Europe’s bid to expand its green tech industry faces a host of challenges, including high energy costs and supply chain issues, solar industry representatives gathered in Madrid warned on Thursday.
The comments come as the European Commission and European governments weigh tougher action on imports while aiming to boost clean tech manufacturing in Europe and reduce the reliance on China for products needed for the green transition.
“You cannot manufacture in Europe,” Gonzalo de la Vina, president for the Europe, Middle East and Africa region of Chinese solar energy firm Trina Solar (688599.SS), said at an event hosted by Spanish industry group Foro Solar.
The company has manufacturing operations in China, Vietnam and Thailand but not in Europe. It plans to invest more than $200 million to build a solar photovoltaic manufacturing facility in Texas, its first in the Western Hemisphere.
“Europe isn’t profitable,” he added.
European products are more expensive according to Christopher Atassi of Gonvarri Solar Steel, part of a Spanish industrial firm with factories around the world, including China, the United States, Spain and other European countries.
“There must be an incentive for the end customer to buy European products,” he said. “Without demand for European products, it is difficult to plan investments.”
Solar panels made in China cost as little as two-thirds of those manufactured in Europe, energy research firm Rystad Energy wrote in a July note.
Panelists said on Thursday this is due in part to higher energy and labour costs, as well as lack of competitive supply chains. For example, in the third quarter of last year, retail electricity prices paid by industrial customers in the EU were roughly twice as high as China’s, according to the European Commission.
On Wednesday, Spain’s acting Energy Minister Teresa Ribera did not rule out imposing tariffs on imports of materials used in solar power generation.
The EU gets more than 90% of its ingots and wafers for solar panels from China, according to the European Commission.
While the focus is often on China, Europe has to play catch-up with the United States, whose Inflation Reduction Act means that “the U.S. model beat Europe five to zero,” Atassi said.
“Europe had a solar panel industry, but now it is in Asia,” Juan Barandiaran of renewable energy equipment maker Gamesa Electric, a Spanish subsidiary of Germany’s Siemens Energy (ENR1n.DE) said. “It is very difficult to create it from scratch.”