The PV market is booming. However, European manufacturers are in crisis mode due to overwhelming cheap competition from China. Companies such as Meyer Burger have threatened to shut down component production. Flex bonuses are required.
04.03.2024 – Solar energy is very popular. In 2023, global PV generation grew by 58% to 413 gigawatts (GW) and Europe by 40% to 56 GW. In Germany, new PV systems with an installed capacity of 14.1 GW are almost double the previous year.
The solar value chain is dominated by China. More than 90% of polysilicon, wafers, solar cells and modules come from China or Asian countries, where factories are mainly in the hands of Chinese owners. "Currently, European production can meet less than 2% of Europe's PV demand," said Walburga Hemetsberger, head of industry association SolarPower Europe.
Price wars due to overcapacity
The situation of European manufacturers is exacerbated by overcapacity, especially in China. It is estimated that Chinese factories can produce about 600 GW of modules per year, which is one-third more than global demand. Prices have fallen by more than 50% in recent months due to oversupply. Low-cost Chinese modules flood the European market at competitive prices, some of which are significantly lower than the cost of production.
Dutch solar analyst Gerard Scheper said this was further reinforced by the rapid shift from the previously dominant monocrystalline PERC PV modules to more robust N-type modules by many Chinese manufacturers. In many cases, the inventory of modules with older technologies has been sold off.
Seeking help and bankruptcy
Since last summer, there has been a steady stream of calls for help from the European solar industry. In mid-September 2023, 40 European solar companies warned in an open letter to Brussels: "If nothing happens now, European solar producers will face huge problems in the coming months, some will even go bankrupt." Back in August, ingot maker Norwegian Crystals filed for bankruptcy. In early September, Norwegian wafer maker Norsun suspended production. In November 2023, REC Solar Norway, Europe's second-largest producer of solar silicon after Wacker Chemie, ceased production.
EU heads of state and government have repeatedly assured that they want to strengthen the domestic PV industry. In such an important industry of the future, a strong dependence on China is too dangerous. In addition, the European Commission has proposed the Net Zero Industry Act as part of the Green Industry Plan. The aim is to promote key green technologies in Europe. Among other things, resilient and sustainable power plants manufactured in Europe will be paid more in solar auctions and tenders. Through the purchase incentive, it is intended to encourage end customers to use "Made in Europe" PV modules and modules.
Flex bonuses will have to wait
The German Solar Energy Industry Association (BSW-Solar) has long called on the federal government to provide temporary flex bonuses as well as additional flex tenders as part of the solar package. The amount is intended to compensate for the price difference between solar products produced in Europe and the Far East. But this has not yet been implemented. In mid-November 2023, the Federal Constitutional Court overturned the budget of the Traffic Light Alliance, which provides assistance to the solar industry. Since then, the LDP has resisted the introduction of flex bonuses in particular.
Meyer Borg modules – no longer "Made in Freiberg"?
But the distress calls continue to escalate. In mid-January 2024, Meyer Berg threatened to close Germany's largest solar module production facility (650 megawatts) in Freiberg, Saxony, in April if politicians did not take steps to create "level playing field" such as flex bonuses. The company has also entered into supply contracts with Norsun and Norwegian Crystals.
A few days ago, Meyer Burger CEO Gunter Erfurt followed suit, announcing that it would no longer produce components in Freiberg from March and would close the plant with 500 employees by the end of April – unless politicians take countermeasures at short notice. Instead, the company wants to move production to the United States, where there are generous subsidies. In Goodyear (Arizona), the first PV modules are scheduled to roll off the assembly line as early as May. In Colorado Springs, an old semiconductor factory at chipmaker Intel will be converted to modern solar cell production. However, existing production of HJT solar cells in Thalheim, Saxony-Anhalt, will continue for another year to support the increase in module production in the US.
Solarwatt和Heckert Solar也敲响了警钟
Following Meyer Burger, Dresden-based Solarwatt is now also threatening to relocate its component production. "If Brussels and Berlin do not make a timely decision, for example in terms of flex bonuses, we will be forced to transfer production from Dresden to other already existing production sites abroad," said CEO Detlef Neuhaus.
Heckert Solar, a Chemnitz-based module maker, also sounded the alarm, cutting production and suspending production investments. "If there are positive signs, we will also invest again," company CEO Benjamin Trinkerl told Handelsblatt.
Resistance from the industry
However, there is resistance to the required bonuses in the industry itself. This is opposed by start-ups such as Ental or 1Komma5 Grad, which sell solar systems and profit from the cheapest possible PV modules. The flex bonus is a continuation of the complex special state subsidy at the expense of the public,wrote Philipp Schröder, head of 1Komma5 Grad, on LinkedIn.
Instead, Schroeder responded with a surprising offer. If the company abandons, the company is ready to take over component production at Meyer Burger in Freiberg. Ental also announced that it will build its own factories in Germany and Europe. According to founder and CEO Mario Kohle, there are plans to create a consortium for the production of domestic solar modules on a Europe-wide scale. In this context, he spoke out in favor of direct investment and subsidies for operating costs, following the example of Northvolt in Hyde or Intel in Maggburg.
EU goals
It remains to be seen how realistic the plans for the new plant will be. At the same time, the traffic light government announced that the solar package would not be adopted until the end of March at the earliest1. In March this year, the European Parliament and the Council of Ministers of the European Union will also finalize the Net Zero Industry Act. Whether the resilience bonus will arrive is still up in the air. In any case, it is clear that achieving the EU's target of producing 40% of solar module demand in Europe by 2030 will be very challenging.
Hans-Christoph Nedlein
