23 Feb 2018
Solar Panel Producers Challenge Decision to Retroactively Impose Duties, While European Parliament Discusses New Rules Which Might Affect Solar Panels Growth
On 5 February 2018, two notices of action were published in the EU’s Official Journal, one brought by Kraftpojkarna (a Swedish producer of solar panels) and another brought by Wuxi Saijing Solar (a Chinese producer of solar panels).
The actions – which are identical – were filed against the European Commission before the EU General Court on 30 November 2017 and relate to the import into the EU of solar modules and solar cells from mainland China.
Definitive EU trade defence measures have been imposed on solar modules and cells from mainland China since 6 December 2013. The measures were imposed as a combination of tariffs on the one hand (anti-dumping duties ranging from 27.3% to 64.9% and countervailing duties ranging from 0% to 11.5%), and a minimum import price (MIP) on the other hand.
While the trade defence measures were initially imposed for a period of two years, the EU extended the duties and MIP for a period of 18 months in March 2017. As a result, the measures are set to expire in September 2018.
Kraftpojkarna (Case T-781/17) and Wuxi Saijing Solar (Case T-782/17) are now challenging parts of the EU regulations imposing definitive anti-dumping and countervailing duties on solar modules and cells from mainland China (Regulations 1238/2013 and 1239/2013), together with certain parts of the Commission’s regulation withdrawing the acceptance of the undertaking for two exporting producers (Regulation 2017/1524).
The producers argue that Article 3(2) of Regulation 1238/2013 and Article 2(2) of Regulation 1239/2013, which give the European Commission the power to declare undertaking invoices invalid, are illegal and should be invalidated. They argue that the European Commission, by invalidating undertaking invoices and then directing customs to collect duties retroactively, as if no valid undertaking invoices had been issued and communicated to customs at the time the goods were declared for release into free circulation, acted in violation of several provisions of the EU’s basic anti-dumping and basic anti-subsidy Regulations.
In that connection, Kraftpojkarna and Wuxi Saijing Solar are of the opinion that Article 2 of Regulation 2017/1524, withdrawing the acceptance of the undertaking for two exporting producers, should be annulled. Article 2 states that the undertaking invoices listed in the Annex to that regulation are declared invalid, and that “[t]he anti-dumping and countervailing duties due at the time of acceptance of the customs declaration for release into free circulation … shall be collected”.
The initiated actions are important, as they contest a decision of the European Commission to retroactively impose anti-dumping and countervailing duties on imports into the EU. If successful, the cases are likely to have repercussions for the imports of solar modules and cells of other producers.
In addition, it was reported – also on 5 February 2018 – that solar panels growth might be threatened by the new EU rules on energy market design, which could also have repercussions for solar modules and cells of Chinese origin. It appears that new draft rules, which are currently being discussed within the European Parliament, would expose households, schools and hospitals that decide to place solar panels on their rooftop to the same responsibilities as big energy utility companies.
As part of a broader “Clean Energy for all Europeans” package, the European Commission put forward proposals for EU energy market design on 30 November 2016. The proposals are aimed at making the electricity market fit for flexibility, decarbonisation and innovation by providing for undistorted market signals. The proposals revise the rules for electricity trading, clarify the responsibilities of market participants, and define principles for assessing capacity needs and for market-based capacity mechanisms.
The ongoing discussions within the European Parliament relate to whether small renewable energy installations should enjoy so-called “priority dispatch” to the electricity grid and thus be exempted from grid balancing responsibilities. While the European Commission, in its 2016 proposals, promised that “consumers and communities will be empowered to actively participate in the electricity market and generate their own electricity, consume it or sell it back to the market”, it seems that the European Parliament’s draft report now turns this principle around by exposing small-scale renewable energy producers to the same rules as big electricity utility companies.
If small-scale renewable energy producers, whose main activity is often not related to power production, were not be exempted from grid balancing responsibilities, it is feared that the administrative and financial burdens would act as a strong disincentive to engage in renewable energy production. As warned by SolarPower Europe, this would have a negative impact on local communities, depriving them of cheap electricity and qualified jobs.
The European Parliament’s draft report seems to state, as a justification, that providing exemptions to some market participants would mean discriminating against others, which would fundamentally undermine market structure, increase costs to consumers and create uncertainty for investors.
A vote in the European Parliament’s industry committee on the rules on energy market design was scheduled to take place on 21 February 2018, and a plenary vote is expected to take place in the coming months. Thereafter, the final negotiations on the new rules will take place between the EU Member States. France and Greece are the two most active supporters of the so-called “priority dispatch” for small-scale renewable energy producers.