Chinese solar PV manufacturers to negotiate new terms with EU?

According to media reports, European manufacturers of solar photovoltaic panels have urged EU legislators to follow the United States’ lead by imposing tariffs on heavily subsidised Chinese panels. Concerned that they will be forced out of the international market, Chinese manufacturers want Beijing to act immediately by seeking “high-level dialogue with the EU”.

The situation arose after the United States ordered that a tariff of up to 31 per cent be imposed on cheap solar PV technology imported from China. The US Commerce Department justified the measure by insisting that the US market had become flooded with Chinese imports that were unfairly subsidised by Beijing. National suppliers in the US were being squeezed out of the market as a result.

If the EU were to impose a similar tariff, Chinese manufacturers would be unable to compete in what has become their biggest market. If Beijing succeeds in its proposed negotiations with the EU, manufacturers in Europe would be unable to rival the prices offered by loss-making Chinese firms. There can only be one winner, but this is not likely to be the customer.

In the UK, feed-in tariffs have been cut by more than a half since the coalition took power. Before March 2012, households were paid 43.3p kWh for electricity that was generated by solar panels and sold to the National Grid. This rate was subsequently reduced to 21p kWh and from August it will fall to 16p kWh.

The government reasons that solar subsidies must fall as solar panels become cheaper to install, but what if the EU imposes a tariff on Chinese solar panels? The cheapest products would no longer be inexpensive, so households would likely be required to pay the higher installation fees. If installation costs increase and subsidies continue to fall, the solar industry would be all but destroyed in the UK.

Yingli Solar’s Wang Yiyu explained that conflict between China and the EU over tariffs and subsidies would benefit neither side. He said: “If the EU were to follow the precedent of the US. the Chinese solar industry would suffer a fatal blow. The investigation would also trigger a whole-scale trade war”.