Before China dominated the solar panel industry, Germany led the way. China was the world's largest producer of solar panels, with several startups clustered in the former East Germany, until about a decade ago when China began ramping up production and lowering prices below almost everyone else.
Now, as Germany and the rest of Europe strive to meet ambitious targets to reduce greenhouse gas emissions, demand for solar panels is starting to increase.
Some of the last remaining manufacturers in the German solar industry are not ready to give up.
They are demanding that the Berlin government provide incentives to protect producers who respond to niche markets and survive by expanding beyond panel production. They argue that Europe's high standards for material origin and short supply chains make production in Germany more environmentally friendly and reliable.
Not everyone is convinced that protectionism is the way to go. Some critics say EU tariffs on Chinese solar panels from 2013 to 2018 failed to save the domestic industry. Others argue that there is a dire need for affordable and widely available solar panels, regardless of their origin.
Europe relies “to a very significant degree” on imported solar panels, so any measures to limit imports “need to be assessed against the goals we have set for ourselves with regard to the energy transition,” the European Commissioner for Financial Stability said. says Mairead McGuinness. , told the European Parliament last month.
But for European solar manufacturers, the problem got worse last year. Not only has China increased its solar panel production, but the United States has tightened tariffs to include Chinese panels shipped to Southeast Asian countries for final assembly. This has resulted in large quantities of Chinese panels being supplied to Europe at below-market prices, destroying opportunities for fair competition, government officials and company executives said.
More than 97% of solar panels installed on rooftops and fields across Europe last year were made overseas, the majority in China, where cheap energy and government support keep prices low.
“Chinese competitors are now giving away unimaginable quantities of their products in Europe at prices well below their domestic production costs,” said Gunter Erfurt, CEO of Swiss solar company Meyer Burger. It was stated in an open letter to the late government. Factories and research centers in Germany.
“We are fighting for fair market conditions, which have not existed for less than a year,” Erfurt wrote.
Mr. Erfurt's appeal cites several other German companies involved in solar production wanting the government to help strengthen the industry as it faces fierce competition from China.
The German Solar Association is demanding that the government push ahead with a proposed incentive called a “resilience bonus” that would pay solar panel owners higher rates for electricity supplied to the grid from domestically produced panels.
In January, the group warned, “While other countries, including the United States and China, are strongly promoting the establishment and expansion of solar gigafactories, the German government has not yet taken concrete measures.”
To meet its ambitious climate goals, Germany will need to produce an additional 80 gigawatts of solar power each year. However, last year, domestic solar power generation facilities were only 9 gigawatts, and domestic solar power companies announced that they could only produce about 1 gigawatt of solar power per year.
This reality has sparked fierce debate within the German solar industry, with some believing the subsidies would do more harm than good.
Philipp Schröder, a former Tesla executive who runs 1Komma5, a solar company he co-founded, said he sourced components primarily from Europe and the United States and successfully competed with low-cost Chinese panels by bundling the panels with heat pumps, batteries and software. Run the entire system. He is opposed to any form of government aid.
“The resilience bonus now being discussed in Germany may help a few profiteers in the short term, but in the medium term it acts like an addictive drug, stifling innovation and fragmenting EU markets,” Mr Schröder said in the post. . On LinkedIn.
This month, Meyer Burger deepened the dispute by saying it would stop production at its Freiberg plant in Germany's eastern state of Saxony and shift the company's focus to expanding production in Arizona and Colorado. There, they can take advantage of U.S. tariffs on Chinese panels and incentives provided through U.S. inflation reduction laws.
“The lack of protection in Europe against unfair competition from China puts almost four years of hard work by our great employees at risk,” the board of Sentis Capital Cell 3 PC, Meyer Burger’s largest shareholder, said in a statement. . The board criticized German lawmakers, citing Washington's “strong bipartisan commitment” to “protect U.S.-based businesses from unfair competition.”
Further infuriating the solar industry are the billions of dollars in subsidies the government has promised to attract other companies, including battery producer Northvolt and microchip makers Intel and TSMC.
Deputy Economy Minister Sven Giegold told reporters this month that Germany would propose measures to help “support local production of solar technology,” but quickly added, “Trade defense measures do not help.” “he added.
Germany has been here before. In the early 2000s, a combination of government incentives, scientific research, and cutting-edge technology helped the solar industry grow into one of the world's leading producers of photovoltaic panels and technologies.
They then sourced solar panels from overseas manufacturers, especially China, and sold them at prices much lower than those quoted by Germany. The impact was swift and brutal. Companies such as Q CELLS, Solon, and Solar World declared bankruptcy and disappeared. However, some companies have continued their efforts by focusing on assembling, installing, and integrating solar panels into comprehensive green power systems.
Simone Tagliapietra, a senior fellow at Bruegel, a Brussels-based think tank, said he agreed the new tariffs were unreasonable. He suggested that Europe instead support the development of new solar technologies to achieve a secure supply of panels and support a green transition and economic growth.
“Choose the next generation of solar panels, products that are still at the forefront of innovation,” said Tagliapietra. “If we cannot beat China quantitatively, we must try to beat it qualitatively.”
Solarwatt, based in the former East Germany, said it may have to close one of its solar panel factories. But making panels is only one part of the company. They also create systems that supply warm homes by connecting the power generated by solar panels to wall boxes that can charge cars and heating pumps.
“Even if production is halted, the future of our company is not in jeopardy,” the company said in a statement. “Our other business units can absorb the approximately 120 people whose employment will be at risk.”
Meyer Burger's decision to close its Freiberg plant leaves up to 500 jobs in limbo. Mr. Erfurt, the company's CEO, said the plant's future depended on Berlin's political leaders. “But we don’t see the government building bridges at the moment,” he said.
“At the same time, the company is considering other alternatives,” he said, adding, “One option is to simply dismantle and rebuild in the United States.”