It may sound crazy, but the loss of Chinese tax breaks that will lead to higher solar panel prices is good news for the solar energy sector. One of the reasons that the demand for solar panels has declined worldwide is the ever-decreasing price. After all, this makes it interesting to postpone the purchase.

That is now changing, because since December 1, the Chinese government has reduced the export tax refund by 4 percent. Chinese manufacturers of solar panels can now only get 9 percent of this tax back. “The remaining 9 percent will also be lost in the first half of 2025,” says Scheper.

Also see: November 2024 pv.index – Steady market confidence as prices drop across categories

“The Chinese government is done with it. The Chinese economy has been doing less well than desired for some time and this tax benefit for solar panels is seen as unnecessary. The prices of solar panels, wafers and cells can hardly be lower, so why do you need a tax break any longer? These can be the first signs of a curve bend towards price increases. Then postponing the purchase becomes less and less interesting.“

„Storage really seen as the new gold“

This does not mean that the problems are over, as consumer demand worldwide is lower than expected and lower than supply. This has created production overcapacity worldwide that Scheper estimates to be potentially around “50 to 100 percent”. According to SolarPower Europe’s EU Market Outlook for Solar Power 2024-2028, the number of installed solar panels in half of the top 10 countries was lower than last year. In addition to the Netherlands, these are Spain, Poland, Austria and Hungary.

Also see: SolarPower Europe report: EU solar market with only weak growth

The other top 10 countries (Germany, Italy, France, Greece and Portugal) did see their installation figures grow, but much less strong than in 2023. While the number of installed solar panels in 2023 was 40 percent higher than in 2022, the number of installed solar panels is expected to increase by only 4 percent in 2024.

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“During and after the COVID 19 pandemic, many investers stepped into the solar energy sector because huge growth figures were being achieved. They now think: ‘What a crazy market this is.’ It has only cost them money. Partly because of this, solar panels are not popular with investors, but also because the manufacturers’ products are fairly interchangeable. Inverters are already a bit more complex, so there is a little more margin on them. But storage is really seen as the new gold,” says Scheper.

„Best for companies to work together as much as possible“

“What many people thought is that the solar energy sector would step aside and start doing storage now, but that turns out not to be so easy. Both home batteries and large-scale battery installations are not plug-and-play modules. You have to be able to install them, provide associated software and maintenance service, and to be able to act you have to work with local parties. This creates a new playing field and it is not at all certain who the winners of battery sales will be.“

Also see: Central & Eastern Europe – Utility-scale storage market set to increase fivefold by 2030

According to Scheper, this has created another situation in which many technicians are without financial resources and many investors without the right technical knowledge. “That offers an opportunity for companies, but that is easier said than done, because where is the added value of your company? The technical knowledge of batteries is not necessarily in the solar energy sector and the financial resources are not widely available at the moment. It is therefore best for companies to work together as much as possible, for example with logistics and purchasing, and thus offer added value to technicians and investors.“ (GS/hcn)





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And in no small part thanks to Azerbaijan’s chairmanship. Which in itself is peculiar as Azerbaijan was hauled over hot coals in the run up to the event, for allegedly not being able to fulfill its role of “honest broker” (being a “petrostate”).

And yet, the deal that Azerbaijan brokered includes a tripling of the finance deal for developing countries (last negotiated at COP21 in Paris), from $100 billion to $300 billion for climate change loss and damage mitigation. The funding is part of a financial package adding up to $1.3 trillion in “blended finance” by 2035. As COP29 President Mukhtar Babayev says in the article for the Guardian describing the final days of the negotiations, that financial deal would have been more generous, had Western countries backed the $500 billion proposed by China.

New deal on carbon market trading

There is more. In addition to the money paid into the Loss and Damage Fund, COP29 also sealed a new deal on carbon market trading, pursuant to Article 6 of the Paris Agreement. As UNFCCC states “after nearly a decade of work, countries have agreed on… making country-to-country trading and a carbon crediting mechanism fully operational.” And adds, “This is good news for developing countries, who will benefit from new flows of finance, and it is particularly good news for least developed countries, who will get the capacity-building support they need to get a foothold in the market.”

Also see: Multilateral development banks to reinforce climate finance

The COP29 Presidency also launched an initiative on peace, relief and recovery (Baku Call) which will tackle the nexus between climate change and armed conflict, focusing on water scarcity, food insecurity, land degradation and human displacement. While UNFCCC hailed progress on transparency stating that, “Transparent climate reporting made big strides forward in Baku… with Parties expressing their appreciation for the timely completion of the Enhanced Transparency Framework (ETF) reporting tools.”

On adaptation there were a number of outcomes. The COP29 decision relating to the least developed countries (LDCs) establishes a support programme for the implementation of National Adaptation Plans. And in addition to a High-Level Dialogue on National Adaptation Plans, the Baku Workplan elevated the voices of Indigenous Peoples and local communities in climate action.

Widening participation in climate action

There were also gender and climate change initiatives, recognising that women are hit disproportionately hard by the climate crisis. These initiatives extended the Lima Work Programme on Gender and Climate Change for another 10 years. Finally, a number of initiatives were aimed at widening participation in climate action. These are Action for Climate Empowerment (ACE), the Youth-led Climate Forum and increased visibility for High-Level Climate Champions.

So, was COP29 a success? According to UNFCCC figures there were 55,000 people in attendance, making it the second largest COP, after Dubai in 2023. So certainly in that sense it hasn’t failed. But, the real question is whether has delivered on its promise to provide effective means of combating climate change.

Also see: IRENA is calling for ambitious NDC updates

To answer this question let us try a counterfactual approach. Let’s assume that the Parties rejected the offer of $300 billion and no progress was made on carbon trading. Would have that enabled a better deal in Belem at COP30? I think not. Actually, had the Parties rejected the deal in Baku, there would have been nothing on the table in Belem.

Counterweight to climate deniers

In January 2025 climate change denier Donald Trump will enter the White House. Trump has already appointed the fracking magnate Chris Wright as energy secretary. According to media reports, Wright has dismissed the idea of a global energy transition, asserting that “there is no climate crisis”. Such developments are emboldening climate change deniers such as President Milei of Argentina, who denounced climate change as a “socialist lie” (Argentian delegation withdrew from COP29).

Also see: Trump’s re-election brings significant challenges for climate protection

In addition, in February Germany goes to the polls. Significantly, the early elections were triggered by Chancellor Scholz’ proposals to close a €10 billion gap in the 2025 budget, by cutting, amongst other items, climate protection measures. Close to Germany, debt-to-GDP ratios in France and Italy remain perilously high, putting any decision on climate funding in jeopardy.

To sum up, the deal in Baku was the best possible deal in the circumstances. This might not be the most popular point of view, but certainly reason has prevailed. Azerbaijan as the COP29 Presidency has done a good job of marshalling the deal through. Had the deal not happened this year, there would have been very little chance of any deal next year. Anyone who thinks that climate change is indeed the greatest societal challenge of our times, should welcome the outcome of COP29 as broadly positive. (GS/hcn)





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