Domestic EU solar parts constructors have struggled to compete with cheap imports from China. Credit: European Energy.

Europe’s local solar manufacturers are struggling to compete with cheap Chinese solar panel imports, but the EU is hesitant about enforcing trade restrictions, according to a report by Reuters.

International Energy Agency data showed that EU member states installed 40% more solar capacity in 2023 than they did in 2022, but most parts came from China – for some countries, a whopping 95% of their material was imported from the Asian country.

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Local solar suppliers have struggled to compete with the lower-cost imports. The sector has warned that half of its capacity could shut down within weeks unless the EU subsidises the industry.

In November, German economy minister Robert Habeck wrote a letter seen by Reuters detailing his concerns about the EU’s idea to place trade restrictions on Chinese solar imports.

The letter said: “I have heard that the Commission may be intending to impose safeguard measures against imports of photovoltaic (PV) modules from China. I have very strong concerns about this.”

Habeck warned that the trade restrictions would disrupt the growth of green energy in Europe and make 90% of the PV market unaffordable. He said EU companies that assemble and install solar panels using imported parts could face bankruptcy.

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In June, Germany announced plans to support its domestic solar manufacturing industry but abandoned them in December due to a government budget crisis.

On Monday, EU financial services commissioner Mairead McGuiness gave a speech in which she offered no new support. She claimed pre-existing measures, such as a law set to be finalised on Tuesday that seeks to fast-track permits for local manufacturing and give EU constructed solar panels an advantage in clean tech tenders, would suffice.

She was ambiguous about trade restrictions.

“Given that we currently rely to a very important degree on imports to reach EU solar deployment targets, any potential measure needs to be weighed against the objectives we have set ourselves when it comes to the energy transition,” she said.