The shadow of China hangs over European solar energy

Ambitious European projects aimed at increasing the production of green energy made in the EU appear compromised. The reason: the enormous surplus of solar panels that the continent is facing.

The accumulation of millions of photovoltaic panels in European warehouses is the result of an industrial battle in China, where fierce competition has led the biggest manufacturers to ramp up production far faster than the panels can be installed.

This excess supply has caused solar panel prices to fall in half. On the face of it, this is excellent news for the EU, which recently committed to tripling its solar energy production capacity to 672 gigawatts in 2030. Which is equivalent to around 200 large nuclear power plants.

Bankrupt industrialists

But in reality, this led to a crisis. Under the Green Deal industrial plan, 40% of solar panels installed in Europe’s fields and rooftops were supposed to be manufactured by European manufacturers.

However, with the influx of cheap Chinese solutions, manufacturers are withdrawing from the market, or becoming insolvent. Last year, 97% of solar panels installed in Europe came from China.

The European Solar Manufacturing Council (ESMC) has warned of an imminent wave of bankruptcies, including those of Exasun, a Dutch producer of solar panels, and Energetic, an Austrian manufacturer of photovoltaic modules.

Buy back surplus

ESMC Secretary General Johan Lindahl calls for action “urgent” to preserve the sector, inviting the EU to buy back all these solar panels that have not found a buyer so that its members remain in activity.

According to best estimates, the equivalent of 90 gigawatts of solar panels are stored across Europe. This solar energy capacity represents roughly 25 large nuclear power plants the size of that of Hinkley Point C (EPR power plant currently being built in the English county of Somerset).

In turn, the crisis is also impacting China, where Longi, the world’s largest producer of solar panels, is expected to cut its workforce by almost a third as the sector faces an overproduction crisis.

Installers rub their hands

The scale of the problem was revealed in a recent report by the International Energy Agency (IEA). This organization warned that although the world was installing solar panels at a record rate of around 400 gigawatts per year, industrial capacity was growing much faster.

By the end of the year, solar panel factories, mainly in China, will be able to produce the equivalent of 1,100 gigawatts per year, triple what the world is ready for. By comparison, this is around 11 times the UK’s total electricity generation capacity.

Some solar panel installers are rubbing their hands. Sagar Adani is building solar power plants in the deserts of India: 54 of them are in service, and 12 are being installed.

His company, Adani Green Energy, is building a solar power plant that will cover an area five times the size of Paris, providing 30 gigawatts of capacity, a third of the UK’s entire generating capacity.

I install tens of millions of solar panels on all of these projectsexplains Adani. Almost all of them were imported from China. No other country can supply such quantities or at such prices.

“China saw an opening before the others, it anticipated what the world would install in the ten years to come. And by increasing production, it was able to significantly reduce costs.”

Cheaper than wind power

As a result, the investment cost of installing solar panels increased from around 1.25 million pounds (approx. 1.48 million euros) per megawatt in 2015 to around 600,000 pounds (approx. 711,820 euros) today – a drop of more than 50% – which makes it the cheapest source of energy, even more so than wind power.

Does European industry have a chance of catching up? “I think we missed the boat,” says Tom Smout, energy consultant.

“Until 2012, the European solar panel sector appeared healthy, but in fact it was very dependent on subsidies and preferential treatment. And then European governments and other customers started buying from China because its products were much cheaper. However, China still has cheap labor, as well as a huge national market. We cannot imagine how Europe could overcome these disadvantages.”

The United Kingdom is less involved. Its latest solar panel manufacturer, GB-Sol, supplies a niche, high-end customer base, not the general public, so we don’t really have any other solution than to source from China.

A long-awaited report across the Channel

The UK Government’s Solar Energy Task Force is set to publish the UK Solar Roadmap, which will cede our country’s increased dependence on the People’s Republic of China.

Chris Hewett, chief executive of Solar Energy UK, the sector’s trade association, chaired the working group with Energy Minister Andrew Bowie. Hewett says the report will recommend a four-fold increase in the UK’s solar generation capacity.

In other words, UK solar power plants are expected to increase from 18 gigawatts, their current output, to 70 gigawatts by 2035 – mainly in large solar farms in the English and Welsh countryside. Concretely, this will amount to covering with solar panels an area the size of Middlesex (around 700 km2).

Suffice to say that when the sun shines in Europe and the United Kingdom, it is the Chinese who rejoice.

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