European solar panel prices to surge by 45%

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21 May 2013, Nuclear, Solar, Wind

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Average solar panel prices in Europe could rise by around 45% in June as a result of import duties designed to protect European manufacturers from underpriced Chinese solar products. However, without an overhaul of European solar subsidies demand could dry up, putting jobs at risk.

Import duties of between 37% and 68% on Chinese solar panels will almost certainly be agreed in a vote by EU member states at the end of May. Chinese solar panel manufacturers have already reduced supplies to Europe after it became mandatory to register all solar panel imports. The additional costs of registration and reduced supply have already resulted in a rise in the average price of solar panels in Europe, going against the trend of rapidly falling prices in recent years.

Given the tight margins and poor state of Chinese solar panel manufacturers' balance sheets, the price increases that will result from import duties are most likely to harm installers - the most profitable part of the value chain - who will probably have to sacrifice some of their margins to limit the effects on investors. But the scale of the price rises, which could be 45% this year, will undoubtedly reduce the return on investments unless government incentives are increased - a situation most governments are completely unprepared for.

European manufacturers will have limited benefits as incentive schemes have been set based on lower price expectations. If European manufacturers are to benefit, which is the objective of the import tariffs, then incentives will also have to be increased. Failing this, European installers and engineering and construction companies are likely to suffer a dramatic slowdown in business, and according to the Alliance for Affordable Solar Energy up to 242,000 job losses could result. / / @DatamonitorEN

Source: MarketLine

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