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Reasons to be cheerful

mounsey

Alastair Mounsey, UK country manager at JA Solar, tells PV installers not to the fear the worst with the likelihood of antidumping tariffs being imposed on Chinese products from next month

Like all those involved in European PV, we manufacturers exist in a world of deadlines. Whether it is a FIT/ROC step down approaching or a Tariff announcement, shipment decisions move in two to three month blocks since beyond that there is always an unknown. An unknown of what will be the final decision, when will it be announced and how the market will react.

Despite this unrest, when comparing the UK PV market with other European countries, the overall growth and certainly the potential continue to outperform the average. There are markets also growing but from a lower base (i.e. Benelux), those historically larger markets but now slowing (Germany), those pausing (Italy), and some seemingly finished (Spain – who recently retroactively cut all FIT payments including to systems already installed).

So there are reasons to be cheerful and proud, particularly on the strong pipeline of large ground mount projects until March 2014. Yet the market does remains fragile and more so now the next deadline faces us as we wait to see the result of negotiations with China and the European Commission on the antidumping case against Chinese manufactured products.

The EU commission stated at the time of its preliminary tariff decision that there would be temporary job losses but for long term benefit. So far it has unfolded as prescribed with EU manufacturers’ order books filling up to pick up the supply deficit whilst the downside comes for the smaller to medium sized installers across UK and EU whose projects are delayed and company resources are stretched.

The stretch comes from customers not having complete access to product and dealing with tighter payment conditions. Forging close relationships has become essential and fortunately at JA Solar we have strong partnerships  in UK – not least with Zenex Solar and Plumb Center with whom we have worked together to maintain a level of supply.

No more are the days of leaving spare stock in Europe to be picked up with long credit terms. We have managed to keep our shipments solid to major installations such as a recently completed 5MW array to the largest UK rooftop installation and are continuing to supply the UK PV’s largest supermarket developer.

It is increasingly clear that either a tariff or minimum price will exist from August. For the Chinese manufacturers no import action is desirable but we at least look forward to a much needed final decision. Looking at the possible effects, a tariff allows the selling price to adjust with cost movements whilst a minimum price at least keeps the income from sales inside the industry. On the negative side, tariffs are a net loss to the industry as it would be a stretch to assume the EU will place tariff receipts directly back into green energy. Equally, a quota controlled market can create a situation where circumvention arrangements and quota ownership become separate and disruptive elements to the market.

Either way, should the pricing advantage lessen, the Chinese based manufacturers still have a capacity advantage to supply larger amounts to the market and have relative financial stability from non European markets sales income.

Outside China, manufacturing options also exist although again policy clarity is still important to allow meaningful investment in long term partnerships which can be accountable, controlled and fully audited by the customer, rather than opting for short term contract manufacturing or co-license arrangements from the lowest bidding offshore factory.

JA Solar enjoys a strong position in the UK and we still look forward to continuing to provide support to a market which allows the generation of clean income and supports UK energy independence. It should be an easy sell, and will be even more so when the shale gas fracking planners start to call. Let’s assume land owners and communities if not already convinced will much prefer PV by then.