The European transition to renewable sources will become more expensive. China is implementing tax changes that will increase the cost of photovoltaics
The installation of renewable energy sources could become significantly more expensive due to a new change in China's tax policy. Chinese companies supply 97% of all photovoltaic modules to the EU, but their price could soon start to rise due to an increase in export tax.
The transition to renewable energy sources led by photovoltaic and wind power plants could soon become significantly more expensive in the European Union, as well as in non-European markets. China is adjusting taxes that will significantly affect the prices of photovoltaic modules, which could increase substantially, while maintaining the profitability of Chinese manufacturers, who dominate the global photovoltaic market.
The billions already being invested by EU countries into the transition to renewable energy could increase significantly. China announced a reduction in the export tax rebate for photovoltaic technologies. From December 1, the rebate for unmounted and mounted photovoltaic cells will decrease from 13% to 9%. This could quickly change the prices of photovoltaic panels, which have been rapidly falling in recent years.
The reduction in tax rebate for Chinese companies will lead to a decrease in their profit margins. To compensate for these losses, companies will probably have to raise the prices of their products. This could significantly impact the prices of photovoltaic panels that are shipped to the European Union.
According to the research company Shanghai Metals Market (SMM), this reduction in tax rebate could support price growth in foreign markets, significantly benefiting Chinese manufacturers. The actual increase in prices will depend on the supply and demand dynamics in individual regions.
Although an increase in technology prices from Chinese manufacturers could significantly increase the cost of photovoltaic installations, it could also support European photovoltaic panel manufacturers. Currently, they face fierce competition from Chinese companies, often suspected of using government support. European manufacturers are unable to compete with such prices and, without EU subsidy support, many cease their activities soon.
An example could be the Swiss company Meyer Burger, which is involved in the production of photovoltaic cells. As one of the few companies that survived the "assault" of Chinese competition, its fate still looks precarious. In mid-November, the company announced that its largest customer (DESRI) had terminated its contract with immediate effect. This led to a significant drop in shares and concerns about the company's future.
The problems faced by photovoltaic manufacturers are not good news for the EU. The 27 member states still struggle to reduce dependence on Chinese photovoltaic systems, which will be crucial for the energy transition. As data from the European Commission shows, 97% of all photovoltaic panels used in the EU come from China. Although Brussels lawmakers strive for change and removal of this dependence through subsidies for new photovoltaic manufacturers, change is still elusive.
Current changes in Chinese tax policy could have a significant impact on the European photovoltaic market. Higher prices will notably increase the costs of installing photovoltaic systems, potentially slowing the transition to renewable resources, especially for households or small and medium-sized businesses.
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