Butterfly effect: since the United States’ Inflation Reduction Act (IRA) came into force in the summer of 2022, a wave of panic has been blowing through the European solar industry. Its market is under attack from a massive influx of Chinese panels, generously subsidised by Beijing.

These are panels that were once destined for the United States, but which the IRA now prevents from being imported. As a result, China, which holds 80% of the world's market share, is shifting its attention to Europe. Stocks are overflowing: between 140 and 170 million pieces are waiting in ports and warehouses. This is having a major impact on prices, which collapsed by more than 25% in 2023.

“Existential threat”

In early February, the European Solar Manufacturing Council (ESMC) sent a letter to the president of the European Commission, Ursula von der Leyen, referring to an “existential threat.” “If nothing is done now, there will be no European industry left in 2030,” the letter read. Last summer, another organisation bringing together players in the sector, SolarPower Europe, tried to alert the EU.

The European market leader, Switzerland’s Meyer Burger Technology, could soon close its site in Freiburg, Germany, one of the largest manufacturing plants on the continent. Meyer Burger Technology has recorded an Ebitda deficit of €126m in 2023. The group, on the other hand, is in the process of finding a lifeline with the construction of a new plant in Colorado Springs, in the United States, which will give it access to the wide range of subsidies provided under the IRA scheme.

Solarcells goes green

This major crisis comes at the very time when Luxembourg’s first production line has just been inaugurated in Hollerich. Solarcells, a joint venture between Socom (electrical, mechanical and piping engineering) and Belgium’s Belga Solar, was officially launched in autumn 2022, and designed its very first panels last November.

, chairman of the board of directors, agrees: “When  in January 2023, I explained that our prices would be 15 to 20% higher than those of Chinese panels. Today, local subsidies mean that the difference is greater. Practically double. On the market, you can find Chinese panels for under €100, while ours are around €200.”

Even so, the director is confident: “Sales are happening. For the moment, we’re not experiencing any problems.”

There are two main reasons for this optimism. The first has to do with the positioning of Solarcells, which prides itself on using 95% recyclable materials and asserts that most of its raw materials come from Europe. “The replacement of non-European raw materials is under study,” added Thein, at the official inauguration on 18 January.

Clearly, Solarcells, which is playing the green card right down to the delivery boxes, which are “cardboard and plastic free” and 100% recyclable, is taking the consequences on the cost side. “Someone who really wants a product with a very low carbon footprint will buy a panel from Luxembourg, or at least from the Greater Region,” said Thein. And not panels “made in China.”

A niche within a niche

The second factor is the size of both the country and the market. In short, a niche market, in which Solarcells itself offers “a niche product,” to use Thein’s term. Solarcells’ production is correspondingly high: 40,000 panels to start the adventure. “The difficulties would be obvious if we produced a million panels. We’d have to sell them,” said Thein. But from the outset, Solarcells chose to focus solely on Luxembourg (Belga Solar, for its part, is concentrating on Belgium).

As a result, “we can’t do just anything. Luxembourg is small, and people talk. If the quality wasn’t there, things would quickly get out.” The same reasoning applies to the carbon footprint: this demand for quality also has a cost. “When you buy Luxlait ice cream, you accept that it’s a little more expensive than others,” said Thein, offering a comparison.

A helping hand

Finally, Solarcells, whose initial investment of €5m was not supported by any public contribution, is currently (like all players in the sector) benefiting indirectly from state subsidies. Luxembourg’s new government has just extended the financial aid package for the purchase and installation of panels until 30 June. This aid, coupled with the incentives put in place in many municipalities, makes a major contribution to reducing the final bill.

“In Luxembourg, financial aid is as high as 90%. When you get 90% support for an installation costing €20,000 or 90% for an installation costing €27,000, the difference that remains to be paid is very small,” said Thein. After 30 June, this state subsidy will not disappear, but the 62.5% of state funding will return to its original level. That is, 50%.

Until then, professionals will be keeping their eyes on Brussels, waiting for a gesture from the European Union. In particular, the ESMC is calling for a mechanism for buying back stocks at the European level, and for funding for projects using locally produced modules. As a member of both the ESMC and SolarPower Europe, Solarcells has declared its solidarity with its colleagues.

This article was first published in French on . It has been translated and edited for Delano.