The European Commission has extended its heavy import tariffs and price controls on solar panels from China which were originally due to expire today, Monday 7th December.

The so-called ‘Expiry Review‘ will mean that the tariff, which adds up to 70% to the cost of imports, could remain in place for several more years and possibly until 2020 – pushing up the price of solar energy for European consumers and businesses by an estimated £700 million.

In effect the Commission is extending an import tax on PV imports from the world’s lowest cost bulk producer – even as EU countries including the UK shower subsidies and other favours on the fossil fuel sector without attracting any formal complaint. The UK alone spends £26 billion a year subsidising fossil fuels.

The Commission’s decision has been denounced by the Solar Trade Association, which describes the tariffs as “punitive”. The STA’s CEO, Paul Barwell, said today: “These price controls on imports of Chinese solar panels need to be dropped. Europe is currently paying far more than it should for its solar – and that applies both to our homeowners and our governments.

“In the last two and a half years under these price controls and restrictions, the UK will have deployed nearly 7GW of solar PV equating to £8.5bn of investment. Over the life of the tariffs this will add £700 million more than it would otherwise need to in terms of the UK’s support for solar – that is simply too much.”

Commission explains: China’s prices are too low

The Commission announced on Saturday morning that it would undertake the two Expiry Reviews into anti-dumping and countervailing measures, as well as an interim review as to whether cells should remain subject to the tariffs, following an application by EU ProSun on behalf of EU producers of PV modules and cells.

Milan Nitzschke, President of EU ProSun, said: “Dumping in a market economy is the greatest threat for competition, jobs and innovation. As long as Chinese manufacturers fail to comply with basic international trade and competition rules, the EU must maintain the measures in full force and effect.”

The complaint was made on 4th September 2015, however the Commission waited until the last possible moment to issue its notice – indicating that it may be seeking to drag out, rather than expedite, the procedure.

According to the Commission’s statement, ProSun had compared Chinese PV prices to those in the USA and India to discover  ‘normal value’ for the products. Because China’s prices were low, the Commission determined:

“The prima facie evidence provided by the applicant shows likelihood of recurrence of injury, which is likely to be caused by further increase of imports at dumped prices from the country concerned …

“Should the measures be allowed to lapse, imports of the product under review … are likely to increase due to the existence of unused capacity in the People’s Republic of China, because the Union market is still attractive in terms of volume and because other third countries have trade defence measures against the product under review.

“In addition, in the absence of measures, Chinese export prices would be at a level low enough to injure the EU industry.”

Protecting producers – but what about consumers?

However the Commission does not seem to have considered that China may be undercutting competitors simply because it has lower production costs owing to, for example, economies of scale, low cost of capital, and lower labour costs.

It is also looking at the issue entirely from the point of view of protecting EU-based producers of solar cells, without taking account the benefits of lower prices to installers and consumers, and the global benefits of increased installation of solar PV systems.

“The Commission appears to be hamstrung by its own restrictive processes, where they cannot take into account the full facts”, observed Paul Barwell. “We hope this review by the Commission will check whether these price controls are in the interests of the industry as a whole.”

But Nitzschke insists: “Only under conditions of fair competition can we maintain our high quality, environmental and social standards. It is absurd that some people believe that it is possible to build a clean energy turnaround on the basis of dumped imports from China.”

The Commission’s move comes at a bad time for the UK’s solar industry, which expects to be hit with an 87% cut in the domestic feed-in tariff, which rewards householders who install solar PV systems. This means it is essential for the UK solar industry to cut its costs to the bone in order to remain competitive.