L R AS Published on Sunday 3 September 2023 - n° 455 - Categories:Europe
The European Union favours the deployment of renewable energies over the manufacture of equipment
For the author, the lack of clear political support, dependence on raw materials and higher production costs are holding back the localisation of European solar production, despite strong demand.
While China has dominated the production and sale of solar panels for the past fifteen years, the photovoltaic world is changing,
which threatens this hegemony. On the one hand, there is increased scrutiny of the sustainability and traceability of the solar supply chain.On the other, there is a growing global race for subsidies, with the United States, India and the European Union announcing their intention to provide financial support to their own manufacturers. This is the case in the United States with its Inflation Reduction Act, and in India, the system based on customs duties and production aid.
In this context, Europe is lagging behind. The REpowerEU initiative sets ambitious renewable energy targets for 2030, but says little about supporting local manufacturing. The recently proposed Net Zero Industry Act (NZIA) aims to stimulate local manufacturing. While this is a step forward, it could take up to two years before the European Commission approves the policy. In other words, the European Union has set very ambitious targets for renewable energy installations in Europe up to 2030, but these targets will not automatically increase demand for locally manufactured products.
The US Inflation Reduction Act is a magnet for European industry and a risk to the development of European industry.
There is currently almost no ingot or wafer capacity in Europe to process silicon. Over 40 GW of annual ingot, wafer and cell capacity - plus an additional 30 GW of panel capacity - would need to be built to meet these targets. Achieving these targets will be increasingly difficult in the face of competition from US subsidies. To attract manufacturers, the EU should introduce much higher manufacturing incentives, establish tariffs to punish products with a higher carbon footprint, and set local content quotas in public tenders.
Industrial production in Europe will face production costs in Europe that could be up to 50% higher than in China (according to S&P Global Commodity Insights), mainly due to higher electricity prices and labour costs in the EU.
Another obstacle will be the fall in the price of Chinese panels following the fall in the price of silicon. The high price of silicon has kept panel prices high for the past two years, narrowing the gap between the most profitable manufacturing sites in mainland China, South East Asia and other regions (including Europe and the US). If panel prices become low again, this will make it increasingly difficult to manufacture the panel supply chain overseas.
To find an advantage, they want to emphasise the lower carbon footprint in Europe, the origin of equipment in public tenders according to the NZIA, as well as a 15% to 20% rating system for sustainability and resilience.
To soften the harshness of his comments, the author wants to emphasise the European advantages. He mentions new technologies such as perovskites and lower-cost, higher-yield wafer production methods.
Some twenty GW of panel production capacity have been announced for the first five months of 2023. This will not change our dependence on Chinese or South-East Asian cells.
In fact, few players in the sector are expecting a major shift in the panel production chain over the next few years. Europe will remain dependent on panels from abroad.
https://www.pv-magazine.com/2023/08/21/deployment-trumps-manufacturing-in-eu-priorities/
PV Magazine 21 August 2023
