EU approves solar panel deal with China

EU commisioners have today agreed to a compromise on imported Chinese solar panels. China has agreed to not export solar panels for less than 56 euro cents (74 US cents) a watt. A limit has also been placed on their solar panels of seven gigawatts capacity per year. But, some European solar companies are still not happy. It's a dispute that has been going on for years.

In the discussions, EU Trade Commissioner Karel De Gucht had been pushing China for a minimum price of 56 euro cents per watt of import, the current average price for solar panels sold in the EU. Chinese trade representatives were reportedly bargaining hard, seeking to maintain their market dominance with a 50-cent-per-watt price.

German company SolarWorld, the country's largest producer of solar panels, spearheaded the original dumping complaint against China. Following the new minimum price agreement by EU Trade Commissioner Gucht, a group of European solar panel producers want to head to court. They say the EU isn't doing enough to represent their interests.

Cheap solar panels imported from China have flooded European markets over the last few years. Combined with cuts in state support, this has caused many European solar companies to go bankrupt, especially in Germany. German company Q-Cells filed for insolvency in April 2012, although the company has survived thanks to foreign investors.

Chinese solar industry representatives were furious about the tariffs imposed by the EU earlier this year. In June, the EU placed a 11.8 percent anti-dumping tariff on Chinese solar panels. Those tariffs were due to go up to 47.6 percent on August 6. Now, the increase will only apply to those Chinese companies that don't agree to the new minimum price.

Germany is among the world leaders in producing solar energy and even set a new world record for electricity from solar in July 2013. Government support packages led to the installation of rooftop solar panels across the country. But governments have cut solar subsidies in recent years, causing the German solar panel industry to shrink.

Germany may reposition itself on the global solar market by focusing on quality and specialization. Using its strength in engineering, Germany's solar sector could turn to the development of technology, maintaining and servicing existing facilities and developing solar for its own specialized market, as with the rooftop photovoltaic cells being produced at the German factory seen here.

Previously, in retaliation for US tariffs on imports of solar panels, China imposed a duty on the raw material polysilicon produced in the US and South Korea. Polysilicon is used to make solar panels. China had been considering a tariff on European wines in retaliation for the proposed EU solar panel duty. Both cases demonstrate the intricacy of global trade webs and the many players involved.

Developing countries need more electricity. While initial costs can be high, solar power ultimately saves money. Although global demand has dropped recently, the solar industry is expected to boom again. Many hope that cheap Chinese solar panels will stimulate a global energy transition.