EU-China dispute to drive European solar firms to bankruptcy: IHS

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More European solar construction firms will face insolvency this year as the European Union’s anti-dumping tariffs drive up prices for Chinese-manufactured solar modules.

That’s the warning from the latest report by IHS, which found that the average price for Chinese crystal polysilicon modules in Europe rose by 4% in June to hit €0.54 (US$0.71). The price rise comes after Chinese module prices declined for the 48 months prior.

“The era of low-cost Chinese modules is now over, as prices have risen due to the EU Commission’s implementation of preliminary anti-dumping tariffs,” said Henning Wicht, senior director of solar research for IHS.

“This will have a negative impact on solar installations, and is likely to cause many companies engaged in the engineering, procurement and construction (EPC) of solar systems to go out of business this year.”

German EPCs Conergy and Gehrlicher have both initiated insolvency proceedings in recent weeks. Gehrlicher blamed its position on the anti-dumping tariffs, although the direct link has yet to be fully evidenced, and European EPC firms are not tied to doing business solely in Europe.

The pair are among a number of manufacturers that have sought the higher profits that come with project development. The uncertainty over rising Chinese module prices has cast a shadow over their trading.

“Anti-dumping tariffs on modules do not help anyone, not even those who request them, because they destroy jobs throughout the whole PV value chain,” said Richard von Hehn, management board member and COO, Gehrlicher Solar in a statement confirming the company’s insolvency.

According to IHS’ Wicht low-cost PV modules from China had been “the engine of growth in the European solar market”.

The report, PV Price Tracker—Modules, predicts that module prices will continue to rise throughout July and again in September, with the average increasing to €0.55 (US$0.73). 

The majority of the solar industry had hoped that the European Union and China could negotiate a settlement and avoid the imposition of further duties before 5 August.

The analysts have noted that prices are now starting to rise again due to the closing of a loophole that allowed Chinese solar manufacturers to declare modules shipped to Croatia as duty-cleared goods due to its imminent EU membership. 

“If the 47.6% tariff goes into effect, global supply lines and pricing for solar modules will be shaken up dramatically,” said Glenn Gu, senior PV analyst at IHS.

“Chinese suppliers initially will suspend almost all shipments to Europe. In order to continue serving the European market, they then will try to shift production capacity to locations outside of China by using overseas branches or via agreements with non-Chinese module makers. But even if they succeed in this, the supply disruption is likely to cause module prices to increase by 12-20% during the following months.” 

IHS believes that the Chinese modules that have been duty-cleared will be sold off as Europe enters a state of shortage. The report notes that high-end pricing for duty-cleared modules is forecast to hit €0.60-0.65 (US$0.79-0.86) per Watt.

Such a high level of pricing will open the door for South Korean and Western manufacturers of solar as module buyers look for cheaper alternatives, according to the report.

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