China has produced too many solar panels: Europe is in crisis

There is an overproduction of solar panels in the world. The capacity of the plants exceeds the demand by 2 TW. Because of this, Europe and the United States are suffering, which accuse Chinese companies of low prices due to state support. So far, only consumers benefit.

"Based in In Dresden in the early 1990s, Solarwatt quickly became a symbol of Europe's ambitions in the field of renewable energy and a bold plan to create solar energy. The opening of a new solar panel plant in Dresden at the end of 2021 was seen as a small victory in the battle for market share among Chinese groups... Now Solarwatt is preparing to stop production at the plant and move this work to China," writes The Financial Times.

Peter Bachmann, the company's product director, told the publication that he felt very sorry for the employees, but from an economic point of view, the company could not have done otherwise.

Solarwatt is not alone, The Financial Times notes: "Global oversupply has brought down solar panel prices over the past two years, leaving a number of European manufacturers unprofitable, jeopardizing U.S. President Joe Biden's ambitions to turn America into a renewable energy force and even ricocheting Chinese companies that dominate the global market."

"We are in a crisis," said Johan Lindahl, Secretary General of the European Solar Energy Production Council.

If companies in Europe, the United States and even China are cutting jobs, postponing projects and preserving facilities, then the abundance of cheap solar panels has brought one significant advantage — consumers and enterprises are installing them in increasing numbers.

According to the International Energy Agency (IEA), it is expected that by 2028, electricity generated by solar energy will surpass the power of wind and nuclear energy.

According to SolarPower Europe, the industry employed more than 800,000 people in Europe at the end of last year. In the United States, almost 265,000 people work in this sector, according to data from the Interstate Council on Renewable Energy Sources.

According to BloombergNEF, panel prices have fallen by more than 60% since July 2022.

"The scale of the damage caused has provoked calls for Brussels to protect European companies from what industry representatives say are state—subsidized Chinese products," the British publication continues. It cites an assessment by the European Solar Energy Production Council: solar panel production capacity in Europe collapsed by about half, 3 GW, as companies went bankrupt, mothballed facilities or moved production abroad.

On the one hand, cheap solar panels influence demand and solve the problems of Global warming. On the other hand, attempts to solve the problem of overproduction have caused a split along national and regional lines.

"There is a trade policy, and there is a climate policy, and they are not synchronized," said AES executive director Andres Gluski. "That's a problem."

So, the United States has introduced new tariffs on solar panels from China — from 25% to 50%. They plan to adhere to a similar policy in Europe.

At the same time, American companies complain that such draconian measures will not protect them.

"In April, a coalition of manufacturers, including First Solar, QCells and Meyer Burger, filed a petition in The U.S. International Trade Commission called for new tariffs on solar panel imports. They accuse Chinese solar companies of dumping elements in Southeast Asia, where the bulk of U.S. imports come from," The Financial Times continues. The publication cites data that a solar panel completely manufactured in the United States using subsidies from the inflation Act costs 18.5 cents per watt. But produced in Southeast Asia - 15.6 cents, in China — just over 10 cents.

"With industry in Europe and the United States under pressure, the key uncertainty is whether Chinese companies will be able to withstand current price levels or reduce production to strengthen their own finances. In March, China's Longi, the world's largest solar company, cut 5% of its 80,000 employees," the British newspaper writes.

"Chinese producers are also experiencing difficulties in the current low price environment," said Marius Bakke, senior analyst at Rystad Energy.