will see Chinese state-owned Shanghai Electric Power buy a €200 million (US$265.7 million) minority stake in Maltese energy provider Enemalta, which has been struggling under an €800 million debt pile.

As part of the deal, Malta Today reported, the China Power Investments Corporation has also made two investments, giving it the opportunity to develop renewable energy projects and establishing an "energy service team," for the Mediterranean region.

The significance of the strategic move has not been lost on industry observers.

A Reuters headline covering the announcement said: "China to gain solar foothold in EU with Malta stake buy."

While much of the carnage resultant from anti-dumping duties imposed on Chinese modules destined for the EU may have been avoided through bilateral negotiations, the capacity to assemble modules in the EU member state may be an advantage for Chinese manufacturers.

Renewable energy researcher Charles Yousif, from Malta University’s Institute for Sustainable Energy said on face value, the deal is a win-win.

"Enemalta desperately needs to diversify its products and services to offload its debts," Yousif told pv magazine. "The investment seems to be aiming at building PV assembly lines rather than manufacturing of PV cells (which is) commendable because it is a much less energy intensive process than solar cell manufacturing."

Malta has been struggling to meet its energy needs in recent years, with a significant proportion of the country’s electricity needs supplied by oil fired power plants. This has resulted in high electricity costs and Enemalta’s formidable debt pile.

Cost effective manufacturing?

Whether PV module assembly in Malta could be cost competitive is disputable. NPD Solarbuzz’ Finlay Colville told pv magazine such a manufacturing operation staffed with in-house project development could be viable, "However," he added, "as a stand-alone operation, just making modules, there is limited evidence that any cost advantage would be achieved."

As a strategic move, to supply the Mediterranean region, Colville believes such an operation may make sense.

"If we are looking at a small 15-30 MW module plant, this could be consumed across a range of southern European markets," he added. "If the factory is above 100 MW, then it is a valid question as to where the output would go."

In announcing the signing of the MoU, the Maltese government hailed the Chinese investment as providing the superpower with a stepping stone into European solar markets.

"Thanks to this agreement, Malta will have an important Chinese company hailing from the world’s second biggest economy as its strategic partner," the government statement read.