EU weighs solar panel tariffs on China

The European Union is poised to levy tariffs on Chinese solar panels, a move that could bolster the fortunes of local manufacturers including one owned by Abu Dhabi.

The European Union is poised to levy tariffs on Chinese solar panels, a move that threatens to slow the deployment of renewable energy but could bolster the fortunes of local manufacturers, including one owned by Abu Dhabi.

Karel De Gucht, the EU trade commissioner, is to recommend the tariff to fellow commissioners on Wednesday, Reuters reported.

Home to half of the global solar market, Europe has undergone a transformation from one of the world's solar panel manufacturing hubs to the final destination of tens of billions of dollars worth of Chinese panels in a few years.

European factories have struggled to compete on price with Chinese producers, who have benefited from generous state subsidies.

Masdar, the Abu Dhabi clean energy company, through its Masdar PV unit owns a US$160 million plant in the German town of Ichtershausen that makes thin-film amorphous silicon panels.

Amid falling prices, Masdar had put on hold its plans to build a solar panel factory in the UAE, aspirations mirrored in Saudi Arabia and Qatar. Last month, Masdar launched a $31.99m utility-scale, 15-megawatt solar photovoltaic (PV) power plant in Mauritania - the largest in Africa, its panels supplied by Masdar PV.

In March, the EU ordered customs officials to start registering Chinese solar imports, the latest in an investigation into whether the $27 billion worth of panels exported from China to the EU in 2011 were "dumped", or sold below their manufacturing cost.

China, which supplies 80 per cent of Europe's solar panels, has threatened to retaliate with tariffs on European wine if the EU goes ahead. The United States has already levied tariffs of 31 per cent or more on certain Chinese solar imports.

But Europe's solar industry is not unified around blocking Chinese panels, which can be half the price of their European counterparts.

Solar installation companies have benefited enormously from a fall in panel prices to a third of their levels two years ago, and one alliance of such installers argues a tariff could both slow the deployment of renewable energy and lose local jobs.

Soventix, a German solar installer, said a hypothetical 60 per cent tariff on Chinese panels would eliminate 242,000 jobs over three years.

Chinese manufacturers, however, have not universally benefited from capturing market share. In March, Suntech, the top solar panel supplier to the Arabian Gulf, defaulted on a $541m bond.