Is there enough political action to support European solar manufacturing?
The European Union has set a goal of at least 30 GW European solar manufacturing, at each stage of the value chain, by 2030. Right now, however, European solar manufacturers are facing a crisis. Market forces are driving down the price of solar components, making it difficult for Europe’s solar industry to sell their products. Insolvencies amongst European solar manufacturers are piling up, while more are announcing plans to reduce to capacity. Europe is coming to the end of the road, where policymakers must decide whether to support manufacturers or accept the unacceptable: an over-concentrated, vulnerable, supply chain of some its most critical climate technologies.
To underline the situation, saddening news came last week as a key player in European solar module manufacturing, Meyer Burger , announced their intention to end production at their Freiberg plant by April if support does not materialise. Ahead of the EU Net-Zero Industry Act negotiation wrapping up in early February, we’ve mapped existing and anticipated support across Europe, and identified where it needs to go further.
Brussels and Beyond Policy Friday Focus
An outline of efforts being made to support European manufacturing, and what’s needed to go further.
Germany
Germany is the first country to try to use March 2023’s updated EU State Aid rules (the Temporary Crisis and Transition Framework – TCTF) to support European solar manufacturers. In summer 2023 the German government had announced that they were seeking bids from companies to contribute to a 10 GW tender of domestic solar production. However, this would be limited to capex support, and some companies decided not to participate in the bid as it would require them to build entirely new integrated chemical plants, and it would exclude companies who have not engaged in concrete companies in the US. Ultimately federal budget negotiations slashed funding for this project, and it is likely that, while still meaningful and necessary, much less than 10 GW would be awarded.
Next month, in February 2024, the German government is expected to announce a new package of ‘resilience auctions’. These auctions are essentially public tenders for solar energy, and solar energy produced using domestic solar panels would receive a resilience ‘bonus’ and be more likely to win the tender. CO2 footprint of the solar panels, as well as module efficiency would also be considered. The package would work out at €55 million of support in 2024.
Italy
Italy is set to transpose the decree ‘Decreto-legge n.181, 09/12/2023’ into law on the 10/02/2024, which would pave the way for a new regime of incentives that are yet to be detailed. Incentives would be granted through a register that classifies PV systems based on their energy performance and energy quality, with the objective of incentivising Italian PV production.
France
The European Commission has approved a French State Aid scheme for investment in green industries; €2.9 billion in the shape of tax credit. Support is granted to green industry projects on solar panels, batteries, wind turbines, heat pumps and key components. Aid is expected to encourage the production of strategic equipment for the transition to a net-zero economy.
European Investment Bank
The European Investment Bank (EIB) operates InvestEU, a European funding scheme aimed at channeling investment into strategic projects and infrastructure. On a case-by-case basis, following regular banking practices, the EIB selects projects to support which align with the priorities of the EIB.
Just this week, the Enel Green Power 3Sun solar factory in Sicily secured €560 million funding via the EIB and a pool of Italian banks. SolarPower Europe are continuing to be in close contact with the EIB in supporting the solar renaissance in Europe, and replicating the EIB’s exemplary support for the wind sector.
EU Innovation Fund
The 3rd Innovation Fund call awarded €3.65 billion to 41 projects in summer 2023, three of which were solar manufacturers that were awarded a total of almost €800 million.
The next Innovation Fund calls end on 9 April 2024, with €4 billion available.
Solar awardees of the Innovation Fund have been 3Sun, Meyer Burger, Norsun, REC Solar, and Midsummer. Notably, 3Sun sought additional support from the EIB and REC Solar decided not to go ahead with their project. Meyer Burger and Norsun have announced recent or planned reduced production.
Clearly, further support is needed.
Horizon Europe
Horizon Europe is a €95 billion funding programme (2021-2027) aimed at supporting research and innovation. Grants ranging from €1 million to €15 million, with the added benefit of access to international network and recognition to attract further investment. Funding calls are published regularly under the Horizon Europe portal.
领英推荐
EU Strategic Technologies Europe Platform
Strategic Technologies Europe Platform (STEP) began its life as the much less ambitious version of the ‘EU Sovereignty Fund’ in the State of the Union speech from European Commission President Ursula von der Leyen , including €10 billion of new funds for investment in strategic sectors like biotech, clean tech and digital technologiesto targeted programmes; InvestEU, Horizon Europe, Innovation Fund, and European Defence Fund. Additional financial support for STEP will depend on the final outcome of negotiations with Member States. But Member States don’t seem to be willing to commit to more than €1.5 billion of new funds.
Some political actors continue to push for a more robust instrument; EU Commissioner for Internal Markets, Thierry Breton has made references to an upcoming Sovereignty Fund, as recently as January 2024. While Belgian Prime Minister Alexander De Croo , under the auspices of the Belgian Presidency of the EU is hoping to revive the idea of an Industrial Deal to support the Green Deal.
So – what more is needed?
Simply put, we need a solar-specific action plan which reflects the realities of an over-concentrated supply chain. We need to complement conversations about innovation with the ability to scale to competitive levels of production.
A dedicated plan for solar would bring together financing and frameworks for the energy source that the EU called the ‘kingpin’ of Europe’s efforts to get off Russian gas, and which the Executive Director of International Energy Agency (IEA) , Fatih Birol , has termed the ‘Queen’ of the energy transition. The action plan would include:
1.????? Adjusting the TCTF to cover the running costs of factories, i.e. opex, not just capex
2.????? Empowering ‘resilience auctions’ in Member States
3.????? Engaging the EIB in supporting an existing and ready-to-go pipeline of solar manufacturing projects in the EU
4.????? An EU-level finance tool for Solar Manufacturing, like an EU Solar Manufacturing Bank, to the tune of €8 billion from now up to 2030
5.????? Ensure clear market access standards that reflect Europe’s ESG values – like Ecodesign or supply chain sustainability legislation
6.????? Consider state guarantees and credit lines for manufacturers struggling to survive
7.????? Emergency acquisition of stocks of European manufacturers
An dedicated action plan for solar would be in line with the European approach to chips, hydrogen, and wind, which respectively are set to receive €11 billion, up to €40 billion, and €5 billion of support through the Chips Act, Hydrogen Bank, and Wind Package.
Solarcoaster
The latest ups and downs in the EU solar manufacturing landscape.
Solar Manufacturing Matters is a fortnightly newsletter on the European solar manufacturing landscape. Every other Friday, check out our latest EU policy analysis and a round up of solar manufacturing market news.
From SolarPower Europe, the award-winning European trade association with over 300 members active at every point in the solar PV value chain.
Policy Advocate | Driving Sustainable Innovations & Strategic Policy Development
1 年Over the past 2 years, about $10 billion has been allocated to support European production projects in the field of solar energy. Is this a lot or a little? Recently, Mayer Burger announced the closure of its last plant in Germany. Considering that Europe is now almost 100% dependent on imports and the stability of supply chains, this is catastrophically low. I would like to remind you that European governments have more than doubled fossil fuel subsidies to $310 billion in 2022. Compare for yourself. These are the wrong priorities.
Entwicklung/Herstellung von nachhaltigen, ?kologischen Produkten oder Dienstleistungen
1 年Just a small correction: Meyer Burger's production facility is located in Freiberg, not Freiburg