Meyer Burger Technology AG says it will wait till the 2nd half of February 2024 for 'sufficient measures' to create fair competitive conditions in Europe, failing which it plans to shut down module production in Germany's Freiburg from April 2024.
The closure of its module factory is being contemplated by the management to 'eliminate unsustainable losses in the absence of resilience measures.' The manufacturer had been planning to expand its 1 GW solar cell and module production capacity at the end of 2022 in Germany, with the addition of 400 MW each by 2023-end.
It refers to the lack of financial and policy support for local production to thrive vis-à-vis elsewhere, especially the US that's supporting its solar industry value chain creation with the Inflation Reduction Act (IRA). Meanwhile, cheaper Chinese modules continue to pile up at European warehouses, further impacting the domestic PV industry.
"Closing our state-of-the-art module production in Germany, which started production less than three years ago, is a decision we would like to avoid," explained Meyer Burger CEO Gunter Erfurt. "But in the absence of long-time announced firm commitments by lawmakers on measures to create a level playing field, we are prepared to execute our restructuring plan in Germany."
Shutting down the German module fab will impact close to 500 employees, but its equipment manufacturing and R&D sites in Switzerland and Germany will not be affected by these measures.
The management added, "Meyer Burger's withdrawal as a solar module manufacturer in Europe would further cement the continent's dependence on imports from China and leave Europe's solar energy transition with less safeguards for the future."
End of December, one of Germany's leading online news platforms, Der Spiegel raised doubts if Meyer Burger could be Europe's solar ray of hope, pointing out that the competition from China is not only producing at lower cost but also higher efficient modules.
Focus on the US
Meyer Burger will instead focus on its expansion in the lucrative US market where it has already secured offtake agreements for 5.4 GW of capacity. Cell production in Germany is to continue to supply its previously announced 2 GW module fab in the US. The manufacturer has already shifted cell production equipment meant for Germany's Thalheim to the US for a 2 GW solar cell fab (see Further Capacity Expansion For Meyer Burger).
Financials & strategy ahead
Citing the 'severe impact of the market distortions in Europe,' Meyer Burger expects to report total sales of around CHF 135 million ($156.5 million) for fiscal year 2023 with an EBITDA loss of at least CHF 126 million ($146 million).
It ended 2023 with a cash position of approximately CHF 150 million ($174 million) and said the company will require a funding of close to CHF 450 million ($522 million) to become cash flow positive for the successful ramp up of its US operations.
The management also hinted at partnerships with industrial players and technology licensing as strategic options to enhance its long-term growth potential and funding position.
The manufacturer said it is in advanced discussions with the German Federal Ministry for Economic Affairs and Climate Protection for export financing from Euler Hermes. It is also exploring 45X, which is related to Advanced Manufacturing Production Credits under the IRA, and a loan from the US Department of Energy.
As Chinese solar modules fill up European warehouses, the European solar PV industry has been rife with rumors of trade measures being considered for solar products to support local companies to strengthen domestic production capacity.
However, as many as 433 solar companies and associations issued a joint statement in November 2023 warning that it would injure the EU solar sector to the detriment of the bloc's green energy transition, and impacting half of the continent's current workforce. Their claim, according to SolarPower Europe, is that the EU currently produces less than 3% of solar panels the bloc needs to meet the annual average target to hit 2030 solar deployment goals.