Following the introduction of a penalty tax for Chinese solar panel imports in the the United States, the European Commission has now launched an investigation into state subsidies of Chinese firms. This follows an earlier investigation into the alleged “dumping” of solar panels into the EU market. This could result in an increase in solar panel prices in the next year. 

The latest subsidy case has been raised following a complaint by a group of 25 European solar panel companies led by Germany’s SolarWorld, the same group that had complained of dumping, and largely the same group that pushed for the penalty tax in the USA.

This is not about small money, since over 21 billion euros worth of solar panels and components came from China to the EU in 2011 – which is about 7 percent of all Chinese exports to the EU.The European Commission can impose provisional duties within nine months and the EU has within 13 months of an investigation’s launch to impose definitive duties for up to five years.

Similarly to the penalty tax in the UK, we view both EU investigations as a case of protectionism. All solar panel manufactures that still remain in Europe have lost competitiveness years ago – not because of dumping or state subsidies but simply because it’s too expensive to mass-produce commodity products in the EU. The long list of European and American solar bankruptcies in recent years clearly shows this.

Price is absolutely key for consumers who are looking to buy solar panels, since a lower price directly results in a better return. Lower prices also allow for lower Feed-in-Tariffs, which in turn reduces the ‘state subsidy’ that Europe gives to solar panels. Governments should applaud the lowest possible price of green electricity, and not spend lots of money on investigations about subsidies or dumping while they still subsidize solar panel installations by such significant amounts themselves.