Recent developments in Germany show the entire mess of Europe's unambitious efforts to save its ailing miniscule solar manufacturing sector. Europe's only cell and module manufacturer Meyer Burger has decided to act on its threat to stop module production in the country.
On the other hand, 1KOMMA5° in a surprise move wants to buy the manufacturer's Freiburg site to save local jobs. At the same time, solar installer Enpal has announced plans to venture into solar production.
Speaking to German news website Der Spiegel, 1KOMMA5° CEO Phillip Schröder said, "If Meyer Burger completely gives up production in Saxony, we are ready to at least save module production and secure as many jobs at the site as possible." The company, which has become one of Germany's largest solar installers in only 3 years, had announced its plans in Oct. 2023 to start producing modules in a 1 GW facility with expansion plans to 5 GW by 2030.
Interestingly, Enpal, Germany's No. 1 solar installer with about €900 million in revenues in 2023, is eyeing module production of its own.
Earlier this year, Meyer Burger had announced plans to shut down its solar module production factory by April 2024, citing the availability of cheaper Chinese modules in the market leading to sustained losses for the company. Instead, it wants to focus on the US market where it is setting up both a solar cell and module fab to profit from the highly attractive Inflation Reduction Act (IRA).
Already in the summer of 2022, Meyer Burger had landed itself a plum order for a long-term gigawatt-scale module supply with US based DE Shaw Renewable Investments (DESRI) in the US (see 3.75 GW DESRI Order For Meyer Burger In US).
One of the leading solar module manufacturers in Europe, Meyer Burger did leave a little window open for German law makers to take final action by mid-February 2024 to create fair competitive conditions with some kind of production bonus (see Meyer Burger May Shutter German Module Fab By April 2024). But the parliament session in that week failed to get the Solar Package I passed due to conflicting views in the government coalition. The so-called Solar Package is a big policy framework package with multiple regulatory improvements for the German solar market that was supposed to also include resilience auctions and a feed-in bonus for end-customers if they chose products from local manufacturers.
In the absence of any concrete financial or regulatory support coming in, Meyer Burger has now said it will halt module production at the Freiburg site in the 1st half of March 2024, expected to lead to significant cost savings from April this year. The next session week of the German Bundestag will take place prior to the deadline in the second week of March.
"As there has not yet been any decision on policy support measures to remediate current market distortions created by oversupply and dumping prices of solar modules, the Group has decided to start preparations for the closure of its Freiberg site, which would take effect in April," stated the Meyer Burger management.
This is where the German solar start-up unicorn 1KOMMA5° has stepped in. Interestingly, 1KOMMA5° together with other big installers recently sharply criticized the German solar association BSW Solar for the latter's demand of resilience or production bonus to encourage the use of locally-produced PV components.
German solar installer Enpal too joined in arguing that the bonus will support only a smaller number of manufacturers with combined module and cell production, creating barriers for other companies. It batted for internationalization instead (see Europe Solar PV News Snippets).
Soon after Meyer Burger's announcement, Enpal issued a short statement saying, "After the announced departure of existing German producers from solar module production, Enpal is ready to make its contribution to the transformation of the German and European solar industry and is taking steps towards its own solar production."
Enpal says it is checking production sites at different locations in Germany and Europe. The company had been looking to cooperate with former VW Group CEO Herbert Diess and a major Chinese producer to set up a factory in Germany last year, but the unexpected steep drop in module prices and missing EU subsidies for this venture have delayed plans. Currently, Enpal sources the bulk of its solar and storage products from China.
Meanwhile, Meyer Burger is seeking shareholder approval for up to CHF 250 million rights issue to finance its 2 GW solar cell fab in Colorado and 2 GW module factory in Arizona in the US.
"The rights issue is an attractive proposal to our investors as they can invest into the highly attractive US business where we are positioned to have the potential to grow a profitable business," explained Meyer Burger CEO Gunter Erfurt. "Furthermore, a clearer focus on our US business makes us independent of political decisions in Europe."
The German debate on support for the manufacturing industry has to be seen in the context of a missing European industrial strategy for solar unlike the US, India or China.
The European Council and Parliament recently reached an agreement over the European Commission proposed Net-Zero Industry Act (NZIA) to support local production of solar equipment recently, but the implementation is still far off (see EU Council & Parliament Agree Over Net-Zero Industry Act).
Several EU manufacturers have been recently haunted by insolvencies, restructuring measures or low utilization rates in a rough business environment of overcapacities, record low prices and inventories. The European solar industry lobby organization SolarPower Europe (SPE) has been calling for short-term emergency measures and structural support for the survival of local producers for many months now. It argues that these will enable both the EU goal of 30 GW domestic manufacturing by 2030 and the EU deployment goals of 750 GWdc (600 GWac). It requires an average annual installation volume of 70 GW, roughly 14 GW more than installed in 2023. In other words, the lobby is asking for carrots, such as CapEx and OpEx support, and no sticks, such as trade measures that would negatively impact the demand side.
Already in September 2023, Walburga Hemetsberger, CEO of SPE was quoted in Politico, "It's now "very likely" the EU will miss those production targets thanks to large-scale bankruptcies unless Brussels acts fast, Hemetsberger said."