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Some German panel makers were driven out of business by stiff competition from China. Adam Berry / Bloomberg News
Some German panel makers were driven out of business by stiff competition from China. Adam Berry / Bloomberg News

Germany warms to China tie-up on solar energy

Abu Dhabi Sustainability Week: Germany wants to grow the global solar market with the help of China, the country that has plunged its solar panel industry into crisis.

Germany wants to grow the global solar market with the help of China, the country that has plunged its solar panel industry into crisis.

Generous tariffs for green energy have turned Germany into the world's biggest generator of solar power, to the benefit of the country's photovoltaic (PV) panel producers.

In recent years, Chinese manufacturers have muscled into the market, selling their panels at steep discounts and driving German companies out of business.

The price war has prompted European manufacturers to file an anti-dumping lawsuit against their Chinese competitors. But Germany should also consider China an opportunity, said Peter Altmaier, Germany's minister for the environment.

"We have an interest in strengthening our cooperation with China. The lawsuit is highly political because the German market is one of the few booming solar markets in the world," said the minister. "But it was always controversial, because German machine manufacturers have benefited from the Chinese solar boom, as have component producers."

With big ambitions to increase the share of renewables in its energy mix, China represents a growing market for panel producers, and its demand will diminish the global production overcapacity, he believes.

The minister is also keen for China to promote the use of renewable energy worldwide, and is cheered by news this week that Beijing will become a member of the International Renewable Energy Agency (Irena), an organisation working towards this cause.

Mr Altmaier plans to integrate China further into these efforts. On the fringes of the World Future Energy Summit held in the capital this week, the minister has proposed the creation of a "renewables club", composed of ministers from nations with a strong track record in clean energy, that will help Irena achieve its aims.

The German minister is hopeful that China will join the club.

"China is turning into a pioneer in renewable energy, and is getting more engaged," he said.

"I believe that the PV market remains promising. If we are able to develop it with the help of the Chinese, then there would be enough orders for everyone."

Germany's huge renewable energy capacity is funded by a tariff policy skewed towards alternative energy, and the national grid is charged with solar power during the peak daytime hours, when the money made from electricity is highest.

As a result, natural gas is unable to compete in the national energy mix, and is being replaced by coal-fired plants, which emit a far greater amount of harmful carbon dioxide.

The shale gas revolution has brought down the price of natural gas in the United States, which has in turn led to a dramatic fall in international coal prices. With gas prices in Europe still high, power providers are increasingly turning to polluting coal.

Low carbon feedstocks such as natural gas should remain competitive with the help of the EU's Emissions Trading System, in which polluters have to buy credits to offset their emissions. But the system is flawed, said Mr Altmaier, as the credits are sold too cheaply in following the economic downturn, blunting their usefulness. The minister is currently engaged in discussions with Germany's minister of the economy to cut the amount of credits in the market, thus boosting their value.

"Gas has a structural disadvantage versus coal because the emissions trading system is not working," he said. "We have an interest in making it work."


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