The European Union has launched a probe against a solar panels dumping exercise by Chinese companies during the year 2011, which saw $26 billion cross the Pacific to the Asian Country. According to the EU, the Chinese companies were exporting the commodity to the 27 member region, at prices less than what the products cost in China.

china solar

This was seen as an attempt to try and price out the European Union based solar companies from the market, and this is why the body has launched an investigation into the matter to draw valuable conclusions that will try and make the playing field fair.

China is the world’s largest producer of solar products, commanding a total market share of about 67% of the global production, and the affiliated companies have been selling the panels at lower prices, therefore operating at a loss all in a bid to knock out the European based companies from the lucrative business.

This is perhaps a foresight to the projected demand for the commodity in the region, as analysts predict that Europe would account for nearly 50% of the global demand for solar panels going forward. This would in turn, help recoup the losses made during the dumping period, which would eventually kick out the European solar companies from the business.

Some of the most affected European companies include companies from Germany, Spain, and Italy. Eurener S.L, a Spanish based photovoltaic module maker could be highly affected, along with Sunfilm AG of Germany. If the trend had continued without mention, perhaps in the next few years we could be talking of the fall of the photovoltaic  module companies in Europe, with a microscopic focus on Chinese companies.

Other European companies manufacturing photovoltaic modules include Germany’s Solar Fabrik AG, Spain’s Isofoton, Italy’s AYTON Clean Energy, and FVG Energy S.p.A, among others.

However, the EU has moved in swiftly to schedule the probe, which will take 15 months, albeit with a possibility of imposing tariffs as early as after nine months into the investigations, if there is strong early evidence of dumping.

According to a report by Goldman Sachs Group, Inc. (NYSE:GS), the latest EU announcement, could put more pressure on Chinese solar companies, thereby imposing a downward risk. This was in relation to the body’s revision of various tariffs in Germany and Italy on Solar imports.

The report says, “Post recent downward revisions to Germany & Italy’s solar feed-in-tariff programs, the team has adjusted down European PV demand to 7.6GW (or 26% of global demand) in 2013E, vs. 13.8GW in 2012E.”

On the other hand, China’s Commerce ministry responded by saying, “Restricting photovoltaic cells not only hurts the interests of industries on both sides, but also will destroy the healthy development of the global PV (photovoltaic) industry and clean energy,” expressing a deep regret at the recent developments in the industry, and the relationship between the two bodies.

First Solar, Inc. (NASDAQ:FSLR) could also be set to benefit, as the EU and U.S team up in the tariffs and implementations, along with counterpart Trina Solar Limited (NYSE:TSL) among others.

Consequently, Goldman Sachs Group, Inc. (NYSE:GS) analysts believe that China will also introduce their own kind of tariffs on imported goods from the EU, as a reaction to what the European Union has on cards. This will likely add more pressure to the solar industry in the world’s largest producer and exporter of the commodity.