Before China dominated the solar panel industry, Germany led the way. It was the world’s largest producer of solar panels, with several start-ups concentrated in the former East Germany, until about a decade ago, when China ramped up production and undercut almost everyone on price.
Now that Germany and the rest of Europe are trying to meet ambitious targets to reduce greenhouse gas emissions, demand for solar panels has increased.
Some of the last remaining manufacturers in Germany’s solar industry are not ready to give up.
They are demanding that the Berlin government offer incentives to protect producers who have survived by catering to niche markets and expanding beyond panel manufacturing. They argue that Europe’s high standards for the origin of materials and shorter supply chains make production in Germany more environmentally friendly and reliable.
Not everyone is convinced that protectionism is the best way to go. Some critics note that European Union tariffs on Chinese solar panels from 2013 to 2018 have failed to save the domestic industry. Others argue that affordable, widely available solar panels are desperately needed regardless of their origin.
Because Europe relies “very significantly” on imported solar panels, any measure to curb imports “must be weighed against the goals we have set for the energy transition,” said Mairead McGuinness, the European commissioner for financial stability. , he told the European Parliament last month.
But for European solar manufacturers, the problem has worsened over the past year. Not only have the Chinese increased their production of solar panels, but the United States has tightened its tariffs to include Chinese panels shipped to Southeast Asian countries for final assembly. That has caused a flood of Chinese panels to reach Europe at below-market prices, government officials and company executives say, crushing any chance for fair competition.
Last year, more than 97 percent of solar panels installed on rooftops and in fields across Europe were made abroad, the vast majority in China, where cheap energy and government support keep prices down.
“Chinese competitors are currently giving their products in unimaginable quantities to Europe far below their production costs,” said an open letter to the government written by Gunter Erfurt, chief executive of Meyer Burger, a Swiss solar company that has two factories and a research center in Germany.
“We are fighting for fair market conditions, which have not existed for less than a year,” Mr. Erfurt wrote.
Mr Erfurt’s call cited several other German solar companies who all want the government to help prop up the industry in the face of stiff competition from China.
The German Solar Association is calling on the government to push through a proposed incentive, called a “resilience bonus,” that would pay solar panel owners higher costs for electricity fed into the grid from domestically produced panels.
“While other countries such as the United States and China are strongly promoting the establishment and scaling up of solar gigafactories, the German government has yet to take concrete action,” the group warned in January.
To meet its ambitious climate goals, Germany needs to generate an additional 80 gigawatts of solar power per year. But last year, the country installed enough to produce only 9 gigawatts — and domestic solar companies say they only have the capacity to produce about 1 gigawatt of solar power annually.
This reality has led to a bitter dispute in the German solar industry, where some believe the subsidies will do more harm than good.
Philipp Schröder, a former Tesla executive who runs 1Komma5, a solar company he co-founded, said it sourced its components mainly from Europe and the United States and successfully competed against low-cost Chinese panels by combining panels with heat pumps, batteries and software to run the entire system. He is against any form of government support.
“The resilience bonus currently being discussed in Germany may be beneficial for a few speculators in the short term, but in the medium term it works like an addictive drug that suppresses innovation and fragments the EU market,” Mr Schröder he said in a post on LinkedIn.
This month, Meyer Burger deepened the controversy when it halted production at a facility in Freiburg in the eastern German state of Saxony and said it would focus on expanding production in Arizona and Colorado. There, it can take advantage of U.S. tariffs on Chinese panels and incentives offered through the U.S. Inflation Reduction Act.
“Due to the lack of European protection against unfair competition from China, almost four years of hard work by great employees in Europe is at risk,” the board of Sentis Capital Cell 3 PC, Meyer Burger’s largest shareholder, said in a statement. . In a slap to German lawmakers, the board cited a “strong bipartisan commitment” in Washington “to protect US-based companies from unfair competition.”
Further angering the solar industry are the billions in subsidies the government has pledged to attract other companies, including battery maker Northvolt and microchip makers Intel and TSMC, as the question of how to handle solar power appears to be getting in the way.
Sven Giegold, a deputy minister at the economy ministry, told reporters this month that Germany would propose measures to help “support local production of solar technology,” but quickly added: “Trade defense measures are not helping.”
Germany has been here before. In the early 2000s, a combination of government incentives, scientific research and cutting-edge technology helped make its solar industry the world’s leading producer of solar panels and technology.
Then manufacturers from abroad, especially China, caught on and sold solar panels at prices far below what the Germans offered. The impact was swift and brutal. Companies like Q-Cells, Solon, and SolarWorld filed for bankruptcy and disappeared. However, some businesses have continued to focus on assembling, installing and integrating solar panels into integrated green energy systems.
Simone Tagliapietra, senior fellow at Bruegel, the Brussels-based think tank, said he agreed the new tariffs would not make sense. To achieve a secure supply of panels, as well as to support the green transition and economic growth, he proposed that Europe should support the development of new solar technologies.
“We are going for the new generation of solar panels, products that are still at the forefront of innovation,” said Mr. Tagliapietra. “If we can’t beat the Chinese in quantity, we must try to beat them in quality.”
Solarwatt, based in the former East Germany, said it may also have to close one of its solar panel factories. But panel manufacturing is only one part of the company. It also creates systems that connect power generated by solar panels to wall boxes that can charge cars and heat pumps to heat homes.
“The future of our company is not at risk, even if production had to be stopped,” the company said in a statement, adding that other divisions could absorb the roughly 120 people whose jobs would be at risk.
Meyer Burger’s decision to close its Freiberg factory has left 500 jobs in limbo. The company’s chief executive, Mr Erfurt, said the future of the factory depended on political leaders in Berlin. “But we don’t see a bridge being built by the government at the moment,” he said.
At the same time, the company is considering other alternatives, he said, adding that “one option is just to break it up and rebuild it in the US.”