EXPRESS #1 - September 4, 2018
“The European Commission has unleashed a new solar age in Europe”. James Watson, CEO of SolarPower Europe has responded enthusiastically to the announcement by the European Commission that it will end the trade measures in place on solar panels and cells imported from China.
The Commission states that “After considering the needs of both producers and those using or importing solar panels, the Commission decided it was in the best interests of the EU as a whole to let the measures lapse. This decision also takes into account the EU’s new renewable energy targets.”
The EU first imposed definitive anti-dumping and anti-subsidy measures in December 2013 for a period of two years. These were then renewed in March 2017 for a period of 18 months only, as opposed to the usual five years.
The Commission observes “that the market situation has not changed to the extent that this would justify a further extension of the measures now beyond the scheduled 18 months. It therefore rejected the EU industry’s request for an expiry review investigation.”
According to Watson, “The trade measures have made solar much more expensive than necessary in Europe. By removing them, solar will now be cheapest form of electricity in many EU countries. This means that many more consumers and national governments will be able to invest in solar. The removal of the measures will also help EU manufacturers along the solar value chain through increased demand for their products. This decision coupled with a strong industrial strategy as proposed through the European Commission’s Clean Energy Industrial Forum will also undoubtedly increase the amount of solar products made in Europe.”
Christian Westermeier, President of SolarPower Europe, said: “This is a watershed moment for the European solar industry. By removing the trade duties, the European Commission has today lifted the single biggest barrier to solar growth in Europe. The Commission’s move to end the trade measures is unquestionably the right one for Europe, we expect to see a significant increase in solar jobs and deployment – which will only propel the energy transition in Europe.”
The move by the Commission sharply contrasts of course with the decision by the Trump administration to impose tariffs on imported solar panels and cells. However, S&P Global Market Intelligence reports that, despite the tariffs, “U.S. solar prices continue falling”.
“In terms of equipment costs, we definitely are seeing spot prices … declining,” Edward Fenster, executive chairman of San Francisco-based rooftop solar developer Sunrun, said on an Aug. 9 earnings call. “Panel prices on a spot basis are probably approximately back where they were a year ago prior to the run-up in price ahead of the Section 201 tariff,” he added, referring to the section of the Trade Act of 1974 that the administration is using to target foreign-made cells and panels.
Dana Russel, CFO and executive vice president of Vivint Solar in Utah, said on an earnings call Aug. 7 that he has also seen module prices declining after a “slight increase” several months ago due to the U.S. tariffs.
“The net result is that capital costs for solar projects in the U.S. have actually declined in recent months,” TerraForm Power CEO John Marcus Stinebaugh said on an Aug. 14 earnings call.
The major reason for the price reduction is the contraction in the Chinese solar market. Edurne Zoco, head of solar research at IHS Markit, in June predicted that price reductions resulting from China’s new solar policies could undercut the economic rationale for manufacturing in America. While a number of foreign companies have announced plans to open plants in the U.S., Goldman Sachs analysts said “cyclical pricing pressures” and uncertainty about the timing of the tariff regime increase the risk of such an undertaking.
Globally, solar installations are suffering from the decline in Chinese demand. Wiki-Solar, a source of utility-scale solar information, reports that 2018 might be the first year in this decade to see utility-scale solar PV installations decline.
The first half of 2018 saw a 20% drop in utility-scale solar PV capacity additions, despite growth in North America, Chile, Australia, and Brazil. Chinese new capacity installations were down 30%.
Utility-scale solar installations – source: Wiki-Solar