European solar companies say local content rules in the EU’s proposal to boost the bloc’s renewables manufacturing will make the transition to clean energy more difficult because of limits on Chinese imports.
The European Commission’s proposed Net Zero Industry Act, which was announced on Thursday, requires governments to reduce public tenders for renewable energy projects if companies source from a single country that represents more 65% of the EU market share for the product. The same rules would apply to products that are offered with a consumer subsidy to encourage adoption.
This would disadvantage solar companies, which the law deems to have an “insufficiently diversified” supply. China holds more than 80% of the European market across the entire industry supply chain.
Last year, the EU achieved a record installation of more than 40 GW of solar panels after a push to replace Russian gas. This was made possible by the doubling of annual European imports of solar panels from China, according to the commission.
In 2022, Europe assembled around 8 GW of solar panels, a fifth of its demand, with most parts coming from China.
“The current proposal asks Member States to reduce support for technologies from geographically dominant areas in supply chains, such as solar. . . If we don’t want to risk slowing down solar deployment, we need a bigger carrot, especially in terms of funding for solar power plants in Europe,” said Dries Acke, policy director at SolarPower Europe, an energy lobby. ‘industry.
Lukas Pauly, managing director of production at Enpal, a German green technology company that sells directly to households, said that if the EU cut national subsidies for non-EU products, “the only effect would be a blow to facilities.
As long as we don’t have enough capacity in Europe, reducing subsidies would slow down the transition to renewable energy. »
The International Energy Agency estimates that the price of panels produced by an onshore European solar supply chain would be more than a third higher than Chinese equivalents, although the gap would likely narrow over time thanks to savings. of scale.
A clause in the proposed law allows governments to make exceptions to local content requirements if there is a “disproportionate” cost difference of more than 10% between local and foreign products.
“The industry has worked so hard to get here. It would be hard to accept if local content rules rolled back those gains. Longer term, a diverse and competitive supply chain is good, but not at all costs,” said Kareen Boutonnat, Managing Director for Europe at Lightsource bp, one of the largest solar developers in the world. region.
Industry leaders also compared the EU provisions unfavorably with the US Cut Inflation Act, which provides $369 billion in subsidies to consumers and producers of green technologies.
“The EU must use the carrot, not the stick. By adopting the current approach, without additional financial support . . . will inevitably mean cutting off foreign supplies to which we are not yet able to say no,” said Andreas Thorsheim, founder of European residential solar market Otovo.
