Passage:
In the late twentieth century, several European municipal utility companies introduced feed-in tariffs—guaranteed above-market rates paid to small-scale producers of solar energy—to accelerate renewable energy adoption. Proponents argued that these long-term financial guarantees would insulate domestic solar panel manufacturers from foreign price competition by fostering a reliable local market. In response to these policy incentives, local manufacturing of photovoltaic cells surged dramatically between 1995 and 2002. However, the legislation governing the feed-in tariffs did not specify that equipment must be sourced locally; utilities were required to purchase power from qualified producers regardless of where the producers purchased their solar hardware. Consequently, when Asian manufacturers expanded their production capacity in 2001 and offered solar components at prices substantially lower than European production costs, European solar installation companies increasingly purchased imported hardware to lower their capital expenses while continuing to receive the fixed tariff rates. By 2005, despite record numbers of domestic solar installations, over sixty percent of European solar panel manufacturers faced bankruptcy, and net domestic manufacturing employment in the sector declined.
Statement: European solar installation companies were legally required to use domestically manufactured equipment in order to qualify for fixed feed-in tariff payments.
Answer: Answer