Germany's budget crisis leaves struggling solar industry in limbo (updated)

Clean Industry Solutions Holding Europe AB

07/12/2023 13:49

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    By Riham Alkousaa
       BERLIN, Dec 7 (Reuters) - Germany's budget crisis is
threatening planned government support for its domestic solar
manufacturers, in what could prove to be the death knell for an
industry that was once world-leading but got undercut by cheaper
Chinese imports.
    Europe's biggest economy aims to produce 80% of electricity
from renewable sources but has become increasingly dependent on
imported components such as solar cells from China.  
    As part of efforts to reduce reliance on China and boost
economic growth, Berlin announced in June plans to support
companies that want to establish or expand solar production
capacity in Germany.
    Some 2.5 billion euros ($2.7 billion) were envisaged for the
programme, half of which was to be provided by the federal
government through its climate transformation fund, Carsten
Koernig, head of the German solar industry federation (BSW),
told Reuters.
    But last month's constitutional court ruling, banning the
transfer of some 60 billion euros of unused debt to the climate
fund puts those plans in jeopardy. 
    "The judgment from the court basically has put every
commitment on hold ... It couldn't have come at a worst time,"
an industry source of a solar company that applied for the aid
told Reuters.
    With the aim of building an annual production capacity of 10
gigawatts (GW) in Germany, the economy ministry launched a
so-called expression of interest process to scout for possible
flagship projects and more than two dozen solar hardware firms
applied for the programme, Koernig added.
    Up to five projects should be selected for capital
expenditure subsides but the results, expected to be published
late last month, have not been out yet, three firms that applied
for the programme told Reuters. 
    Asked about the court ruling's impact on solar industry
government support plans, an economy ministry spokesperson said
they could not make any precise statements about individual
programmes as the government was still examining the court
ruling.
    The BSW said the budget ruling had also put on hold a
decision on a subsidy it had proposed to parliament to offer
incentives to people installing European-made solar systems. 
    "I remain confident that there will be a solution here and
hopefully it can be very soon," Koernig said.
    
    RISING PRICE PRESSURES
    Before the court ruling, Germany's solar companies were
facing growing price pressure from their Chinese rivals, forcing
them to sell below production costs, with potential subsidies
seen as their only lifeline.
    "The companies that are now being considered (for subsidies)
will no longer exist in six months if you don't solve the
problem before then - this market is being structurally
destroyed," said Christian Kern, a supervisory board member of
German solar glass manufacturer Interfloat.
    
   
    On Sunday, Sweden's Clean Industry Solutions Holding Europe
AB said its German subsidiary Industrial Solar GmbH would file
for insolvency proceedings, citing a "precarious" situation for
European photovoltaic manufacturers due to a record drop in
module prices. 
    "The problem: under the current conditions, there is no
chance of producing photovoltaic panels, cells and technology in
Germany and making a profit," Kern added.
    Edurne Zoco, Executive Director, Clean Energy Technology at
S&P Global, said Europe as a whole has to promote a market for
domestic manufacturers in order to support and grow local
production. 
    "You need to be 100% sure that the products are going to be
able to be sold within the region because you will not be able
to export those products due to international competition." 
    Brussels and European governments have been mulling tougher
action on clean tech imports as they seek to expand
manufacturing in Europe and reduce the reliance on China for
products needed for the green transition.
    But German companies say that many of them don't have the
time to wait for protracted policymaking. 
    "We're not talking about new investments, we're talking
about the fact that the companies will all stop operations. So I
can tell you, it's really a matter of weeks now and no longer of
years," said Interfloat board member Kern.
       
($1 = 0.9277 euros)

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US solar industry poised for slower growth next year after
record-setting 2023    http://reut.rs/3GyRTFe
Global average module price for solar energy declines    https://tmsnrt.rs/3GwmIdW
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Riham Alkousaa; editing by David Evans)
 ((Riham.Alkousaa@thomsonreuters.com; Twitter: @RihamKousa;))