‘Good chance’ of deal to diffuse solar panel trade war
A deal aimed at agreeing a minimum price for Chinese solar panel importers in the EU is moving forward
A deal to diffuse a looming trade war between the EU and China over alleged dumping of solar panels in Europe is moving forward.
The European Commission accuses China of flooding Europe with billions of euros of cheap solar panels sold at below the cost of production, and has imposed duties that will jump up to punitive levels in August if a deal can’t be reached.
The impact of overcapacity and plunging prices on European solar firms was underscored today as German group Conergy filed for insolvency, but Europe's free-trade advocates Britain and Germany want to avoid angering China and risk business with Europe's second largest trading partner.
Today officials from Europe and China said more than two weeks of negotiations in Beijing were going well and they aimed to agree a minimum price for Chinese importers above their production costs, although numbers are still fluid.
"We remain highly optimistic about the direction we are moving in," says Sun Guangbin, head of a government-industry association authorised to represent Chinese solar companies in the talks.
The European Commission, which handles trade cases for EU governments, declined to comment, but four officials close to the negotiations said they were also very positive.
"The architecture of the deal is there," said one person who declined to be named because of the sensitivity of the talks. "The atmosphere in the talks is very business-like, there's a good chance of a deal before the August deadline."
Punitive tariffs have the potential to affect €21bn of imported Chinese solar panels, cells and wafers from manufacturers such as Trina Solar, Yingli Green Energy and Suntech Power Holdings.
The EU accounts for about half of China's solar exports, which have already been affected by the euro zone public debt crisis that forced major European countries such as Germany to slash subsidies for renewable power.
The proposed deal involves an annual quota for Chinese panels that cannot be sold at less than the cost of production in China. Analysts say that was around $0.59 per watt in 2012, but could go down to as low as $0.48 this year, compared with about $0.65 per watt in Europe.
Under the proposal, panels sold in excess of the quota would be subject to duties, although the final level and the amount are still under discussion. The agreement could set quotas for two to three years, with a review thereafter.
"Figures reported in the media are not the official numbers," said one person involved, noting that the many companies have their own calculations.
German and Chinese media have reported that Beijing has made an offer of a minimum price of €0.50 euros ($0.65) per watt for an annual volume of panel exports of up to 10 gigawatts of photovoltaic modules.
But that quota may be too generous in European eyes because it is still 80 per cent of the EU market. Meanwhile the minimum import price for Chinese panels would probably not go far enough to protect European industry and satisfy EU negotiators.
Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80 per cent of the European market from almost zero a few years ago.
As a result, Chinese-made panels are as much as 45 per cent cheaper than those made in Europe, industry executives say. Europe accounted for half of the global market in 2012, which was worth $77bn, according to research firm IHS.
Beijing is deciding whether to levy its own duties on imported European solar-grade polysilicon, a raw material used in solar panel production.
In an apparent response to the solar dispute, China also formally began an investigation this month into whether Europe is selling wine in China below cost.
EU Trade Commissioner Karel De Gucht, in China last month for talks, said he hoped any agreement on solar panels would help to resolve the wine dispute. EU officials deny dumping wine in China or subsidising exports.
"Who's getting the best engineering education? And what did your careers advisor suggest you do when you leave school?"
- Raspberry Pi education kits: how they can help develop IT skills
- India’s orbiter readies for Mars encounter
- A survey of engineering education throughout the world
- Internet of Things: get yourself connected
- The rise and rise of the smart city
- India to build hydroelectric plant in electricity-starved Nepal
- What to Specialise in Electronics Engineering?? [03:02 am 03/04/14]
- Britain to have just one remaining coal pit by the end of 2015 [01:11 am 03/04/14]
- LV Generator Star point earthing - UK [08:35 pm 02/04/14]
- East West Rail - the Oxford to Bedford route [07:33 pm 02/04/14]
- Small nuclear power [06:06 pm 02/04/14]
The essential source of engineering products and suppliers.
Tune into our latest podcast