We commented in a previous alert that the European Commission had launched an investigation into "dumping" of solar panels in the European market by Chinese companies. Yesterday (4 June 2013) it was announced that the European Commission would be imposing provisional anti-dumping tariffs on solar panels imported from China. We consider in this alert how these measures are likely to impact the development of solar parks in the UK and mainland Europe.

The tariff The new duties will apply on the import of solar panels, cells and wafers from China. The new duties are effective from tomorrow (6 June 2013). The European Commission (EC) has said, in its press release, that it does not want this duty to "disrupt" the EU solar market, and is therefore using a "phased approach" to the imposition of duties. The duty will be set at a flat rate of 11.8% until 6 August 2013. From that date, variable duties will be imposed at an average rate of 47.6%; the actual duties may range from 37.2% to 67.9%, the rate apparently depending upon the extent to which the relevant manufacturer/importer has "co-operated", with higher tariffs being levied upon those Chinese companies which have not co-operated. Co-operation in this context is likely to mean a commitment to respect "minimum import prices".

The variable duties will apply until 5 December 2013, at which point the EC will need to make a decision as to whether to impose duties (and at what level) on a more permanent basis, for the following five year period.

The aim of the duty is to secure jobs, which the EC believes would otherwise be lost, in the EU solar panel industry. The EC’s estimate is that, without imposing this duty, 25,000 jobs would be lost, presumably within the manufacturing sector. This has been disputed by a number of trade organisations, who believe that in fact it is the imposition of the duty which will lead to a loss of jobs.

Impact on solar developments

Over the last few years, solar panel prices have been decreasing; this has been a key factor in the decreasing cost of solar park construction. The reducing cost of solar power has prompted, or enabled, governments to reduce the support given to solar parks, such as Feed-in Tariffs (FiTs) and Renewables Obligation Certificates (ROCs) in the UK.

However, it is now becoming clear that, according to the EC, at least part of the decrease in panel cost has been due to "Chinese companies…selling solar panels to Europe at far below their normal market value".1 We will have to wait and see whether, if the cost of solar PV construction rises, levels of government support will similarly increase. If not, this could lead to the development of some proposed solar parks becoming commercially unviable, squeezed at both ends by rising costs and reducing support.

The EC views the levelling of the "playing field" through the imposition of the anti-dumping duty as a necessary action to ensure that the EU meets its renewable energy targets. If, as suggested above, the imposition of anti-dumping tariffs actually leads to fewer solar developments, it will be interesting to see if the EC changes its mind on this point.

Further measures likely

As we have noted above, the measures announced yesterday only provide clarity as to the position until 5 December 2013. The position in 2014 and onwards will require further EC action.

In addition to the anti-dumping measures announced yesterday, the EC is yet to announce the results of its separate anti-subsidy investigation. This could impose anti-subsidy measures over and above the anti-dumping tariffs. An announcement as to the potential imposition of provisional anti-subsidy measures is expected in early August.