Johan Lindahl, the secretary general of the European Solar Manufacturing Council (ESMC), informed PV Tech Premium that there is a widespread agreement within the EU that it cannot simply watch as the solar manufacturing industry disappears. On March 4th, the Transport, Telecommunications and Energy Council (TTE) of the EU agreed to explore ways to support the European solar manufacturing industry, which EU Commissioner for Energy Kadri Simson described as being in a "very delicate situation." The ESMC and SolarPower Europe trade bodies held discussions with EU state energy ministers, commissioners, and members of parliament during a lunch at the TTE council.
Over the past few months, several European companies, including Swiss solar manufacturer Meyer Burger, have exited the industry. Meyer Burger notably announced the closure of its German manufacturing facility in January, while NorSun, a solar ingot producer, and REC Group, a polysilicon producer, have also announced operational pauses and shutdowns. The primary reason behind this trend is the pricing pressure from "uncompetitively low-priced" imports from China, along with a lack of cohesive legislative support. Following the TTE council, Lindahl urged the Commission to implement measures to enable the industry to persist in "survival mode" until the Net Zero Industry Act (NZIA) comes into effect, which the ESMC indicated would realistically occur in 2026, according to a document obtained by PV Tech Premium.
CAPEX and OPEX
In her statement following the council meeting, Simson expressed her intention to develop a solar power pledge, in which member states and stakeholders would pledge to take specific actions to support production within Europe. While the details of the council lunch discussions and the exact nature of the "pledge" were not confirmed, Lindahl emphasized the need for direct financial assistance to aid both new and existing manufacturers.
The ESMC proposed that the Commission permit member states to provide operational expenditure (OPEX) support in addition to the current capital expenditure (CAPEX) support for Net Zero industries. Recent announcements from the Netherlands, Spain, and Germany have focused on establishing CAPEX funding for new solar and energy storage manufacturing capacity, but the EU would also benefit from supporting existing producers.
Lindahl suggested that the industry would benefit from emergency OPEX funding over a limited two-year period to bridge the gap until the NZIA is in effect. This funding would cover the disparity between the currently unsustainable low module prices and the manufacturing costs of European manufacturers if the modules were sold at market prices.
The ESMC previously accused Chinese module producers of engaging in 'price dumping' in Europe, where modules were sold at uncompetitively low prices, sometimes below the cost of production. Coupled with the ongoing oversupply issue, with an estimated 80GW of imported solar modules in European warehouses and inventories, the EU's installation of around 57GW of solar PV in 2023 falls significantly below the excess inventory.
In its emergency support proposal to the European Commission, the ESMC recommended that the commission provide support for existing producers to operate at approximately 40% capacity, which it deemed as the minimum threshold for maintaining economic operation. This would represent an annual European solar module production capacity of 2.4GW in 2024/25, in addition to the 0.8GW of European-made modules currently in inventory from 2023.
Lindahl estimated that around €800-850 million would be required to cover the difference between manufacturing costs and market prices. He clarified that they are not requesting the EU or member states to cover the full manufacturing capacity of all module manufacturers, but rather to sustain the industry at a utilization rate of around 40%.
He also mentioned that the ESMC has consulted with all major European manufacturers, who are in support of this proposal.
Spend now to save later
Providing OPEX support to existing manufacturers, even though it represents a significant portion of a €1 billion commitment, could result in long-term cost savings, as indicated by the ESMC.
Allowing the industry to shut down now and then restarting it once the NZIA is in effect would necessitate CAPEX for establishing new sites, facilities, and workforces.
According to the ESMC's calculations, maintaining Europe's approximately 6GW of capacity at 40% could result in saving around €300 million in new brownfield projects. Additionally, purchasing 1GW of EU modules would reduce the bloc's trade deficit with China by approximately €100 million under current market conditions, funds that would remain within the EU and support its economy and green jobs.
Solar pledge may be ‘not enough’
In a statement to PV Tech Premium, French solar manufacturing startup Carbon emphasized the need for swift and concrete actions, stating that mere words are insufficient. While acknowledging the importance of opening the field for voluntary measures by Member States as a first step, Carbon expressed the view that this alone would not be adequate. The company stressed the necessity for the Net-Zero Industry Act and other European regulations to create a level playing field that would promote the European PV industry, urging the EU to act with greater speed and determination to revive the European solar manufacturing sector.
Carbon, a member of the ESMC, had previously announced financing and plans for a 5GW/3.5GW tunnel oxide passivated contact (TOPCon) solar cell and module plant in Fos-sur-mer, France, with intentions to integrate production-at-scale with European research and development (R&D). However, the realization of Carbon's solar manufacturing plans is still pending, and it remains unclear what specific actions the EU could take to expedite the process. Lindahl emphasized to PV Tech Premium that effective financial support is crucial, as the entire value chain could be at risk without it.
Lindahl further highlighted the potential consequences, stating that the absence of European module manufacturers could jeopardize the entire value chain, including glass manufacturers, wafer manufacturers, and other component producers, as they would lack customers in Europe. This could lead to significant risks, including bankruptcy or relocation to the US or other regions.
In a recent blog, PV Tech's head of research, Finlay Colville, suggested that the European PV industry still has the opportunity to participate on the global stage, emphasizing the potential role of Europe's solar equipment manufacturers and research institutes in various global markets.
On the other hand, SolarPower Europe, another trade body present at the TTE Council, took a different stance following Simson's announcement. CEO Walburga Hemetsberger emphasized the importance of making optimal use of existing financing support under revised State Aid rules and the Recovery and Resilience Facility, while also proposing an EU-wide financing vehicle dedicated to solar manufacturing to leverage the single market. Hemetsberger cautioned against considering trade defense measures as a solution, advocating instead for a robust industrial strategy accompanied by clear ESG market access standards, citing historical evidence that trade defense measures do not support manufacturers or deployment.
Source: PV Tech
