Solar panel leader warns Europe about boycotting China – 02/20/2024 – Market

The world’s largest solar panel maker has warned that Europe and the United States risk a slowdown in the decarbonization of their economies if they restrict the participation of Chinese companies in their renewable energy supply chains.

China dominates solar panel manufacturing, accounting for more than 80% of global production after decades of intense state support, rapid growth in domestic demand and plenty of local competition.

But Western political and industrial leaders have called for greater supply diversity in the face of a glut of Chinese imports, as well as expressing security concerns about the use of Chinese-made components in critical infrastructure.

Dennis She, vice-president of Longi Green Energy Technology, which has about 20% of the global photovoltaic module market, told the Financial Times that Western countries would “at least slow down” their transitions away from fossil fuels if they reduced the supply of solar energy from China. He also warned that the cost of solar panels produced without Chinese involvement in countries like the US would be “double.”

Europe builds less than 3% of the solar panels needed to reach the target of having 42.5% of energy generated by renewable sources by 2030.

She said importing larger volumes from China would mean more jobs further down the supply chain beyond panel manufacturing, including the construction of new solar developments, as well as engineering, design and installation.

“You don’t need to eliminate most downstream jobs in the supply chain to protect the 1% [dos empregos europeus na fabricação de painéis solares]— that doesn’t make sense,” She said.

The assessment comes amid growing Western concern that Beijing’s subsidies for its clean technology industries — which also include wind power, batteries and electric vehicles — have increased Chinese manufacturing capacity far beyond the levels needed to meet demand. domestic, leading to unfair trade practices as Chinese factories now flood international markets with exports.

Last month, a group of US senators, involving both major parties, called on President Joe Biden to increase tariffs on imports of solar panels made in China. The heavily subsidized products were undermining American efforts to “relocalize” domestic manufacturing, they said, adding that China’s overcapacity posed “an existential threat” to U.S. energy security.

In response to Western protectionism, China’s industrial sector, which has weathered several rounds of tariffs from Europe and the US over the past 15 years, is increasingly expanding its manufacturing capacity closer to overseas customers, including the US.

However, some attempts to move production to Southeast Asia were seen in the US as a way to circumvent restrictions. Companies, including a Longi subsidiary, have been found guilty in the US of using foreign manufacturing to “avoid” tariffs on Chinese-made components.

Longi produces most of its products in China, but also has factories in Vietnam and Malaysia, and plans a new factory in India.

To mitigate worsening geopolitical risk, She said Longi is increasingly “trying to work with countries”, including through local joint venture partners, to establish greater solar production capacity.

This includes the US, where the Shanghai-listed group has established a joint venture with Invenergy in Ohio. Longi is also in talks to enter Saudi Arabia through a local partner.

However, to serve developing economies in regions such as Southeast Asia, Latin America and Africa, Longi is increasing exports from China, She said, noting that about 1 billion people in the world live without access to electricity.

“For the rest of the market, solar is a very nice ‘gift from the gods’… you have China’s solar (panel), the sun is your own sun,” he said.

Energy consultancy Wood Mackenzie predicts that, after investing more than US$130 billion last year alone, China will continue to lead solar technology and dominate more than three-quarters of the world’s polysilicon, wafer, cell and solar module manufacturing capacity. for the next three years at least.

Last year, solar production costs in China fell more than 40% to about 15 cents per watt, compared with 30 cents in Europe and 40 cents in the US, according to Wood Mackenzie . The decline was driven in part by lower material costs and oversupply.

Longi’s current factory utilization rate has dropped to between 70% and 80% due to oversupply, but industry consolidation and demand growth in the coming years are expected to help the company gain market share and improve profitability.

“Everyone is suffering right now,” She said, adding that only companies with sufficient production, like Longi, are likely to survive.

“Small players, or new players from other industries, will disappear from the market… I can’t tell you the exact number, but second and third tier companies, the majority of companies, in fact, are at risk,” he assessed.