Europe’s solar industry is facing its deepest crisis in more than a decade as steep competition from China erodes manufacturing in the sector, rendering the continent’s hope of greater energy independence even more wishful.
More solar panels were installed than ever before across the EU last year in a boon for the bloc’s climate goals.
However, that was partially made possible by an influx of Chinese equipment, causing profits for local manufacturers to plunge.
Photo: Reuters
Despite insistence on pushing for more homegrown energy infrastructure, governments have been slow to prop up the ailing industry.
The latest fallout became apparent on Wednesday, when Swiss panel maker Meyer Burger Technology AG said it might shut a production site in Freiberg, Germany — one of Europe’s largest — and redirect investments to the US. Pending a final decision next month, the site’s shutdown might happen as early as April and would affect about 500 workers.
Solar has been at the forefront of Europe’s renewables expansion in the past few years due to plummeting costs, but the trend has come at the expense of European panel producers who have not managed to sufficiently scale up supply chains to compete globally.
At the same time, governments are under pressure to push ahead with the energy transition and lack the budgets that would be needed to help European producers keep up.
A key factor that complicated matters was the US’ 2022 ban on panels with components from China’s Xinjiang region. The move aimed at ruling out forced labor, but caused equipment to flood into Europe. Research firm Rystad Energy in July last year estimated that around 7 billion euros (US$7.64 billion) worth of Chinese-made panels had piled up in European warehouses, capable of producing about the same amount of energy as all the panels that were installed in the region during 2022.
Meyer Burger CEO Gunter Erfurt called the development “dumping.” Globally, solar module prices halved to US$0.12 per watt last year — about a third of Meyer Burger’s module production cost, BloombergNEF said. Even leading Chinese solar manufacturers have struggled to maintain profitability.
In September last year, Norway’s Norsun AS — which makes ingots and wafers used in solar cell production — announced a temporary output halt and layoffs. In November last year, German module producer Solarwatt GmbH said it would cut 10 percent of its workforce, which it had previously intended to expand.
Finnish solar company Valoe Oyj filed a debt restructuring application last month to avoid insolvency. Austrian PV producer Energetica Industries GmbH opened bankruptcy proceedings that month.
“The European and German solar industry is currently being massively undercut across the board,” Solarwatt’s CEO Detlef Neuhaus said.
The EU said it aims to manufacture at least 40 percent of its clean tech needs domestically by 2030, an ambition shaped in no small part by the lessons learned from the energy crisis following Russia’s invasion of Ukraine.
However, domestic suppliers meet less than 2 percent of European demand for solar, business association SolarPower Europe said, and about 90 percent of components come from China. Some manufacturers such as Meyer Burger are eyeing investments in the US as its Inflation Reduction Act boosts tax cuts and incentives for end consumers.
Trade lobbies have pushed governments to ramp up support while avoiding tariffs or import bans. The European Commission’s Net Zero Industry Act, which has yet to be finalized, aims to set criteria for renewable auctions to take into account cybersecurity, sustainability and deliverability — something that should favor domestic wind and solar manufacturers.
In Germany, the government is debating offering producers a “resilience bonus” which could cover the operational cost differences versus their foreign competitors, but officials are still divided over the measure, as they have been busy plugging a 17 billion euro budget hole.
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