European warehouses are now struggling to contain the growing stockpile of Chinese-manufactured solar PV (photovoltaic) panels, with approximately 40 gigawatts-direct current (GWdc) of capacity, equivalent to the entire continent’s installations in 2022. These stored solar panels are valued at a staggering €7 billion and have the potential to power around 20 million homes annually. Experts predict that this accumulation will only intensify, with Rystad Energy forecasting 100 GWdc of solar capacity sitting in storage by the end of 2023.
The surge in European solar imports has been dramatic over the past five years, nearly quadrupling from €5.5 billion in 2018 to surpassing €20 billion last year. This growth in imports has been driven primarily by Chinese products, which accounted for a staggering €18.5 billion, or 91% of all PV import expenditure. The competitive advantage of Chinese manufacturers lies in their ability to undercut rivals on price, thanks to their dominance in the production and processing of the crucial raw material, solar-grade polysilicon, into PV modules.
Market analysts had hoped that the influx of inventory might signal a slowdown in imports, but the data from the first few months of 2023 tell a different story. Import levels in January were 17% higher than in 2022, followed by increases of 22% in February, 51% in March, 16% in April, and 6% in May. If this trend continues, 2023 will set a new record for imports and inventory, with expected annual imports of 120 GWdc, significantly surpassing the anticipated capacity installations of 63 GWdc.
Marius Mordal Bakke, senior supply chain analyst at Rystad Energy, highlights the urgency driving European countries to secure affordable solar infrastructure when commenting, “European countries are desperate to get their hands on affordable solar infrastructure to advance their renewable energy targets, decarbonize and avoid paying elevated prices for new capacity. Although efforts are underway to build a reliable solar supply chain in Europe, the need for panels now means leaders cannot wait until 2025 or later to buy European.”
Various energy policies and the green transition have propelled the demand for solar PV growth in Europe. Since 2022, initiatives like the Green Deal Industrial Plan (GDIP), REPowerEU, and the Net Zero Industry Act have set ambitious goals for solar PV installations and European manufacturing in the coming years. The set objectives encompass two key milestones: achieving 30 GWdc of European manufacturing across the entire value chain by 2025 and ensuring that 40% of installed solar PV is manufactured within the continent by the year 2030.
However, locally-made modules have struggled to keep up with the rapid growth of imported panels, leading to a significant gap between shipped and installed modules. Between 2021 and 2022, European countries witnessed a surge of 112% in Chinese solar module imports, reaching approximately 87 GWdc. Despite this substantial increase, the installation rate in these countries fell short of anticipated levels, leading to a significant gap of nearly 47 GWdc in 2022 between the shipped modules and the ones actually installed.
Based on the current market trends in 2023, Rystad Energy projected that Chinese imports will experience an annual increase of 38%, reaching a total of 120 GWdc. Meanwhile, installations are expected to gain momentum, surging by 57% compared to the previous year, and reaching approximately 63 GWdc. However, despite this increase in installations, the gap between imports and actual installations will widen in absolute terms, resulting in a difference of 57.4 GWdc by the end of the year.
Countries like the Netherlands, Spain, Germany, Poland, France, Greece, Italy, and the UK are major destinations for imported solar panels. The Netherlands, in particular, has been a standout leader, importing almost 45 GWdc of Chinese PV panels in 2022, surpassing its domestic installations by more than ten times. Spain, Germany, and France also imported more panels from China than they installed from any source. Greece exhibited a similar trend on a smaller scale, with domestic installations accounting for only 15% of the capacity imported from China.
Despite the previous year’s stockpiling, robust imports and a slowdown in solar installations are leading to an overstocking situation in Europe. Ongoing bottlenecks, such as labor shortages and critical material delays, are likely to persist until 2025. Nevertheless, the surplus inventory means that panel prices are unlikely to experience significant increases in the foreseeable future.
One potential concern for the stored products is the ongoing technology transition in the solar industry from P-type to N-type cells, coupled with incentives for purchasing European-manufactured panels. If the stockpiled Chinese panels remain in storage for an extended period, they could face declining interest from European buyers. However, this scenario will not materialize in the short term until the continent improves its manufacturing capabilities.
