After Japan's JPY 20 trillion Green Transformation Plan, India's Production Linked Incentive (PLI) and the US' $369 billion Inflation Reduction Act (IRA), the European Commission (EC) has finally promised state aid for clean tech manufacturing in the form of Green Deal Industrial Plan for European Union (EU).
Announcing the measure in a special address at the World Economic Forum (WEF) recently, EC President Ursula von der Leyen said, "To keep European industry attractive, there is a need to be competitive with the offers and incentives that are currently available outside the EU."
The Green Deal Industrial Plan is to be based on the 4 pillars of regulatory environment that seeks to ease permitting to ensure speed and access, financing, skills and trade to build strong and resilient supply chains.
To speed up the permitting process, the EU will 'temporarily' adapt the state aid rules for easier calculations, simpler procedures, accelerated approvals including simple tax-break models.
Leyen explained that targeted aid for production facilities in strategic clean-tech value chains will help 'counter relocation risks from foreign subsidies' most probably pointing at the US whose IRA deal is attracting solar players even from Europe.
For the mid-term, it has suggested to draw up European Sovereignty Fund to support upstream research, innovation and strategic industrial projects that are key to reaching net zero. Factoring in labor shortage in the market, the Green Deal will develop skills needed to ensure energy transition.
Under a Net-Zero Industry Act, on the lines of the Chips Act, the commission will identify clear goals for European clean tech by 2030, as demanded by CEOs of 13 European and American solar industry stakeholders in October 2022 (see Solar CEOs Demand Bold Action From European Commission). It will go hand-in-hand with the Critical Raw Materials Act that will be brought in to improve EU competitiveness and also to build a critical raw materials club to strengthen supply chains and diversify from single suppliers.
Welcoming the Green Deal Industrial Plan and easing of permitting processes for renewables, European solar PV lobby association SolarPower Europe (SPE) called it a significant moment for European solar manufacturers that will enable Europe to produce 30 GW solar panels as targeted by 2025 (see European Solar PV Industry Alliance Formally Established).
"The green industrial revolution is here to stay, and a European Sovereignty Fund, under the EU's existing multiannual financial framework, will be key in delivering support to Europe's domestic manufacturing base in the longer term," said SPE Policy Director Dries Acke. "Alongside the Green Deal Industrial Plan, the European Commission should adopt Green Public Procurement to stimulate demand for sustainable European solar PV."
However, Europe will have to act fast to implement its big announcements as the US is quickly attracting new solar companies. Only last week two companies published plans to invest in solar production in the US. Now, the first top Chinese solar PV manufacturer JA Solar is trying to profit from the US IRA, picking the State of Arizona to locate its 1st US solar manufacturing fab with an annual production capacity of 2 GW, which is scheduled to become operational by Q4/2023 (see JA Solar takes US Manufacturing Steps). And South Korea's Hanwha Q Cells announced to increase its stakes in the US solar market aiming for 8.4 GW manufacturing capacity in the country, including a 3.3 GW ingot-to-module solar hub in Georgia (see Hanwha Solutions Planning 8.4 GW US Production Capacity).