What does the new EU political cycle mean for solar manufacturing?

The European Union has set a goal of at least 30 GW of European solar manufacturing, at each stage of the value chain, by 2030. However, market forces are driving down the price of solar components, making it difficult for Europe’s solar industry to sell their products and scale up. Some parts of the European solar value chain are particularly impacted, like solar modules and wafers. We continue our urgent calls to support these critical links in the solar-led energy transition.

This edition of Solar Manufacturing Matters comes as the new EU political cycle begins to kick off in earnest, with industry activity across the EU Institutions.

Over summer, the Industry, Research and Energy (ITRE) Committee in the new European Parliament settled on its new configuration. In recent weeks, the European Commission has proposed its new ‘College’ of Commissioners, and their thematic action plans for the next five years. The Council of EU Competitiveness Ministers met up in Brussels just this week. All of this has been underpinned by the recent ‘Draghi’ report on The future of European competitiveness. But what do these developments mean for solar manufacturing?

Policy Friday Focus: The Draghi Report

On 9 September, the European Commission published the long-awaited Report on the Future of EU Competitiveness, authored by Mario Draghi, the former President of the European Central Bank. The publication is playing a significant role in the shaping of the new European Commission's strategic direction.

The report notes the rise of manufacturing in China. While not specifically in the text of the report, speaking at its launch, and in the European Parliament, Draghi expressed doubt towards the value of reshoring solar manufacturing to Europe. We pointed out:

“Spending on resilience is not a cost, but an investment. It is important not to give up on strengthening the EU solar supply chain – it is the continent’s primary decarbonisation technology” – Walburga Hemetsberger, CEO of SolarPower Europe.

However, we agree with the report’s acknowledgment of the potential of the Net-Zero Industry Act. The NZIA will create a new ‘market pull’ for EU solar products. A visible pipeline of demand de-risks investments in new factories. The report highlights the possibilities: if the EU steps up manufacturing capacity as envisaged under the NZIA, clean tech investment could reach €92 billion by 2030. Accordingly, the report suggests including NZIA implementation in National Energy and Climate Plans, to assess investment needs and plans for manufacturing projects.

The report echoes our calls for support from the European Investment Bank in reshoring solar manufacturing. The EIB’s support of 3SUN’s Sicilian factory is a good, but singular, example. Going even further, Draghi suggests adding ‘Made in EU’ provisions to the EIB loans.

Importantly, the report recommends that the next EU budget – the Multiannual Financial Framework – should streamline funding devoted to the manufacturing of clean technologies, with support for both capital and operational expenditure (for a limited period of time for specific segments, while production is ramped up). This reflects our repeated calls that manufacturers in the solar supply chain need opex support to scale up, while they face energy prices twice as high as their competitors in China, and three times as high as those in the US.

The new EU Political Cycle

The machine to reset EU policymakers started back in spring, with the European elections to choose the new European Parliament and MEPs. Then, over summer, the ITRE Committee – the key committee on industrial policy – formalised its configuration, with Borys Budka MEP as the Chair. From Poland, and part of the centre-right European People’s Party, Budka has a history of supporting public funding for renewables.

On the other side of the EU quarter, the process to appoint the new Commissioners from each Member State is ongoing. Earlier this month, following each Member State nomination for their representative, President Ursula von der Leyen revealed her proposed Commission formation. Some key figures to watch, their country, and their portfolio:

• Teresa Ribera (Spain - Clean, Just and Competitive Transition): Ribera will be responsible for competitiveness policy/portfolio, ensure that EU stays on track for the Green Deal goals, and that we decarbonise and industrialise EU economy at the same time. She will lead on the Clean Industrial Deal as well as competition policy, including a revision of competition policy.

• Stéphane Séjourné (France - Prosperity and Industrial Strategy): Séjourné will be responsible for the industry, SMEs and single market portfolio, investment and innovation, economic stability, trade and economic security.

• Dan Jørgensen (Denmark - Energy and Housing): Jørgensen will work to help to bring down energy prices, invest in clean energy and ensure we cut EU dependencies, look at all housing aspects from energy efficiency to investment and construction. He will also have to deliver a European Affordable Housing Plan.

The Commissioners-Designate are now subject to hearings in the European Parliament (expected 4-12 November). Then, the new College of Commissioners is expected to enter office on 1st December.

Following the announcement of the list of Commissioner candidates’ names, the European Commission released the mission letters to Commissioners that set out their general work programme. The letters include a proposal for a new approach to competition policy, including to help protect consumers from rising prices, and a State Aid Framework ‘to accelerate the roll-out of renewable energy, deploy industrial decarbonisation and to ensure sufficient manufacturing capacity of clean tech’.

Wrapping up the activity in the EU institutions, Competition Ministers met in Brussels this week. The Ministers have already begun the process on an updated State Aid Framework. The rules dictate how much support EU countries can give to their industry.

The Ministers confirmed that they will formally ask the European Commission to extend certain elements of the current rules, which are expected to expire in 2025. Neither the elements requested for extension, nor the duration of the extension have been specified yet. Nonetheless, we see this move as good news for solar manufacturers, who need support to reach the EU target of 30 GW of manufacturing by 2030. As well as an extension, we’re also recommending that the rules are simplified, making support easier to access and implement.

Solarcoaster

The latest ups and downs in the EU solar manufacturing landscape.

• TRADE: As trade barriers rise in several markets, including India, the US and South Africa, the Chinese industry is in a significant state of consolidation. Policies are being discussed in China to reduce the overcapacity.

• PRICES: The price of solar components has reached record lows, pushing Chinese exports ~26% higher YoY (Jan-Jul) but still, European module imports were ~10% lower than last year (Jan-Jul). Despite lower imports and relatively high installation levels, the pressure on EU wholesale markets remains under pressure, leading prices on the EU wholesale market to reach all-time lows.

• ALARM BELLS: In the EU, manufacturers from polysilicon (Wacker) to inverters (Both market leaders Fronius and SMA) are facing challenges, with some adopting cost-saving measures to weather the storm.

• SUPPORT: Though delayed, policy makers are reacting to the difficult environment: the EU commission approved a manufacturing support scheme in Poland, there's regional support for a Dutch BIPV plant, and the Bulgarian government has signed an MoU for a local cell factory. More movement came from France where production plans from Carbon and Holosolis PV were recognized as 'national interest' projects.

• EXPANSION: In France, Carbon acquired Photowatt, while in Italy, module and cell manufacturing is set to expand as Midsummer develops 50 MW CIGS thin-film cell production and Comal further develops its 500 MW of module manufacturing.

Solar Manufacturing Matters is a fortnightly newsletter on the European solar manufacturing landscape. Every other Friday, check out our latest EU policy analysis and a roundup of solar manufacturing market news.

From SolarPower Europe, the award-winning European trade association with over 320 members active at every point in the solar PV value chain.