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Environment

Solar trade deal with China 'a fair compromise'

The EU has approved a solar panel trade deal with China, saving Europe from a full-blown trade war. The deal has been criticized, but solar industry expert Eicke Weber says this compromise will stabilze the market.

The European Commission imposed anti-dumping tariffs on Chinese solar panels earlier this year, claiming China was selling their product at artifically low prices. But a new deal between the two sets a minimum price for Chinese panels within the EU market and brings punitive tariffs to an end. Eicke Weber, the Director of Frauenhofer Institute for Solar Energy Systems ISE, says the deal is a fair one.

Deutsche Welle: Dr. Weber, could you tell us about the compromise solar trade deal?

Eicke R. Weber: The problem was that China has been selling photovoltaic modules at prices far below production costs and this is why the European Union, as well as the United States started to request tariffs in order to equilibrate the situation. However, nobody really likes to put up barriers against free trade. So it is a relief that we have found a compromise that seems to be acceptable on both sides, in which the Chinese manufacturers promise to keep a minimum price for the modules, as well as agree to limits on the total volume of modules shipped to Europe.

Chinese solar panel factory workers attending a protest against EU tariffs.

There was strong opposition in China to the prospect of Europe introducing tariffs on Chinese solar panels

This compromise seems to have done little to ease the tensions in Europe. The Alliance for Affordable Solar Energy (AFASE) says any rise in price will harm the market for solar power. On the other hand, EU ProSun, a solar industry lobby group, says the EU is being blackmailed by China. What is your opinion?

Any compromise will never satisfy the interests of competing parties on both sides fully. I think it is a relatively fair compromise. What is most important is that reaching such compromise avoids a trade war and allows investors to go forward with confidence. The biggest danger of the past situation was that investors could not know for which price they were going to get modules and whether there would be retroactive tariffs slapped on those prices, which of course really disrupted the market very strongly.

An AFASE protest in Brussels.

Solar power promoters like AFASE are concerned any rise in costs will harm the solar market

ProSun has gone as far as to say the compromise is illegal and they're planning to take their complaint to the European Court of Justice in Luxembourg. What kind of results can we expect if they take it that far?

Of course nobody can predict any decision of the Court of Justice. From my own, more technical than political perspective, I would think that the compromise makes plenty of sense. It really avoids the most damaging consequences of the past situation, in which modules were sold at prices of 30 or 40 cents per watt - those were clearly dumping prices. I think a price bottom of 56 cents per watt is a bottom where some manufacturers, including European manufacturers, will be able to produce at least at cost.

You have spent a lot of time in the US, which has had its own dispute with China about the production of cheap solar panels and parts. How is the American renewables industry reacting to the EU-China deal?

It was the same companies behind the US problem with China. The problem is the same: low prices for Chinese modules appeared in Europe and in the US. I have not yet seen published reactions from the US industry but I expect the US will be willing to join a compromise of the kind that has been reached. US interest in avoiding a trade war is as large as in Europe.

Workers in China make a solar panel

Weber says the United States may adopt a similar compromise to Europe with regards to Chinese solar panels

This deal goes to the end of 2015. What impact do you think it will have on the future of renewable energy worldwide?

In principle the impact will be positive because it will reestablish stability of an investment climate so investors know what prices they can calculate with. I think it makes sense to limit the deal to 2015 because in 2015 we might have a new market situation. We may have different prices and then either we don't need such a deal at all or we can renegotiate.

Professor Eicke Weber is Director of the Fraunhofer Institute for Solar Energy Systems ISE and Professor for Physics and Solar Energy at the Albert-Ludwigs-University of Freiburg, Germany.

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