European Solar Sector Proposes Domestic Production Labeling

The European solar manufacturing industry is currently grappling with significant challenges. Projections indicate that by 2024, European production will account for less than 10% of all photovoltaic (PV) modules sold in Europe, with less than 5% encompassing European-produced solar battery. Despite ongoing legislative efforts to stabilize the sector, these measures are often slow to take effect. A primary concern is the widening price gap between imported and domestically produced PV modules.

To address this issue, the European Solar Manufacturing Council (ESMC) is pioneering the "Domestic Production Portfolio" (DPP) initiative in collaboration with external stakeholders. This voluntary initiative encourages client companies to incorporate a higher number of European-made PV modules into their sales portfolios. The core idea of the DPP is to assign a domestic production label, motivating solar power plant investors to commit to including an increasing proportion of domestic solar production in their sales portfolios. This label represents a commitment to local manufacturing, job creation, and economic robustness.

Objectives and Implementation of the DPP

The DPP is designed to complement, not replace, legislative support, akin to voluntary initiatives such as the Leadership in Energy and Environmental Design (LEED) system and the Renewables Portfolio Standard (RPS) in the USA. The initiative explores mechanisms like price leveraging to mitigate the price disparity between European and Chinese solar modules. This approach ensures that end customers who purchase European solar modules do not bear the entire price difference.

The DPP is crafted for immediate and flexible implementation, supporting domestic content for PV installations beyond public procurements and tendering, which are not covered by the Net Zero Industry Act (NZIA). The program categorizes European PV modules based on their involvement in the value-creation chain, aiming to gradually increase the proportion of domestically produced modules in the market.

Aiming for a Fully Integrated Value Chain in Europe

The ultimate goal of the DPP is to establish a fully integrated value chain in Europe. The initiative plans to start with a 5% DPP commitment in 2026, increase to 10% in 2027, and aim for 40% of the market by 2030. This roadmap provides the necessary time for industrial ramp-up, with the expectation that as production scales up, the costs of European PV modules will gradually align with international costs, potentially reducing the need for the DPP label by the 2030s.

Hans-Josef Fell, former Member of the Bundestag and co-author of the Renewable Energy Law (EEG), emphasized the importance of European solar production to reduce dependency on Chinese imports. He stated, "The implementation of ESMC's DPP proposition is crucial to nourish domestic production growth in parallel with the expanding solar market."

Eicke Weber, co-founder of ESMC and MCPV, added, "The urgently needed renaissance of the European solar industry requires certainty regarding domestic module sales. The DPP program offers such assurance without having to wait for public support, easing the task for all DPP participants, who can register now."

Conclusion

The DPP initiative represents a strategic effort to bolster the European solar manufacturing industry by promoting the use of domestically produced PV modules. By encouraging local production, the DPP aims to create jobs, strengthen the economy, and ensure a more stable and sustainable solar market in Europe. The gradual increase in domestic production targets provides a structured path towards reducing reliance on imports and achieving a fully integrated value chain within Europe. As the industry scales up, the cost competitiveness of European PV modules is expected to improve, ultimately fostering a robust and self-sufficient solar sector in the region.