Debate: State of EU solar industry in light of unfair competition
Date: MONDAY, 5 FEBRUARY 2024
Speaker: Mairead McGuinness
Language: EN

I do want to start with some good news: the EU installed 56 GW of solar photovoltaic (PV) last year, according to industry data. This is a record and is twice as much as just two years earlier. Solar energy is one of the key pillars of the energy transition; it is the fastest growing source of electricity, responsible for 8 % of the electricity generated last year in the European Union. Solar installations are an equally important contributor to our energy autonomy: the installations of the last two years allow us to save 15 billion cubic metres of Russian gas imports, and these are impressive figures.  Yet, in order to reach our ambitious 2030 target for renewables, we still need to see further acceleration in both solar and wind deployment. In six years, by 2030, we expect the solar panels deployment to increase by 20 %. Two thirds of these solar installations last year were on our rooftops. Citizens and companies have taken advantage of this cheap source of energy to weather the high energy prices of the past two years.  This boom is also a source of economic growth and job creation: in 2022, the sector was responsible for 650 000 jobs, and this number is increasing rapidly towards 1 million. Eight out of ten jobs in this sector are related to solar panel deployment, one out of ten to solar panel manufacturing.  The EU needs to have access to affordable solar panels to fuel the green transition and unlock the economic opportunities, and the green transition is also an economic opportunity for the EU. This rapid deployment builds on the solar energy strategy adopted in May 2022 as part of the REPower EU package. The strategy included a set of actions to promote solar energy, including the development of the solar manufacturing industry. The supply of the EU market is highly dependent on imports, as more than 97 % of the solar panels deployed in Europe are imported, mainly from China. However, if we take a closer look at the solar supply chain, the EU has some strong assets on which it could develop this ecosystem. The EU has one of the strongest, or rather is one of the strongest producers of polysilicon worldwide, but also has globally competitive manufacturers of inverters and trackers. With the exception of the period of COVID-related related supply chain turbulence, the increasingly rapid deployment of solar energy across the EU has been driven over the years by the decreasing costs and prices. Colleagues, since 2023, a global oversupply and a surge of imports in the EU has put under strong pressure the solar supply chains. Solar panel prices have plummeted by over 40 %. These falling prices are an opportunity for citizens and solar panel installers as it supports internal demand, and it is clearly a challenge to EU solar panel producers. Our European solar panel manufacturers have their modules in stock suffering from losses and are forced to scale back or freeze production lines. As spelled out by the International Energy Agency in its outlook, the uncertainties on the evolution of prices are high: on the one hand, global solar panel deployment is expected to further accelerate. On the other hand, the deployment of massive expansion of production is also in the making, mainly in China, and this situation might remain.  The EU is therefore actively working on a vast set of instruments to support the solar industry. In order to support the acceleration of the green transition, the EU adopted the Green Deal industrial plan: it creates a supportive environment to scale up the EU’s net-zero industry, including solar. As part of this plan, the Commission presented a proposal for a net-zero industry act, which is at the final stretches of the negotiations between Parliament and the Council. We hope that both institutions will find an ambitious agreement on this important piece of legislation in the trilogue tomorrow. The net-zero industry act (NZIA) includes several measures relevant for the solar panel sector. In particular, it aims at the leveraging of public demand through renewable energy auctions and public procurement, using resilience and sustainability criteria to favour the diversification of the sourcing of net-zero technologies. The NZIA package will include guidelines and recommendations to help EU Member States to make full use of the flexibilities under the existing legislative framework, which already allows the inclusion of non-price criteria in competitive auctions and procurements. Some EU Member States are already using these flexibilities. By applying more systemically objective, transparent and non-discriminatory non-price criteria, the resilience and sustainability contributions of the different offers will be better taken into consideration by EU Member States, and that will contribute to diversifying their source of supply.  Additionally, to organise and support the EU solar industry in scaling up, the Commission also launched the European Solar PV Industry Alliance, which set itself the target of 30 GW of production capacity along the value chain by 2025. This is a pipeline of projects waiting for a financing decision. The European Investment Bank has recently adopted a financial package to boost the production capacity of high-performance bifacial PV modules, and this is to be done by one of the EU key manufacturers in Italy. Europe’s biggest solar factory, 3SUN, secured EUR 560 million’s worth of financing from the EIB and a pool of Italian banks led by UniCredit and backed by the Italian export credit agency. On the financing side, the current state aid framework – the temporary crisis and transition framework – allows Member States to provide support to new investments in clean tech industries, including solar panels. EU Member States can use this flexibility. In less than a year, since March 2023, the Commission has approved 9 schemes with a budget of over EUR 12 billion for strategic equipment necessary for the net-zero transition, including solar panels. Furthermore, several aid measures for solar panel manufacturers have been approved under the regional aid guidelines. Member States have until the end of 2025 to approve their plans and, as I said, several of them have already done so. As regards EU funds, the Innovation Fund has so far granted support to new investment in solar manufacturing projects to the tune of EUR 400 million over two years. The ongoing call for proposals has a strong focus on manufacturing. The objective of the new Strategic Technologies for Europe Platform is precisely to support sectors like solar panel manufacturing. In addition, we need to ensure that solar panels installed in the EU are produced in a sustainable manner. This is why the Commission is working on developing eco-design and energy labelling requirements. Other horizontal legislation might also be relevant for this sector, such as the regulation to ban products made using forced labour. The EU is also working with reliable third countries on reinforcing our supply chains. We share a common interest in de-risking our joint over-dependency by promoting the diversification of our sourcing. For instance, the EU is cooperating actively with the US and India in order to boost the development of the PV sector. Finally, when justified, the EU also has instruments to tackle unfair trade practices such as dumping of injurious subsidisation – when that is in the overall Union interest, we can take that action. Given that we currently rely to a very important degree on imports to reach EU solar deployment targets, any potential measure needs to be weighed against the objectives we have set ourselves when it comes to the energy transition. Thank you colleagues for your attention and I look forward to the debate.