Germany brewing solar "big retreat" Chinese PV companies affected

Deutsche Bank issued a report on February 14, saying that the German government's adjustment of solar photovoltaic industry policy may exceed expectations. The day before, German Minister of Economy Rosler and Environment Minister Rothgen once again negotiated on the solar photovoltaic industry policy. According to German media reports, the German government's further reduction of solar PV subsidies is inevitable. The differences between the two major departments are only due to the difference. The adjustment of Germany's solar energy industry policy will not only have a significant impact on its domestic companies, but also on China's solar photovoltaic companies.

Sunshine time is short, big investment in exchange for low output

The opposition to solar power generation in Germany is increasing. Due to climatic and geographical reasons, Germany’s average annual sunshine duration is 1,528 hours, only about half that of Spain. A person in charge of a U.S. electric power company said that the development of solar energy in Germany is like “planting pineapple in Alaska”. However, under the government's support, Germany has become the world's largest solar power market. The world's new solar power generation equipment is in Germany, with a total installed capacity of 25 million kilowatts. According to the German "Renewable Energy Law," power companies must purchase high-priced solar power from users, and the government will provide subsidies according to the situation. In the past 10 years, the German government subsidized the solar photovoltaic industry by more than 100 billion euros.

The German “Spiegel Online” website stated that the solar photovoltaic industry took away 50% of the government's total subsidy in new energy, but only satisfied 3% of the electricity demand, far less than the 8% achieved by wind energy. Erdmann, economist and energy policy adviser to German Chancellor Merkel, also stated that the development of solar energy may be Germany's “most expensive mistake” in environmental protection policies.

Substantially reduced subsidies, affecting 100,000 jobs

"Mirror Online" stated that the German ruling coalition is intensively revamping the "Renewable Energy Law" and turning wind energy into the main target of new energy. According to Rosler’s plan revealed last month, by 2020, the installed capacity of solar power in Germany will not exceed 9 million kilowatts, which is equivalent to an increase of 1 million kilowatts per year. At the same time, he demanded that the German government's on-grid tariff subsidies be cut by 25% to 32% as soon as possible. The German Solar Energy Industry Association warned that the plan will affect 100,000 jobs in Germany's photovoltaic industry and the entire industry will face serious crisis.

The plan of the German Ministry of Environment is to control the annual installed capacity of solar photovoltaics between 2.5 and 3.5 million kilowatts, and reduce solar subsidies monthly, but the annual reduction will not exceed 24%.

Since last December, two German solar companies, SolonSE and Millennium Corporation, have been bankrupt. "Star enterprises" Q-cells are also struggling on the verge of bankruptcy, and only at the last moment did they seek shareholders to save their lives. The reason why Germany's solar photovoltaic companies are in trouble lies in the fact that government subsidies are continuously decreasing, and on the other hand, it is due to fierce global competition. At present, there is a serious excess of global PV industry capacity, and the oversupply will inevitably lead to a drop in prices. In the first 9 months of last year alone, the price of photovoltaic products fell by 30%. Industry insiders estimate that the German solar PV industry will usher in a big reshuffle, and eventually only 1/3 of the companies will survive.

Business traps, but take China's factors

Compared with their German counterparts, Chinese companies produce solar photovoltaic products with superior prices and quality. Some solar energy companies in Germany have blamed their own difficulties on China's competition. SolonSE, a German manufacturer of solar cell modules, stated in its bankruptcy statement that they have encountered "low price competition" with Chinese products. According to a report by the German News Agency on January 15, some German solar companies hope that the government will impose punitive tariffs on Chinese solar manufacturers. "Our competition is obviously distorted. China is substantially expanding its production capacity and has established a stable market position," said Olrich, chairman of the Central Germany Solar Valley Research Association.

China's LDK recently decided to acquire Germany's Sunway Photovoltaic Inc. and was criticized. According to the "Frankfurter Zeitung" article, the EU originally expected that China would use more than $3 trillion in uranium reserves to purchase European government bonds and ease the debt crisis in Europe. It did not occur to Chinese companies that they were "grabbing on the beach" for European companies and infrastructure construction.

The German Ministry of Economic Affairs pointed out that in 2008, 60% of Germany's new solar photovoltaic market share was occupied by German solar energy companies, and Chinese manufacturers accounted for only 21%. By 2011, the share of Chinese manufacturers reached 60%, while the share of German companies was reduced to 15%.

Scale is the key, and industry calls for retaining competition

Photovoltaic company Canadian Solar Energy Corporation held a press conference in Munich on the 9th, calling on Europe not to follow the poor precedent of the United States and set up trade barriers for Chinese solar energy companies. The conference pointed out that punitive tariffs will affect thousands of jobs in the European solar energy industry. Developers, installers and service companies of European PV projects will also be affected. This is not a good thing for Europe in crisis. . A signed article in “The Voice of Germany” pointed out that those criticizing Chinese solar companies may have forgotten that German solar companies have also received strong support from the government for many years.

Chris Brown, an American energy policy expert, believes that China's development of solar photovoltaics is part of the strategy of developing new energy. Its purpose is to get rid of dependence on energy imports and reduce environmental pollution. With the encouragement of related policies supporting research and development, China's solar photovoltaic companies have formed their own brand and technology base. Industry analyst Vicht believes that Germany's photovoltaic industry is mostly small and medium-sized enterprises, and it cannot carry out large-scale production. In China, it is different that large factories can reduce costs through large-scale production. The German version of the Financial Times said that the weaknesses of some German solar companies have become increasingly evident: the scale is too small, there is no competitiveness, the product cost is high and the degree of specialization is not enough.

Kneich, president of the German Solar Energy Industry Association, said that in the long run, the fierce competition in the solar energy industry is conducive to the development of the industry. Relying on technological progress, large-scale production and fierce international competition, the solar energy industry is moving toward the goal of producing cheap energy.