Local solar product manufacturers have said that their businesses are at risk if the government does not crack down on illegal solar modules made with cheap cells from China. Last year, solar panels imported through a third country were used in about 30 percent of solar installations, indicating that the government’s efforts to seize illegal solar products were ineffective. That could add to roadblocks in the country’s efforts to reduce carbon emissions by 2050.
Two gigawatts of solar systems were deployed in Taiwan last year. About 0.6 gigawatts of that power came from solar panels imported through third countries, primarily Southeast Asian nations, industry sources said.
Local solar companies said that it is impossible to compete with those imports, as they were 10 to 30 percent cheaper than domestic products, making them extremely attractive to solar energy developers. The wide price gaps mean that the government’s 6 percent increase in feed-in tariffs for adopting Taiwan-made solar panels is unlikely to spur domestic purchases.
It is highly suspicious that those third-country solar modules were equipped with Chinese solar cells, as China’s major solar companies have allocated their production to Indonesia, Vietnam, Thailand or Malaysia to leverage cheap labor in those countries. That shift came as a result of rising Chinese labor costs and stricter environmental rules in China.
Chinese manufacturers of solar cells are under pressure to find a new market after Washington in June last year blocked them from entering the US, to prevent low-cost Chinese products from harming the viability of the US solar supply chain. Analysts believe that Taiwan has become China’s new target market, as the government offers decent tariffs to encourage renewable energy generation.
The Ministry of Economic Affairs last year started requiring importers to submit certificates of origin for solar equipment. Solar energy developers that fail to abide by the requirement could lose their permits to supply electricity.
However, the rules do not stop solar panels made in Southeast Asia from entering Taiwan. During the first 11 months of last year, solar module imports surged 42-fold to a record high from 2021, industry sources said. Even though those imported solar panels were made in Southeast Asia, it is not easy to identify whether the solar cells inside them were made by Chinese companies.
With few effective methods to safeguard their interests and profits, some solar companies have considered slowing their local investment or capacity expansion and scouting overseas sites. One local solar company has said it has delayed new investment in manufacturing next-generation solar products in Taiwan because the market cannot afford the more expensive devices.
Price competition could intensify this year, as the US considers more restrictions on Chinese solar imports.
Taiwan is heavily reliant on energy imports. A slowdown in solar investment would imperil the country’s goal of reaching zero carbon emissions by 2050. The government’s plan requires energy from renewable sources, particularly solar energy, which is to make up a big portion of Taiwan’s energy supply over the next few years.
Realistically, the government should step up its crackdown on the illegal use of Chinese solar cells, allowing local solar companies to grow with the country’s energy transformation. Solar companies have to do their best to improve manufacturing costs and shrink the gap with their Chinese rivals.
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