LONGi executive pours cold water on rumored scale of EU solar stockpiling

The rumored scale of solar panels sitting unsold in European warehouses is difficult to reconcile with the market's realities, according to an executive from Chinese manufacturer LONGi Green Energy Technology Co. Ltd., a major supplier of solar modules to the EU.

Chinese companies have been blamed for "dumping" panels in Europe, sending module prices downward and causing difficulties for domestic manufacturers. One recent estimate said up to 80 GW of stock was piled up.

But Gulnara Abdullina, LONGi's president of Europe, said such claims amounted to "unsupported rumors" given conversations between LONGi and other major module-makers.

"It's hard to believe the numbers because I'm talking to my peers [and] we're far away from the numbers that are being quoted right now," Abdullina said in an interview with S&P Global Commodity Insights on the sidelines of the BNEF Summit in London on Oct. 11.

The executive pointed to the fact that 78 GW of solar modules were imported to the EU from China in the first eight months of 2023. That compares to 61 GW in the year-ago period, according to an analysis of Chinese customs data by energy and climate think tank Ember.

"They have been imported, but also they have been installed," Abdullina said about the modules.

The actual amount of stock piling up in European warehouses is not known but is likely to be somewhat below 80 GW, according to industry estimates.

In mid-August, Swiss-headquartered module-maker Meyer Burger Technology AG said 45 GW was in stock. More recently, analysts at S&P Global Commodity Insights put the figure at "north of 40 GW."

Rooftop growth to blame

Most of the warehoused solar modules in Europe are likely for distributed generation such as rooftop solar, since equipment for utility-scale projects is typically produced to order.

The energy crisis and high electricity prices led to a huge growth in distributed generation demand in 2022.

Solar distributors saw their stock depleting and made "massive orders" so they could provide fast delivery to residential and commercial customers, according to Edurne Zoco, executive director of clean energy technology at Commodity Insights. But companies failed to realize that overall stocks were filling up faster than the rate of installations.

"Demand for [distributed generation] has not continued growing as expected by the market and this has been a major factor to worsening high inventory levels," Zoco said in an email. "The [distributed generation] market is strong but performing below expectations."

The analyst noted that July was the first month where module shipments to Europe declined, falling 33% month over month.

For Abdullina, Europe's oversupply of solar modules is explained more by this cooling off in the residential market rather than Chinese manufacturers intentionally dumping stock into Europe.

"Maybe someone does, but I don't believe that the top players in the industry, LONGi included, are doing that," Abdullina said.

Potential trade barriers

The stockpiling has had a big effect on solar module prices, which have dropped more than 35% in recent months.

As a result, the inventory became "toxic" since it had to be sold at a much lower price than the price at which it was purchased or even manufactured, Zoco said. While it is too early to quantify the amount of stock that must now be written off, the risk of insolvency for certain distributors "cannot be underestimated," the analyst added.

Abdullina predicted that Europe might end the year with 30 GW to 40 GW of stock in warehouses — slightly more than what is considered normal for the industry.

Still, the issue appears to be making some governments nervous. Germany, for instance, is said to be considering subsidies and trade laws to protect domestic manufacturers from falling module prices, according to a Sept. 28 report by Reuters.

Lobby group SolarPower Europe said Oct. 2 that trade barriers are "not the solution." It called instead for adjustments to the EU's state aid framework to allow member states to support the running costs of factories, and the creation of a Solar Manufacturing Bank dedicated to financing European solar producers.

The group is also pushing for so-called "resilience auctions" that reward solar systems with the highest shares of EU production. Under the draft Net-Zero Industry Act, 40% of the bloc's annual deployment needs would be met by domestic manufacturing, equating to at least 30 GW of solar capacity per year.

"Energy independence, I think, is the most important factor right now. That's why I don't believe that they will shut down the market to create trade barriers," Abdullina said. "It makes no sense."

The executive pointed to past EU antidumping tariffs on Chinese solar imports put in place a decade ago when the bloc's annual solar installations were a fraction of what they are today.

"[It was] a single-gigawatt market. But now when we're looking at a 50-, 60-, 70-GW market," Abdullina said. "Do we have as an industry ... 20, 30 GW of manufacturing capacity here? Not yet, but it's possible."

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