Challenges dim prospects for China's solar power industry

CLEAN ENERGY provision in China is facing a range of new challenges. The country’s solar power sector has long thrived on being able to sell cheap solar panels overseas; now the EU is investigating cheap Chinese imports of photovoltaic technology.

China’s solar product exports were valued at €27.7 billion in 2011, with the EU buying more than 60 per cent of the output. However, the EU now believes this enviable growth was due at least partially to billions of euro in subsidies that Brussels and national governments put in

place to promote installation of solar panels for homes and businesses.

China’s solar panel industry has been criticised for creating a glut and the resulting price collapse has seen widescale job losses at solar panel makers such as Trina Solar and LDK Solar.

The EU is investigating China for making solar panels – and the cells and wafers used in them – below cost price in an anti-dumping probe that covers imports from China worth €21 billion.

If the EU brings in anti-dumping duties against China, the impact would be much worse than that of a US decision earlier this year to impose anti-dumping duties up to 250 per cent, because the EU buys so much more product from China.

And now an industry group of European solar equipment makers, EU ProSun, led by Germany’s Solarworld, allege that Chinese solar photovoltaic manufacturers are receiving illegal subsidies.

“China seeks a monopoly in the solar sector and subsidises the local industry with billions. That’s leading to overcapacities and ruinous price competition,” said EU ProSun president Milan Nitzschke.

“Chinese banks implement government policy by giving very low interest rates to solar manufacturers and, if the borrower cannot pay back the loan, it may be written off, extended indefinitely or paid off by other government-controlled entities,” said Nitzschke, in remarks published in local media.

The group also claims that regional and local subsidies have been granted, including repayment of interest, electricity costs, transaction costs for land, value-added tax and credit guarantees.

The Chinese companies have tried to defend themselves against accusations that they have been given state privileges.

“We obtained land fully in line with market price, without saving a penny under any ‘special policies’. Also, we took bank loans at normal market rates and didn’t receive any governmental subsidies,” Chen Kangping, chief executive of photovoltaic manufacturer JinkoSolar, told the Xinhua news agency.

As growth slows in Europe and the US, exports are slowing too, which has forced the Chinese to look at the domestic market, just as in so many other industries.

To boost domestic demand, the National Energy Administration is trying to implement a pilot scheme to supply electricity via small solar panel power generators. Provincial governments must file by October 15th on how they plan to implement the scheme.

Beijing, Shanghai, Tianjin, eastern and coastal regions will be the first few regions to implement the solar panel power generation pilot scheme.