EU Commission: solar dumping duties and minimum price to remain

Yesterday the European Commission published, in its Official Journal, that import duties and the minimum price system for solar modules and cells from China is to be reviewed. Without such a review the measures would automatically expire. They will remain in place until the EC completes its review, which can take a maximum of 15 months

The EU decision has not come as a surprise. Previously, German Chancellor Angela Merkel had spoken in support of the duties during a visit to China. The EC had previously communicated the high likelihood of a review to trade envoys from various EU member states in a meeting last month, according to Solar Power Europe’s (formerly EPIA) James Watson. Since being renamed Solar Power Europe the body has taken a position in opposition to the solar duties.

Currently the minimum import price for solar modules is €0.56/W (US$0.61/W). This year the EC has ruled that a number of companies have violated and should be removed from the undertaking including Canadian Solar, Renesolar, ET Solar, Znshine, Chint Solar Energy and Sunny.

Critics of the antidumping and antidumping measures, along with the minimum import price (MIP), argue that global module prices are significantly below €0.56/W, causing the cost of developing solar projects in Europe to be artificially high.

“The fact that this decision falls precisely parallel to the UN climate change negotiations (COP21) in Paris represents a paradox,” commented Holger Krawinnkel, the spokesman for the Solar Alliance for Europe (SAFE), in a press statement. “In Paris the emphasis is on Europe’s pioneering role in climate protection and renewable energy, however with this decision, the solar market in Europe is, in fact, slowed down.” SAFE is an association of European solar project developers who, among others, are committed to the abolition of trade barriers.

The association EU Prosun had petitioned the EC for a review solar trade measures in September. The body represents are 50% of solar cell and module producers and is led by German manufacturer SolarWorld. According to the statement issued by the EU, 25% of producers would have had to be represented by EU Prosun for it be able to petition for the expiry review.

“Dumping is the greatest threat to competition, jobs and innovation. As long as Chinese manufacturers fail to comply with basic international trade and competitions rules, the EU measures must therefore be retained and continue to be in force, “ said Milan Nitzschke, President of EU Prosun and spokesman for SolarWorld, in a statement. Nitzschke added that more than half of Europe’s cell and module manufacturing had been maintained and that around €100 million (US$109 million) will be invested in production capacity in Germany alone in the next few years.

Positions run along stakeholder lines

Support or dissent from the current situation of tariffs and the MIP run very much along stakeholder lines. While European module manufacturers have an interest in maintaining the duties, almost all other parties would benefit from lower prices from China and therefore higher margins. It is difficult to ascertain true production costs for solar module producers in Europe, however pv magazine recently carried out analysis showing that unsubsidized modules can be produced in Europe for €0.41 – €0.45/kWh (US$0.45 – $0.49/W). The full analysis will be published in the January 2016 edition of pv magazine, global edition.

Critics of the current regime argue that modules cause a range of collateral damage to the EU solar markets. Globally active companies active in the EU say that it harms their competitiveness both in the EU and abroad. They also say that more favorable prices cannot be offered by Chinese suppliers when larger order volumes are required. It is common that for large volume orders price discounts are provided.

Cells could be removed

In the EC’s latest publication there is an indication that Chinese and Taiwanese PV cells may be excluded from the tariff measures. “The partial interim review may be limited to the examination of whether it is in the interest of the Union to maintain the measures currently in force… to crystalline silicon PV modules or cells.” This interim review can also take up to 15 months.

“The Union [solar] industry sold only very limited numbers of cells to independent users, whereas non-integrated producers of modules are dependent on alternative sources of supply… namely from the People’s Republic of China but also Taiwan and Malaysia,” the EC statement reads.

EU Prosun considers this additional aspect of the investigation unnecessary. This is somewhat remarkable, because other than SolarWorld most module manufacturers in the EU rely on cells from Asia.

Reasons for the EU decision

The EC writes that it came to the conclusion to conduct the expiry review after a consultation period. In its statement of decision, the EU quotes directly from the Prosun application in parts.

In its determination, the EC has used PV production costs in other parts of the world to ascertain whether Chinese producers were selling product in the EU below cost. These “third markets” for comparison have been both the U.S. and India in the EC’s previous adjudication.

For this latest review, EU Prosun has again proposed that either the U.S. or India be used as an analogue country for comparison. There is now a 10 day period in which “interested parties” can make alternative proposals. The use of India in the 2013 determination has been criticized by opponents, who argue that there is not manufacturing at scale in India with which to make a comparison to China.

SAFE argues that the use of U.S. for comparison would be “totally unacceptable,” according to spokesperson Krawinkel. “Since 2012, import duties on Chinese modules have been in effect in the U.S.,” he adds, “so there have been market interventions there.”

Solar Power Europe President James Watson is, by contrast, more optimistic. He says that the EC will not take into account “broader arguments” than those considered two years ago. He cites recent research from EY (formerly Ernst & Young) saying that up to 50,000 additional jobs could be created in the European solar industry by 2020 if the tariffs lapsed and prices on modules and cells fell.

EU Prosun has previously dismissed such claims, pointing to the U.S. where 30% annual jobs growth has been achieved by the solar sector despite the imposition of tariffs.

Edited by Jonathan Gifford