Europe's transition to green energy faces a dilemma, caught between the surge in solar energy installations fueled by inexpensive Chinese imports and the detrimental impact on local solar manufacturers in the region.

The continent experienced a remarkable year in green energy, with European Union countries witnessing a 40% increase in solar capacity installations compared to 2022. However, this success story conceals a crisis for Europe's domestic solar panel manufacturers. The overwhelming majority of solar panels and components contributing to this surge originated from China, accounting for up to 95%, according to data from the International Energy Agency.

Despite the apparent green energy boom, local European solar manufacturers find themselves in dire straits, grappling with the adverse effects of cheaper imports and oversupply. The sector is now on the brink, with imminent production closures and warnings that half of its capacity could shutter within weeks unless decisive government intervention occurs.

Policymakers are facing a daunting task in responding to this complex situation, and there is a divergence of opinions on the appropriate course of action. German Economy Minister Robert Habeck expressed concern in a November letter to the European Commission, suggesting that proposed trade restrictions on Chinese solar imports might stifle Europe's rapid green energy expansion. Habeck cautioned that such restrictions could elevate prices in 90% of the photovoltaic (PV) market, potentially leading to bankruptcies among EU companies relying on imported parts for assembling and installing solar panels. The minister urged a careful and balanced approach to avoid jeopardizing the progress in Europe's green energy sector.

Source: reuters.com