In a move to avoid imposing anti-dumping duties, Europe is nearing an agreement with China on minimum prices at which Chinese solar panels may be sold in Europe, according to some reports.
The two sides are reportedly considering a compromise minimum price of €0.55/W (up from China´s initial proposal of €0.50 and down from Europe´s counter-proposed €0.57). Both prices are in the range of €0.59, the current average European selling price for Chinese modules.
"Chinese negotiators went back to Beijing on Monday evening and when they left Brussels, only a few numbers had not yet been settled," said an anonymous Chinese source that reports said is close to the talks. Further negotiations between EU Trade Commissioner Karel De Gucht and Chinese Commerce Minister Gao Hucheng will be handled by telephone, reports said.
However, initial reports from this afternoon tell a different story: Chinese negotiators reportedly walked out at lunchtime after refusing Europe´s €0.55 offer. The European Commission has not confirmed these initial reports. Setting Chinese solar panel imports at 7 GW per year had been agreed by both sides, but now may also be off the table. Reports say the Chinese delegation will discuss a new strategy on Sunday.
The anti-dumping duties of 47.6 percent are set to kick in on August 6. European negotiators had specified that they needed two weeks’ notice to put an agreed deal in place, which would mean that the deadline of July 23 had passed. But Chinese solar panel producers would still be able to avoid the tariffs by freezing panel imports until a deal has been struck.
"We are very close. Both sides want a deal," said an unnamed European source. "Even if an agreement is not in place on August 6, Chinese producers could choose to hold back their imports until there is agreement because we are so close."
The European Commission would not comment on the reports, saying only that "discussions are ongoing at the highest level, as both sides seek an amicable solution." The Chinese mission to the EU also did not comment.
European solar panel industry association EU ProSun has called China’s first proposed minimum price of €0.50/W “unacceptable” and “an insult to Europe" because the price is lower than the current average selling price. On reports that the two sides are now considering a compromise price, the group said in a statement that "a minimum price of between €0.55 and €0.57, apparently the price level in the agreement, would lie exactly at the level of the current dumping price for Chinese modules. At the same time, the agreement also sets a quantity to which the undertaking exemption applies, which is about 70 percent of the expected solar market. This is essentially a guarantee of sales at that level and more for China and an authorisation to sell at dumped prices. That is a clear violation of EU trade law."
"In these negotiations," said EU ProSun´s president Milan Nitschke, "the EU Commission obviously acted against their overall mission and did not represent the interests of the European industry. It appears rather that there was only a desire to bring the proceedings to a quick end."
If an agreement is eventually reached by the August 6 deadline, it likely will be a compromise that is not painless for either side, explains Henning Wicht, senior director of solar research for IHS.
For Europe, pricing at or above the €0.57-0.60 kWh range will help ease the low-price competitive pressure from China. Those prices also will favor rooftop systems in Europe, and not ground-mounted systems in Germany and Italy, while allowing room for projects in emerging markets such as the U.K. and Romania. That doesn´t address the problem of Europe´s oversized solar distribution channel, however, Wicht says, pointing out that Germany alone has 300 wholesalers.
For China, some of its Tier 1 suppliers can probably live with that pricing ballpark, Wicht noted. But as was the case with the U.S. tariff decision against China, they will likely seek to set up factories elsewhere, such as Taiwan or Korea, to ship to the European market without penalty. Ironically they could even look at buying up shuttered solar PV factories in Europe on the cheap, Wicht points out, since most of the heavy capital has already been invested and the equipment is robust enough to manage a few years´ worth of further production.
Both European and Chinese officials have repeatedly professed a desire to reach a compromise sooner rather than later. Wicht suggests a resolution is more likely to be reached via negotiation before this next August 6 deadline, than accepting the higher 47 percent tariff for the next several months until the broader resolution. It´s possible, but unlikely, that China is holding its ground until year´s end, betting that the EU member-states won´t agree on the tariffs at all and they are wiped out completely, Wicht noted.
If both sides can´t come to an agreement in the next 11 days, the next big flurry of activity will happen at the end of the year when EU member-states have to decide on these measures in a unified voice - if they can, and which they have yet to do so far. Wicht hopes there will be an effort to shrink the timeline for duties from five years to perhaps an annual review term to examine the state of the market and maybe shift the fixed price or remove it entirely. In theory the EU could tack an addendum to the legislation in order to seek more time on a decision, but this likely wouldn´t be pursued, he said.