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European Solar | Chinese energy shortages threaten European energy transition

BREAKING NEWS: Chinese PV manufacturers have scaled down their production because of mandatory power rationing enforced by the Chinese government. This has major consequences for the Chinese PV production capacity. “More and more solar energy projects are getting into trouble as a result” says Gerard Scheper, CEO of European Solar.

This development has major consequences for the global supply of PV panels, components and raw materials. The Chinese government has taken a strong position in this. “They are communicating clearly that “China comes first” and demanding that the large M10 panels are not exported so that they can cover the Chinese demand. The rest is sold to the highest bidder.”

According to Scheper this means selling to the USA despite the high US import taxes as the result of the trade war going on between these two super powers. “This is really an expensive joke, because the minimum selling price is now about $0.32 per watt peak.” Not including the logistical costs, which are currently sky-high.

This article was based on the analysis of the Dutch research agency European Solar. They publish every month The World of Solar Market Outlook Report. Feel free to download the free full October 2021 report here.

Impact on the Dutch and European energy transition

The pink elephant in the room is the question if the Chinese power deficit really is this big or is it a political strategy for China to show off their green energy capacity during the Winter Olympics next year in Beijing? “For now we can only guess but I am sure that by the beginning of next year we’ll be able to answer this question.”

The truth, most likely, lays somewhere in the middle and we’ll need to take both scenario’s in consideration. “That’s why I am also seeing PV panel manufacturers scramble to install all kinds of battery / storage systems as fast as they possibly can.”

Europe and the Netherlands will be severely affected by the indirect consequences of these Chinese energy shortages. “For Europe it could end up badly because of the reduced supply of PV panels. It is therefore important to see what is (not) available and at which price points in order to analyze and evaluate which projects can still be profitable.”

Recovery in sight?

“The expected market recovery seems to be coming well into the third quarter of 2022. That’s why I advise solar entrepreneurs to postpone as many projects as possible. A majority of the projects, and especially those relying on subsidies, cannot be profitable at these price points per watt peak. As it turns out, procurement is serious business.”

Author:

  • Gerard Scheper, CEO, European Solar

Compliments of European Solar – a member of the EACCNY.