Skip to navigationSkip to content

Europe set to drive Chinese solar manufacturers off the continent

AP Photo/Alexander F. Yuan
Time to find some other buyers.
ChinaPublished This article is more than 2 years old.

The bad news for Chinese solar manufacturers just keeps coming.

A report out today from market research firm IHS says struggling companies like Suntech could be driven out of the European market in June when regulators impose tariffs on Chinese-made solar panels. Like American regulators, who levied penalties on Chinese manufacturers last year, the European Commission has voted to impose tariffs ranging from 37.2% to 67.9% in retaliation for dumping solar modules below cost.

That’ll hurt, especially as Europe has been one of China’s biggest markets for solar panels. China came to dominate the global photovoltaic (PV) market as it ramped up production and helped send solar panel prices falling 75% in recent years. Now their panels will be be priced out of the European market.

“When the duties go into effect, prices for Chinese modules will rise dramatically as they cannot absorb these additional costs due to the poor state of their balance sheets,” Ash Sharma, IHS’ senior director of solar research,” said in a statement. “This likely will force many Chinese PV module suppliers out of the European market and could spur rising costs for installations.”

The damage to the solar companies is hard to quantify. In past years, Europe has accounted for around 80% of shipments for some Chinese manufacturers. How big a market it remains today is something of a mystery, as many New York-listed Chinese manufacturers have ceased filing quarterly and annual financial statements. Today, for example, regulators put Suntech on notice over its failure to file a 2012 annual statement.

But European and US manufacturers like First Solar and SunPower won’t profit as much as they might like from the troubles of their Chinese competitors. According to IHS, cutbacks to government programs that pay a premium for renewable energy will limit their ability to raise their prices to take advantage of the increased cost of Chinese modules.

So what are Suntech, Yingli, Trina Solar and other Chinese manufacturers to do?

IHS predicts Chinese companies will try to make up for the loss of European sales by focusing on Japan, which is ratcheting up solar installations, or China itself. The Chinese government has set a target of bringing online 10,000 megawatts of new solar electricity generating capacity in 2013. Still, the loss of the European market will be a body blow to major Chinese manufacturers, many of which  are carrying billions of dollars of debt on their books.

📬 Kick off each morning with coffee and the Daily Brief (BYO coffee).

By providing your email, you agree to the Quartz Privacy Policy.