The Strategist

Germany is losing the solar energy market to China

05/16/2017 - 14:38

Solarworld, Germany's largest producer of solar panels, has failed to stand a competition with Chinese companies that flooded the solar energy market with inexpensive panels. As reported by Reuters, Solarworld intends to file an application for bankruptcy of the company.

The manufacturer noted in a statement that prices on the market have been relatively low for quite a long time. In this regard, the company cannot develop its business anymore, and has no positive forecasts. In addition, Solarworld has accumulated a lot of debts, and the company must announce its financial insolvency now.

The company’s Head, Frank Asbeck stressed that he does not see any other way out of the situation. Therefore, the company will declare bankruptcy within three weeks.

Recall that in 2016, the manufacturer suffered a loss of 92 million euros due to lower prices for solar panels and the wide range of products on the market. After that, the company was forced to announce the first staff reductions. However, bankruptcy was not discussed at that time.

Solarworld was one of those German companies that experienced a serious decline at the turn of the decade due to the market oversaturation. In 2013, the company avoided bankruptcy by reducing capital, and also due to state subsidies, the newspaper notes. Many other German manufacturers of solar panels lost their business then.

In April of 2017, the concern’s management said that they hope that the situation will stabilize by 2019. The company planned to start getting paid once again due to cost cutbacks, including staff cuts.

After the tragedy at the Japanese "Fukushima-1", Germany decided to gradually abandon nuclear energy. By 2022, the country intends to disconnect the last nuclear power plant. Germany is hopeful of alternative sources of energy, such as wind, sun and biofuel, and is planning to invest in about a trillion euros in an energy reform.

In 2015, for the first time in the history of Germany, 1.5 million solar panels installed throughout the country produced the same amount of electricity as nuclear power plants did. So, in July 2015, both solar panels and nuclear power plants generated 5.18 terawatt-hours. The sun and wind generated a total of 11.7 terawatt-hours. As the German edition of DW wrote, the growth in production was facilitated by the sunny but windy weather that prevailed in the Federal Republic of Germany in July 2015.

As for the market economy, the European Union was thinking about imposing an additional tax on imported Chinese-made solar batteries several years ago. The question of a tax at a rate of 40% in addition to the already existing. The fact is that Chinese solar batteries are sold at fairly low prices, actually dumping, which leads to a sharp drop in the cost of this type of products and consecutive ruin and bankruptcy of a number of European companies. Manufacturers of solar panels in China are supported by the state, providing companies with benefits and subsidies.