Chinese PV firms face exclusion from EU price deal

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Canadian Solar, ReneSola and ET Solar all face being closed out of the minimum price agreement between China and the EU after having allegedly flouted rules of the 2013 deal.

According to documentation seen by PV Tech, the European Commission is proposing the withdrawal of the undertaking to the three Chinese manufacturers, potentially exposing them to the much higher anti-dumping and countervailing tariffs set in 2013.

The minimum import price (MIP) of €0.56/W was set in the summer of 2013 following a lengthy investigation by the European Commission into dumping and subsidy practices by Chinese companies. Companies were offered the chance of accepting the MIP and an import quota, or a 47.6% import tariff.

Since the MIP was instituted, there have been widespread rumours circulating within the European industry of Chinese companies employing various tactics to avoid the MIP, but none have so far stuck.

But PV Tech has now been passed an official internal document from the MIP monitoring team in the commission’s Directorate General for Trade outlining proposals to withdraw the MIP from Canadian Solar, ReneSola and ET Solar. PV Tech understands other companies have been investigated by the commission, but these three are the only ones where any substantial evidence has been amassed.

Dated 5 March 2015, the document gives a detailed account of the three companies’ alleged transgressions, which range from breaches in reporting obligations under the deal to exceeding the limit on sales set within the undertaking. The main findings are outlined below:

Canadian Solar

According to the commission, Canadian Solar “provided certain benefits to several customers”, which it did not detail in quarterly reports submitted to the commission, prompting the commission to conclude the company had “breached” its reporting obligation under the undertaking.

The commission said further analysis of the benefits led it to conclude Canadian Solar had breached its obligation with respect to the MIP, as “deducting these benefits from the sales price in the transactions with the customers concerned decreased these prices below the MIP”.

Canadian Solar also conducted “parallel sales” of modules covered and not covered by the MIP to the same customers, prompting the commission to conclude the firm had breached limits set by the undertaking.

ReneSola

Although ReneSola operates an original equipment manufacturer network around the world, which allows it to circumvent trade duties such as those in force in Europe and the US, the commission said this arrangement had made it impossible to monitor the provenance of ReneSola’s imports into Europe. “The commission analysed the implications of the this pattern of trade and concluded that it renders the monitoring of ReneSola’s undertaking impracticable,” the document said.

ET Solar

ET Solar has apparently fallen foul of the fact that it sells complete solar parks and has not specified sales of its modules within these deals in its reports to the commission.

“ET Solar is not able to demonstrate the MIP is respected in the sales of complete solar parks as there is no sales price per se for the modules as the customer pays only a total price for the installation and no further reliable breakdown of the price for the modules, other equipment and services was provided…This renders the monitoring of ET Solar’s undertaking impracticable.”

A spokesman for the commission would not confirm the existence or contents of the document, but said no final decisions had been made on the withdrawal of the MIP from any companies.

“We continue the monitoring of imports of solar panels from China, of course, and should any modifications to the price undertaking be decided normal legal procedures would then of course apply,” the spokesman said.

According to the document, all three companies will have the opportunity to defend themselves before any final decision is made, a process PV Tech understands could take until the summer.

A spokesman for ET Solar said: “As one of the solar companies who greatly contributed to the settlement, ET Solar takes it with most seriousness and respects it with all possible cautiousness. We have been obeying the undertakings in every detail.

“We’d like to state that ET Solar has been stringently following all regulations defined by the settlement. And we have been seriously respecting the undertaking in all our sales activities.”

Canadian Solar said it had “strived to fully comply with the undertaking agreement” and was “closely coordinating with the European Commission and the Chamber of Commerce in China to demonstrate that it has fully complied with the undertaking agreement”.

A spokesman said: “We believe that we have been compliant with the undertaking agreement. Any decision of the European Commission would not have a significant impact on our guidance for the full year 2015. Europe accounts for a small part of our business and, in any case, we can continue servicing our customers in Europe.”

PV Tech as been unable to contact ReneSola for comment.

Milan Nitzschke of EU ProSun, the alliance led by manufacturer Solarworld that brought the original claims against Chinese firms, said: “I appreciate that nine months after we sent the first evidence of violations that were going on to the commission they have now taken some decisions and it is obvious that the commission is not doing that without strong evidence.

“It means those three manufacturers, and I'm sure others, are seriously violating the undertaking and if you have an unequivocal contract after so-called amicable negotiations and then one party violates it so seriously then it has to be something that is changed.

“I'm glad the commission has put forward some control mechanisms and I guess the undertaking will stay in place for the other manufacturers but it would be extremely high risk for them to violate the MIP in the future. This is a warning shot. No-one should try to violate this in the future. Without violation the undertaking is a working instrument but only if some control mechanisms are in place.”

The commission document is at pains to point out that breach of the undertaking of a single producer would not automatically lead to withdrawal for all producers. “The commission therefore concludes that the overall functioning of the undertaking is not affected and there are no grounds for withdrawal of the acceptance of the undertaking.”

Additional reporting by John Parnell and Peter Bennett. This story has been ammended from its original version to include comment from Canadian Solar.

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