In the last 20 years, Europe and the USA have given free tickets to China to be present in their markets. Thanks to reforms, cheap labor, and resources, China has slowly assumed a dominant economic position in the world. A wave of farmers’ strikes is currently shaking Europe. Agriculture in Europe was subsidized, and now, due to the daily political situation, the war in Ukraine, and financial aid to Ukraine, the economy of Europe is shaken. The first blow was felt by farmers, whose subsidies were reduced. Subsidies to agriculture were a reflection of a strong industry that benefited from domestic agriculture, but the situation worsened. Next to be hit is the economy of Europe, which is based on input resources and components. In the following text, I will discuss the situation in the solar panel industry.
The European solar industry is faltering, but why?
At the moment, emergency steps are being looked for and thought about in Brussels to help keep European solar production going, which is important for the continent’s goals of becoming energy independent. It looks more and more likely that big companies in the EU’s solar business will go bankrupt. As Chinese competition grows and demand in Europe falls, the EU should step in and spend 100 million euros on solar panels made by European companies that are about to go bankrupt. Things are pretty bad for European companies that make solar panels. In 2023, the price of solar panels dropped by a quarter. This means that the cost of making them in Europe is now about twice as high as the world price of 15 cents per watt. This is why EU producers can’t sell their stock: “It’s hard for European producers right now; their stock is building up.”
Norwegian Cristals, a company that makes solar ingots, bricks, and tiles, filed for bankruptcy last month, saying it didn’t have enough cash to go ahead with its plans to grow.
Urgent measures to save the European solar industry
SolarPower Europe now wants the EU to “immediately takeover” its generator supplies. This could happen through a newly announced fund to help rebuild Ukraine or a special vehicle set up by Brussels for this reason. In “the next few weeks,” the business world needs “80 to 100 million” euros, Hemetsberger said.
If Solar Power Europe gets its way, a Bank for Solar Production should be set up with a starting fund of 6 billion euros. If the EU wants to keep the business going, this is the first thing they think about doing. That way, they would have reached their goal of producing goods in their own country until 2030.
European Commission for Solar Energy
“Aware of the difficulties faced by EU producers,” the European Solar Energy Commission said. It was “in regular contact with the renewable energy generation industry… to better understand the market situation and discuss possible options to address the current situation.”
Jenny Chase, a senior economist at BloombergNEF, said that the drop in prices was due to more production in China and less demand in Europe because of higher interest rates and permit bottlenecks.”A lot of [European] solar producers are going to fail… in the next few years,” she stated, adding: “The EU producers have higher costs, so it’s very, very likely that some of them will suffer.”Since then, at least eight companies have gone bankrupt, said they would stop making things, or restructured their debt. Each of them hurts Europe’s plan to make 30 GW of its own electricity by 2030.
2030 is approaching
The European Commission for Solar Energy wants European leaders to do something. They have already given decision-makers a set of measures to think about:
Here are the steps that are being suggested:
- Changing the TCTF so that it covers companies’ running costs, not just their capital costs
- Making “resilience auctions” stronger in member states. There are already a number of ready-to-go solar production projects in the EU.
- The European Investment Bank should help with these projects. There should also be an 8-billion-euro
- EU-wide financial tool for solar production, like the European Bank for Solar Energy Production.
- Set clear rules for getting into the European market that are in line with European ESG values. For example, laws on eco-design or supply chain sustainability
- Think about government promises and lines of credit for producers who are having a hard time making ends meet.
- Getting supplies from European makers right away