Solar glass: European PV module manufacturers fear being “taken hostage”

Currently, nearly all producers across the entire value chain find themselves facing fierce competition. In the face of massive overcapacity, and China’s announcement to slow down its PV market, prices have come under heavy pressure. Cutting costs and finding lucrative sales channels are, consequently, a must.

European producers in particular, have to go to great lengths to assert themselves in the market. And now they face another challenge: solar glass.

Tarrifs

Since 2014, the EU has imposed 80-100% tariffs on solar glass imports from China, to offset dumping and subsidies. These tariffs will be in force until at least mid-May 2019, and render solar glass from China economically uninteresting for European module makers. Now, a new anti-dumping proceeding against solar glass producers from Malaysia, is underway. The application was submitted by EU Prosun Glass.

Martin Holzbecher, Vice President of the association, confirmed to pv magazine that “massively ramped up imports from Malaysia to the EU at dumping prices” are the basis upon which the motion was filed. In his view, there are approximately 10 solar glass producers currently left in Europe.

Risk

However, module makers see the risk that Luxemburg-based Interfloat will build a monopoly through its solar glass making German subsidiary, GMB Glasmanufaktur Brandenburg GmbH. European manufacturers pointed out that the company is the last remaining solar glass producer that can deliver reliably.

Reportedly, Saint Gobain also produces solar glass intermittently, but is not as reliable. Meanwhile, Belgian-based solar glass producer, Ducatt had to declare bankruptcy in the wake of SolarWorld’s first insolvency in May 2017. If tariffs are now imposed on Malaysian solar glass, European module makers will be “taken hostage” by the remaining European companies, several module manufacturers told pv magazine.

They add that they do not see any alternatives to this scenario. Aside from GMB, only producers from China and Malaysia are currently capable of delivering solar glass of sufficient quality for mass production.

Interfloat declined to make a public statement on the allegations following a pv magazine request. Martin Holzbecher, who was an authorized signatory at GMB until August 2015, explains, “With 10 suppliers a monopoly situation is unlikely. The petition aims to eliminate unfair trade practices. Competitors should be playing on a level field again.”

Whether EU Prosun Glass will also file a motion to extend the existing tariffs on Chinese solar glass until after 2019, will not be decided before the end of the year.

However, the time is ticking for European manufacturers. Additionally, they claim to be disadvantaged by the fact that they have to pay tariffs on Chinese solar glass, but that such tariffs are not be imposed on Chinese module imports to the EU.

One of Germany’s biggest module manufacturers quantifies the pricing disadvantage, stating that this would cost between €1.40 and €1.50 per module, and thus between 0.5 and 0.75 euro cents per Watt. The CEO, who wishes to remain anonymous, explains further that he does not believe GMB will further increase its prices if anti-dumping tariffs against Malaysian solar glass are introduced.

He does, however, point out that the price gap is already very significant and that GMB quasi-obliges European module makers to make long-term commitments to GMB, as prices would be even higher otherwise.

Bernhard Weilharter, CEO of CS Wismar says, “Hitherto, we have omitted the use of glass from China because the punitive duties make its use uneconomical. Malaysia would have been an option – which we have not used so far – but is rendered moot now anyway.”

In general, he believes that the current legal framework is not very helpful for module makers in Europe. “The price gap between European and Asian producers has emerged largely from artificially expensive BOM (bill of materials). Due to the high degree of automation, the cost of labor does not have much of an impact on the module price.”

Looking at procurement costs of upstream products, Weilharter takes issue with the fact that the minimum import price of modules was reduced drastically, but remained high for cells. He talks specifically about polycrystalline PV modules. The minimum import price for modules has dropped by 13 euro cents per Watt over the last months. For cells, however, the minimum import price dropped by just 3 cents.

Against the backdrop of an internationally raging trade conflict, European module producers might face additional artificial price hikes. Import tariffs for aluminium and steel could also be raised, which would further increase the cost of modules.