Officially these are called minimum prices. But unfortunately they soon turn out to be high in comparison with other regions, because you operate in a very dynamic industry where prices move down fast and competition is tough.
What seemed to be a pleasant arrangement turns out to be a chain, strangling your efforts to serve the market and your customers. The minimum pricing arrangement evolves into a maximum-price trap. After three years you decide to rip off the chains.
This is exactly what has happened in the solar industry. More and more companies have said “goodbye” to the so called minimum price agreement for imports of Chinese solar modules and cells to Europe.
And it’s not just the small ones, but also the market leaders.
With Trina Solar and, as recently as last week, JinkoSolar, the two biggest module manufacturers have left the agreement behind. Given the fact that others have been forced to leave earlier due to breaching the rules, the count goes up to four of the ten biggest module suppliers globally. Today, the total stands at 17. More are to follow soon, surely.
The industry is voting with its feet. And to add to the madness, the European Commission itself no longer seems able to handle its rules. In August they excluded two Taiwanese manufacturers not due to any failures to abide by the rules, but because the authorities were too overstretched to monitor them.
This is absurd and the final proof of this system’s failure.
Let’s think back: The minimum price system was established to protect European cell and module manufacturers from alleged dumping and other anti-competitive practices by Chinese exporters.
However, it wasn’t able to help. A study by IHS has proved that solar manufacturers in China and other Asian countries can produce much cheaper due to simple economic parameters: economies of scale, proximity to supply chains and standardisation. Whereas manufacturers in Asia have successfully extended their lead, top European players are still 20% more expensive.
By trying to protect a small number of companies, as a collateral damage Europe’s solar market and solar industry as a whole have been harmed severely.
Tens of thousands of jobs were lost in other sectors than cell and module manufacturing. Europe, the longtime global leader in technology and pricing, has turned into a niche market compared with upward developments in the Americas or Asia.
The sooner this crazy downward spiral is stopped, the better. It’s time for the EU Commission to act by eliminating minimum prices and duties, reopening the European solar market and giving space for growth again.
Holger Krawinkel is spokesperson for the Solar Alliance for Europe (SAFE), a network of companies and associations active in the solar energy sector
