© 2014 Prognos AG
The Impact of Anti-Dumping and / or
Countervailing Duties on Imports of Solar Panels,
Cells and Wafers from China on EU Employment
and Value Added
Oliver Ehrentraut
Geneva, 4 April 2014
EU PV Market
New PV installations 2011-2015 (GW) – EU
(Development without duties)
Gigawatt
25
21,6
20,8
21,6
20
17,8
16,4
14,8
15
10
9,3
8,2
7,4
5
5,9
0
2011
2012*
EU - policy driven
2013*
2014*
2015*
EU - moderate
Source: EPIA (2012): Global Market Outlook for Photovoltaics until 2016, May 2012
© 2014 Prognos AG
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© 2014 Prognos AG
EU PV Market shrinks significantly due to AD and / or CVD
The overall market impact for the EU shown below reflects the aggregate of the
calculations for every single segment in every key market.
Impact of anti-dumping tariffs on the PV forecasts for Europe until 2015, EPIA Policy-driven
scenario, in GW
Ground mounted
Commercial rooftop
Private rooftop
17.8
16.4
3.1
14.8
2.8
2.9
7.7
8.1
0.8
6.6
4.9
20%
tariff
8.2
9.2
7.0
0.8
0.7
7.2
5.6
4.6
4.4
2.9
EPIA
policy
driven
1.7
1.5
1.4
3.8
11.7
11.6
10.9
2.0
1.8
35%
tariff
60%
tariff
EPIA
policy
driven
2013
9.8
8.2
7.4
0.9
0.6
7.2
5.6
5.2
7.4
0.7
5.2
4.9
3.0
20%
tariff
1.9
1.7
35%
tariff
60%
tariff
2.9
EPIA
policy
driven
2014
20%
tariff
1.8
1.6
35%
tariff
60%
tariff
2015
© 2014 Prognos AG
Stylized Demand Curve for the EU PV Market
The demand curve along the increasing line of imposition of anti-dumping duties
shows the growing decrease of demand. Any duty rate will immediately translate in
decreased demand.
loss in demand
tariff 60%
tariff 35%
tariff 20%
100%
90%
80%
70%
70%
60%
50%
50%
45%
40%
30%
20%
10%
0%
p1 …
p2 …
p3 …
pn
price/wp
© 2014 Prognos AG
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© 2014 Prognos AG
PV Value Chain
Not only the producers of cells and modules have to be taken into account…
Solarsilicon
Ingots
Wafers
Cells
Modules
PV-Systems
Source: Prognos based on European project "PV employment" 2009
Installation
Operations
&
Maintenance
Demounting
Recycling
© 2014 Prognos AG
Input-Output-Table showing effects for EU-5
-10,0%
-9,0%
-8,0%
labor f orce
gross value
-7,0%
-6,0%
-5,0%
-4,0%
-3,0%
-2,0%
-1,0%
0,0%
A_B Agriculture, hunting, f orestry and f ishing
C_D_E Total industry (excluding construction)
C Mining and quarrying
D Manuf acturing
DA Food products, beverages and tobacco
DB Textiles and textile products
DC Leather and leather products
DD Wood and wood products
DE Pulp, paper; publishing and printing
DF Coke, ref ined petroleum products
DG Chemicals, chemical products and man-made f ibres
DH Rubber and plastic products
DI Other non-metallic mineral products
DJ Basic metals and f abricated metal products
DK Machinery and equipment n.e.c.
DL Electrical and optical equipment
DM Transport equipment
DN Manuf acturing n.e.c.
E Electricity, gas and water supply
F Construction
G_TO_P Services
G_H_I Wholesale, hotels & restaurants, transport & communication
G Wholesale, retail trade, rep.
H Hotels and restaurants
I Transport, storage and communication
J_K Fincial intermed.; real estate, renting & business activities
J Fincial intermediation
K Real estate, renting and business activities
L_TO_P Other service activities
L Public authorities
M Education
N Health and social work
O Social and persol service activities
P Activities of households
© 2014 Prognos AG
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© 2014 Prognos AG
The impact of decreased demand on employment and
value added: four main findings
Impact on Demand leads to important economic effects
1. Employment in the solar sector in Europe decreases because the demand for PV
products decreases + less value added, i.e. less solar installations and less demand of
BOS components.
2. Employment and value added are also affected by the decrease of exports of raw
materials and machinery from EU Member States to China.
3. Moreover, all other segments of the EU economy such as the supply of engineering or
other services are suffering from the decrease in demand for solar products.
4. Employment and value added in the EU may be positively affected by a limited increase
of production of solar products in the EU.
© 2014 Prognos AG
EU-27 reduction in labor force (tariffs of 20, 35 and 60%)
Labor force, persons
-
58,200
55,500
41,000
31,900
26,400
15,000
-
-
-115,600
-146,500
-175,500
-214,700
-234,800
-248,400
-274,300
2013
Scenario 1
-276,100
-300,200
2014
S1 Supply Side
Scenario 2
S2 Supply Side
2015
Scenario 3
S3 Supply Side
© 2014 Prognos AG
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© 2014 Prognos AG
EU-27 reduction in value added (tariffs of 20, 35 and 60%)
Gross value, million Euro
1,340
1,120
640
-
2,470
2,370
1,780
-
-
-4,740
-6,130
-7,500
-8,810
-9,640
-10,400
-11,460
-11,660
-12,690
2013
Scenario 1
S1 Supply Side
2014
Scenario 2
S2 Supply Side
2015
Scenario 3
S3 Supply Side
© 2014 Prognos AG
Summary and Conclusion
AD and / or CVD duties harm the EU economy as a whole
 With any increase in the price level and thus at any level of duties, demand will decrease.
 At the level of duties taken for illustration purposes (20% to 60%) for 2013-2015:
- On average over the 3 years 145,900 to 269,800 jobs lost;
- on aggregate € 18.4 to 33.8 billion lost in value added.
The above job losses and the shortfall in value added is after offset of the potential
increased employment and value added by the EU solar producers that the study also
calculates. In particular:
(i) EU Producers might gain a higher market share but in a significantly smaller market.
(ii) The plus in EU production cannot compensate the losses.
 Germany suffers the highest losses, followed by Italy and the UK.
© 2014 Prognos AG
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© 2014 Prognos AG
Dr. Oliver Ehrentraut
Senior Project Manager
│ Henric Petri-Str. 9 │ CH-4010 Basel
Tel:
Fax:
+41 61 3273-453
+41 61 3273-300
E-Mail:
oliver.ehrentraut@prognos.com
© 2014 Prognos AG
Methodology and Premises
The study aimed at determining whether anti-dumping and / or countervailing duties
would have an impact on employment and value added and, if so, what that impact
would be
To determine whether and what that impact would be, the study proceeded in two steps:
(i) determine what, if any, impact the duties would have on the PV market volume and
(ii) based on the impact on demand, determine whether and how there would be an impact
on employment and value added along the entire PV value chain and in connecting
branches of the EU economy.
© 2014 Prognos AG
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© 2014 Prognos AG
Methodology and Premises
Analysis of the impact on demand (1/2)
The market forecasted by the European Photovoltaic Industry Association for 2013, 2014
and 2015 without anti-dumping and countervailing duties was taken as basis, i.e., the impact
of the duties on this demand was assessed.
To do so, the following factors were taken into account:
(i) the cost of solar systems for 2013, 2014 and 2015 for systems including Chinese
modules versus systems including EU-made modules – costs were based on the forecasts
published by different specialized surveyors as compared with Prognos’ own market
analysis;
(ii) the contribution to revenue from solar systems of public support schemes and, in
particular, revenue generated from the feed-in-tariffs;
(iii) the revenue generated from solar installations by self-consumption of the solar energy
generated;
(iv) the average return on investment anticipated by investors;
(v) for illustration purposes, the impact of three levels of anti-dumping and / or countervailing
duties (20%, 35% and 60%) was determined on the cost of systems and compared against
revenue from FiTs and self-consumption and anticipated ROI (Return on Investment).
© 2014 Prognos AG
Methodology and Premises
Analysis of the impact on demand (2/2)
 This allowed to determine whether a private or business investor would consider the
investment in a solar installation to be financially rewarding if anti-dumping and / or
countervailing duties were imposed. This was then the basis for assessing the impact on
demand with reference to the impact that cost increases / revenue decreases had in the
past on demand.
This analysis was made for
- the three segments of PV installations generally distinguished in Europe, i.e., private
rooftop, commercial rooftop and ground-mounted installations;
- for the five EU Member States with the largest volume of installations, i.e., Germany, Italy,
Spain, France and the UK, which represent about 80% of the market volume;
The analysis includes a rough estimation for the rest of the European market.
© 2014 Prognos AG
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© 2014 Prognos AG
Market Evaluation - Step by step approach
Analysis of LCOE and the revenues of PV systems
By way of example, the premises and calculations for commercial rooftop installations in
Germany are shown in the table below.
Germany - Commercial rooftop (10-100 kW)
Unit
2013
2014
2015
System costs Germany/EU
Euro/Wp
1.30
1.33
1.25
System costs China
Euro/Wp
1.10
1.15
1.10
Fixed operation costs (based on investment costs)
%
1%
1%
1%
Interest/ROI (pre tax)
%
8%
8%
8%
Average annual full load hours (over lifetime)
h
925
925
925
FiT
Cent/kWh
14.5
11.5
9.2
Electricity prices commercial consumer (excl. VAT)
Cent/kWh
21.1
21.8
22.4
%
50%
50%
50%
Premises
Potential own consumption rate
LCOE calculation
Revenue calculation
Market expectation
© 2014 Prognos AG
German Commercial Rooftop
LCOE vs. Revenue incl. FiT
Development of LCOEs with 925 full load hours, FiT for commercial PV systems
and the revenues with an own consumption rate of 50% in Germany, in Cent/kWh
17.8
16.6
15.7
17.7
16.6
16.9
16.1
15.8
15.1
13.9
13.3
14.5
13.3
LCOE China
11.5
9.2
LCOE Germany/EU
LCOE China with 60% tariff
FiT
Revenue
2013
2014
2015
© 2014 Prognos AG
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© 2014 Prognos AG
Results of the market evaluation
Market impact: Example - Germany commercial rooftop
 The FiT for PV are expected to decrease faster than the cost for PV systems in the next
years.
 Therefore self-consumption will become more important for investors to gain sufficient profit
margins. But the legal framework for self-consumption is not certain yet and the risk for
investors will rise with an increase of self-consumption.
 Anti dumping measures lead to a significant increase of system costs.
 The average LCOE increases above the average expected revenue.
 The commercial rooftop market segment is expected to shrink by 20% to 50%.
 The decrease in demand for the whole German PV market is between 28% (2013, tariff of
20%) and up to 55% (2013, tariff 60%).
© 2014 Prognos AG
Methodology and Premises
Analysis of economic effects
 For the calculation of the impact on employment and value added, we used the 2005
OECD input/output tables for all sectors of economy as updated by more recent data
stemming from Prognos’ macroeconomic forecast VIEW (own monitoring of economic
interaction among regions and sectors of industry).
 IO-Tables contain branch-specific productivities. Thus, changes in the employment level
can be determined by taking into account the value added lost because of the shrinking
demand for PV products and installations. The analysis also takes into account that less
intermediate inputs are exported from the EU to China. The share of value added
produced in the EU e.g. in Chinese PV modules is about 36 %.
© 2014 Prognos AG
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