A decision on whether or not to consider extending existing trade duties on Chinese solar manufacturers is on the European Commission’s table.
If duties are extended, the price undertaking on Chinese modules and cells, which enforces a minimum import price (MIP) and a quota on Chinese products, is likely to remain in place. If the commission even decides to consider an extension, its investigation could last up to 15 months, extending the status quo and the MIP at the same time.
The latest development in the dispute has deepened divides in the industry with most people’s opinion dependent on where they sit along the supply chain.
Unsubstantiated reports have reached PV Tech of European module manufacturers struggling to source European cells and one facing scrutiny from customs officials over previous supply deals as trade tariffs threaten to expand in geographic scope. PV Tech also understands that even the commission itself is split, with some fed up of a resource-sapping saga and others determined not to soften their stance on unfair Chinese trade practices.
And then there is the question of whether the duties in place for the past two years have done anything to protect what is left of the European PV manufacturing, which the best available evidence suggests has continued to shrink over that time. All of these factors make the commission's decision, which it must make by early December, one that is unlikely to keep everyone happy.
It is worth going back to the fundamentals of this case and remembering what this whole conflict is about. The European manufacturing industry faced competition from Chinese firms that were found to be using illegal practices in order to gain an advantage. Back in 2013, European solar demand was booming and manufacturers employed thousands of people, mainly across Germany, Spain and Italy. They wanted to meet that demand on a level playing field. Developers and installers wanted the best prices. The Chinese wanted access to the market. Despite finding evidence of dumping, the price undertaking was negotiated and, supposedly, all sides were to be sated by the result.
Today European demand has petered out, so installers and developers in Europe are not happy. Chinese manufacturers have been subject to an increase in red tape and external price control, and those using OEM agreements have been removed from the settlement leaving them at the mercy of the full tariffs. They aren’t happy either. Swathes of European manufacturers have still gone bankrupt, idled significant capacity or relocated overseas. It appears the amicable agreement has created few winners.
“The fact is that the European Commission conducted an independent investigation, the results of which showed there was dumping and dumping is illegal,” Dr. Uros Merc, president and CEO of Slovenian module manufacturer Bisol tells PV Tech. “But it is a little bit strange to me that after finding this, the Commission made an ‘amicable agreement’ with the Chinese that brushed this dumping under the carpet. If something is illegal you should be against it.”
Merc says all he wants is fair trade. As far as he is concerned, that means applying the same rules to every sector; aerospace, pharmaceuticals, solar modules and their component parts. This is where he diverges from the position of EU ProSun, the body that made the initial complaint to the commission. He wants to see the same level playing field on all components of solar modules, not just cells and the finished article.
EU ProSun meanwhile, is now opposed to the case against Chinese glass, something SolarWorld purchases rather than makes itself, on the basis that only one European-based manufacturer benefits. This is the same allegation levelled at it by others in the cell and module case.
SolarWorld, the driving force behind EU ProSun, is the only cell producer of scale in Europe and Merc says it is difficult for his company to obtain cells from them and produce a competitive product. They now source the bulk of their cells from Taiwan. SolarWorld, meanwhile, has told PV Tech that it does not hold a monopoly on European cell production.
“SolarWorld is the last fully integrated manufacturer left in Europe and one of the few module manufacturers in Europe which produces their own cells,” says Milan Nitzschke, vice president of SolarWorld and president of EU ProSun. “It's a sad story that Chinese dumping forced so many other cell manufacturers to go bankrupt, close production or leave the country,” he says listing Sovello, Schott, QCells, Conergy and Photovoltek among the departed. “The same happened to wafers which have not even made it into the anti-dumping regulations.”
There remains the question of SolarWorld’s role in EU ProSun and whether it is effectively the sole beneficiary of its trade complaints, an allegation it faces regularly.
We contacted a number of European manufacturers to ask if they supported ProSun. We also compiled the capacity or anticipated production of firms, like Brandoni and Solsonica, that have been named as complainants in lawsuits against the commission alongside SolarWorld. We could find less than 200MW of cell and module capacity among companies that confirmed membership of ProSun, or had supported its aims in lawsuits against Brussels. The next biggest producer is the global OEM Jabil Circuit, which is understood to prefer a neutral stance. (It’s worth pointing out that this research was not exhaustive.)
We know from the expiry review request that more than 1.5GW of output was represented by the group of 12 petitioners and SolarWorld’s own capacity is between 1GW and 1.5GW. So just how much of EU ProSun is simply SolarWorld?
“SolarWorld counts for far below 50% of production of the 30 companies represented by ProSun and 20% of total EU module production,” claims Nitzschke, without providing a further breakdown. “It is not only EU manufacturers that benefit [from trade duties] but also every other non-Chinese manufacturer, the fair-playing Chinese manufacturers, the market generally and the customers who have a much broader variety of products to choose from.”
The continued contraction of the European PV manufacturing sector will increase the percentage of the market represented by ProSun. As other ProSun members drop away, SolarWorld’s influence would also increase.
So how did we end up in this complex, unsatisfying situation that would seem to have left all sides dissatisfied? The simple answer is politics.
Eighteen member states opposed the imposition of the preliminary duties back in 2013. Merc was informed at the time that Germany had been encouraging the Slovenian economic ministry vote against the tariffs. With France and Spain backing them, Germany was unable to win enough support to block the measures.
Nitzschke agrees with Merc that duties, rather than a price undertaking, are the preferred means to compensate for and deter dumping.
“Implementing an MIP was a decision of the EU reacting on huge pressure from China, European installers and certain member states, for example Germany, who wanted to help European exporters to China such as [polysilicon firm] Wacker,” says Nitzschke.
China’s threat at the time to retaliate against Europe’s wine industry was a master stroke. Spain, France and Italy are the world’s three largest wine producers. Those three joined by Germany, can block EU council votes on their own under the “qualified majority” rules. As it happened, the wine case didn’t stop France et al from backing the anti-dumping measures. It may have had a hand in the emergence of the amicable agreement. The wine case was worth a fraction of the solar case but then-trade commissioner De Gucht, who has a stake in a Tuscan vineyard, may have been additionally sensitive to it. No doubt Germany’s manufacturing giants would also have been nervous about the possibility of being caught in the crossfire.
Rescuing the current situation, while respecting (or steamrolling) the rule of law, will require a fresh bout of political interference. Whether that means an overhaul of the MIP, the enforcement of duties or their removal, the path forward is in Brussels’ hands. How you feel about the case probably depends on where you fit along the supply chain. Ultimately, whether you make modules in Bavaria, cells in Wuxi or wine in Tuscany, self-interest wins out.