L R AS Published on Tuesday 14 June 2022 - n° 408 - Categories:Europe

The problem of European reindustrialisation in PV

The development of photovoltaics has been stimulated by China. The United States and Europe are now the two major markets dependent on Chinese products. They have just discovered that they are too dependent. Delivery problems, rising prices in the PV sector, and dependence on Russia in the Ukraine affair are prompting these two major markets to find alternative solutions.

Europe lacks manufacturing capacity, despite an annual silicon production capacity of 22 GW. Wafer and cell production capacity is very limited. They stand at 0.5 GW and 2 GW. Europe has an annual panel production capacity of 6.5 GW (for an estimated demand of 49 GW in 2022). Production is limited because production costs (electricity and labour) keep prices high, which encourages customers to buy panels in China.

With 49 GW of panel demand this year, Europe is the world's second largest market after China. Currently, 90% of its demand is supplied by Chinese products. It is crucial to reduce this figure and increase local production. Demand for photovoltaic panels in Europe is growing every year. It could reach 65-70 GW by 2025.

Delivery costs tend to rise, due to robust demand and fluctuating exchange rates. Glass-foil panels with a power output of more than 500 W are delivered at $0.27-0.28/W. Spot prices exceed $0.28-0.30/W when supply is lower than strong demand. Prices for residential projects are $0.285-0.315/W. Prices for black-backed panels range from $0.295 to $0.35/W. Price differences between consumer products and Chinese panels are in the region of 3 to 8%.

European manufacturers need to target the right customers. Faced with higher production costs, they need to focus on high-end rooftop markets to make a profit, as prices for ground-mounted projects are too expensive compared with their Chinese competitors.

Europe is attracting various manufacturers to expand their production due to the following factors:

-Demand for photovoltaic panels in Europe is growing every year. It could reach 65-70 GW by 2025.

- Delivery prices have been trending upwards, due to robust demand and fluctuating exchange rates.

Secondly, as the M10 format is expected to remain common in the coming years, while the G12 format will see its market share gradually increase, manufacturers should deploy equipment capable of adapting to formats up to G12 for long-term use and cost amortisation.

P-type PERCs will continue to be the most common type over the next few years, thanks to their cost advantage and a production process that allows manufacturers to convert existing lines to TOPCon.

The HJT has a simpler manufacturing process (with just six procedures), a higher theoretical conversion efficiency and uses thinner wafers. In addition, HJT is a fundamental technology for developing panels with a low carbon footprint.

The key is to opt for N-type technologies. Currently, P-type and N-type panels have price differences of $0.01 to $0.05 per watt. With wider price acceptance, Europe can be a pioneering market for N-type panels. The development and application of N-type products will be accelerated if the European market widely adopts these products.

Finally, it is desirable for manufacturers to develop production on a GW scale rather than a 200-500 MW scale, as the resulting cost advantage enables them to negotiate better with upstream or downstream sectors.

Conclusion

Local manufacturing in Europe faces a number of obstacles, all of which boil down to competition from low-cost products made in China. In addition to the supportive policies that the EU and governments will put in place in the future, greater price acceptance and innovation for new products will allow the Union to work on N-type technology and low carbon footprint products, which are two markets that China has yet to conquer. These differences are the keys to giving "made in Europe" a competitive edge.

https://www.infolink-group.com/en/solar/analysis-trends/Is-reshoring-European-PV-manufacturing-a-real-possibility

PV InfoLink of1 June 2022

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