The crux of the ongoing PV trade dispute between Europe and China is primarily the costs of solar module production and how high the real prices should at least be. IHS has now released a study, The Price of Solar – Benchmarking PV Module Manufacturing Cost, on behalf of the Solar Alliance for Europe, which is pushing for the elimination of European anti-dumping and anti-subsidy duties on Chinese-made PV manufacturers. In presenting the results, the analysts stressed that they remained neutral in the PV trade dispute.
Its therefore not surprisingly that EU ProSun, which supports the import tariffs, found support for its own position in the study. While it welcomed the results, the industry lobby group criticized the conclusions the Solar Alliance drew. EU ProSun President Milan Nitzschke accused the Alliance of having one goal the resumption of Chinese PV module imports at dumping prices and of spinning or simply ignoring the studys key results.
The report shows that solar module production costs have fallen by as much as 46% in the last four years, Nitzschke said, pointing out that the price decline was seen mainly among European and U.S. manufactures.
"Despite the billions that the Chinese government has put into the overcapacity of its solar industry, Chinese manufacturers have not managed to catch up, Nitzschke said. The gap between production costs in Europe and China has never been narrower, and that despite the fact that a major part of European production is in the high-priced quality segment.
IHS looked at the direct manufacturing cost of leading module suppliers by region, including China (Trina Solar, Jinko Solar, Canadian Solar and JA Solar), non-Chinese but producing in Asia (Hanwha Q-Cells and REC) and Tier 1 manufacturers in Japan, Europe and the U.S. (SolarWorld, Kyocera and Sharp).
The study identified three key factors behind the cost gap: economies of scale, material costs and standardization. IHS found a price difference of 22%, or $0.13 per Watt-peak, between Chinese and non-Chinese manufacturers. Economies of scale accounts for $0.07, according to the study, with the remaining amount divided between material costs and standardization.
Yet in considering these factors, the study makes no reference to subsidies for Chinese PV manufacturers, Nitzschke said, pointing to the low cost of energy, raw materials and equipment. Even their access to capital is much easier, he added.
"Interest rates do not have to be super low, but even companies in seemingly hopeless situations still receive new loans, such as Yingli with a planned 1 billion, while non-Chinese companies have to pay off old debts," Nitzschke told pv magazine. Non-Chinese competitors could not benefit from the subsidies. It is therefore all the more remarkable that non-Chinese companies could now catch up without these subsidies and reduce their costs in such a way.
IHS analyst Henning Wicht admitted at the presentation of the study in Berlin that he had no concrete figures on loans for Chinese PV manufacturers, but added that he did not consider it a main reason for the differences in costs.
Nitzschke, however, sees access to capital as essential to the difference in manufacturing costs. "In the U.S. or even in Europe I would not get credit from a state bank to yet again increase existing overcapacity.
Nitzschke also rejects the studys argument that Chinese producers have the advantage of economies of scale due to their greater production volume. Economies of scale effects are primarily seen in individual production up to 250 MW. "The real synergies arise in purchasing, he added.
SolarWorld, for example, has a total capacity of nearly 1,500 MW but is quite competitive with the other manufacturers in this scale, Nitzschke pointed out.
"The purchasing cost advantage in China results mainly through subsidized preliminary products, including Chinese silicon, aluminum, silver, sheets and energy. Chinese overcapacity is funded by the state. That is exactly the reason why the EU imposed anti-dumping measures and why they must continue.
Nitzschke also pointed to the studys findings that the EU was increasingly producing high-efficiency modules whose production costs were systematically higher than those of standard modules. Taking this into account, the cost gap between European manufacturers and Chinese and other Asian suppliers is reduced even further.
The EU ProSun president predicted that two segments will emerge in the future. "The European manufacturers rely primarily on long-lasting products with high efficiencies and they therefore stand out from mass-produced Chinese products. The trend will shift towards high-performance quality products and away from the standard modules, he said, stressing that the anti-dumping measures would not stop further cost reductions.