SPE, ISE Report Pitches For EU Support To Reduce Price Gap With Chinese Modules

SolarPower Europe, in its new study with the Fraunhofer Institute for Solar Energy Systems (ISE), shows that with the right urgent policies, the cost gap between Net-Zero Industry Act (NZIA)-compliant modules and Chinese-imported modules can be reduced to below 10%. The report is yet another attempt to make a case for mane in Europe, something that has been considered impossible when seen in the context of Chinese pricing by most manufacturers. By adding factors such as social value added or net zero compliance, the report simply makes the case to justify ever higher subsidy burdens, to try and compete.   

As there remains a cost difference (2.2 to 5.8 €ct/Wp) between NZIA-compliant EU-made and NZIA-compliant non-EU modules, the report highlights the risk that, without additional measures, the NZIA provisions could support solar supply chain diversification without boosting European solar manufacturers.

Additionally, the report claims that fully reshoring the PV value chain is more costly upfront but delivers higher long-term macroeconomic benefits. The Reshoring Solar Module Manufacturing to Europe report projects up to 2,700 jobs and €66.4 million in annual tax and social revenues per GWp/a.

Walburga Hemetsberger, CEO of SolarPower Europe, said: “This new report underlines that, with the right policies, Europe can competitively deliver 30 GW of solar manufacturing by 2030, creating thousands of local jobs and building a resilient, innovative solar supply chain that keeps economic value here at home. To meet the 2030 goal, the EU and Member States must act swiftly. Without interventions, Europe risks losing its remaining industrial and technological capabilities in solar.”

Why EU-Made Solar Modules Cost More Than Chinese Imports

SolarPower Europe, in the Reshoring Solar Module Manufacturing to Europe report, based on a cost gap analysis and policy impact simulation, finds that producing a solar module in Europe with EU-made solar cells costs around 10.3 €ct/Wp more than producing the same module in China.

• Higher Equipment Costs

The report explains that the gap stems from higher costs in equipment (+40%), building and facility (+110%), labour (+280%), and materials (+50%). As a result, utility solar installations cost about 60.8 €ct/Wp compared to 50.0 €ct/Wp for a Chinese system, translating into a Levelised Cost of Electricity (LCOE) that is 14.5% higher for European-made modules. This indicates that EU-made products already fall within the 15% limit of additional costs under the NZIA auction rules.

However, the report notes a significant cost difference (2.2 to 5.8 €ct/Wp) between NZIA-compliant EU-made and NZIA-compliant non-EU-made modules. The NZIA’s resilience criteria can diversify module supply chains and boost imports from elsewhere, but without more policy measures, reshoring EU production may not be achieved.

• Cost Gap Between EU-Made and China-Imported Solar

The report reveals that the cost gap between EU-made and Chinese-imported solar can be further reduced to below 10% with the right mix of policies, such as combining CAPEX and OPEX schemes for both solar manufacturers and project developers, alongside output-based support (successful models exist in the US under the IRA and in India under PLI schemes), assuming solar factories reach 3–5 GW capacity.

The report notes that industry support needs range from €1.4–5.2 billion annually to reach the 30 GW target for European solar manufacturing by 2030, with up to 39% of costs being recovered through macroeconomic benefits (up to 2,700 jobs and €66.4 million in annual tax and social revenues per GWp/a).

• Other key recommendations include:

• Establishing an EU-level output-based support scheme for solar manufacturing, combining grants, loans, and de-risking instruments to cover both CAPEX and OPEX.

• Implementing NZIA policy schemes across Member States, including “Made-in-EU” bonus points in rooftop support and public procurement programmes.

In Pushing for solar manufacturing in Europe, it is no surprise that the report, despite all efforts to show a lower gap, ends up making the case for sustained, long term financial support to the sector. Something that will translate to higher prices either way for end consumers.  Bringing in NZIA based costing just muddies the pricing on an issue where the final word has not been said. Keep in mind that even though Europe does have an advantage on sourcing green energy, China and to a lesser extent India based manufacturers are more than capable of adapting to new requirements within the next 12-18 months. We believe Europe is approaching the issue wrong, unless they are fine with making Europeans pay a much higher cost for power than they otherwise could have.