One of the world’s major solar manufacturers, Trina Solar Limited TSL announced that it has withdrawn from a voluntary program − the European Union (“EU”) Price Undertaking (“UT”). The company said that it will continue to serve EU customers through its overseas manufacturing facilities.
This decision addresses one of the main challenges faced by Chinese solar companies in selling panels in the EU above a fixed minimum price that has been hampering Trina Solar’s global expansion strategy.
Solar trade relations have heated up lately with every country in this arena trying its level best to protect homegrown interests. Chinese solar companies have suffered earlier due to low panel prices and anti-dumping ("AD") duties imposed by the U.S. and Europe on solar panel imports. The aim is to safeguard the domestic solar market from low-priced Chinese products.
In Dec 2013, the European Council imposed two sets of duties − AD and anti-subsidy ("AS") duties − on solar cells and solar panels imported from China to counter alleged below-cost sales in Europe as well as Chinese subsidies.
Subsequently, Trina Solar and other Chinese solar manufacturers agreed to participate in the two-year EU Price UT program in Dec 2013. Solar manufacturers that decided to take part avoided the duties. As part of the program, Tina Solar and other Chinese companies would sell solar cells as well as panels in the EU at a price above a fixed Minimum Import Price.
Earlier this month, the EU revealed that it will review the latest trade protection measures to safeguard European solar power manufacturers to help them compete against cheaper Chinese products.
In the words of Mr. Jifan Gao, Chairman and Chief Executive Officer of Trina Solar, the extended pricing program “misinterprets the rules and scope of the original” agreement, and “adversely affects the execution of our global expansion strategy.”
Yet, Trina Solar will continue to pursue sales in Europe through factories outside China. Chinese solar companies like ReneSola Ltd. SOL and JinkoSolar Holding Co., Ltd. JKS have also been opening production facilities in other countries in recent years to dodge the hefty levies.
China leads the world in total electricity generation from renewable sources, backed by its increased allegiance in recent times to the alternative path. It is followed closely by the U.S., Brazil and Canada.
All leading solar cell manufacturers are looking for opportunities in the emerging markets. These markets primarily comprise the Asia-Pacific region with China, India and Japan being the key destinations for the global solar giants. The long-term outlook on the whole appears bright. This is especially true as global warming and high fuel emission issues have proven how inevitable clean energy sources will be in the future.
However, the global economic turmoil, China's slowdown and the consequent subsidy rollback in the prime global solar markets seem to be major headwinds for the renewable energy industry on the whole. Again, if we are to expand renewable manufacturing infrastructure worldwide to fight the climate crisis, manufacturers in the U.S., Europe as well as China should try to settle their dispute before the industry is hurt at large. Measures to reduce the inflow of Chinese solar panels may hamper the battle against climate change.
Trina Solar currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the solar space is JA Solar Holdings Co., Ltd. JASO, sporting a Zacks Rank #1 (Strong Buy).
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