Sunny Skies Ahead
Gone are the clouds that once hung over Germany’s photovoltaic sector. Concerns about energy security and the need for climate action are driving a remarkable solar renaissance in Europe’s largest economy.
In 2017, the German solar panel manufacturer SolarWorld went bankrupt. The casualty was symptomatic of a nationwide crash in renewable energy production. The decline in the photovoltaic (PV) sector cast a shadow of doubt over the future of “Solar Valley,” a regional hub of solar panel manufacturing in the eastern German states of Saxony and Saxony-Anhalt.
Fast forward five years: The region is experiencing a wave of foreign business expansion and the German solar sector is shining brightly once more. In 2021, Meyer Br Burger, a leading Swiss manufacturer of PV equipment, moved into some of SolarWorld’s former facilities in Freiberg. Barely a year later, it announced another round of expansion worth over EUR 250 million for its German plants. Meyer Burger aims to produce 1.4 gigawatts of solar modules in its Freiberg facility alone in 2023.
The Bottom Line
Russia’s war in Ukraine and a Europe-wide surge in fossil fuel prices has given the German photovoltaic sector a new – and sustainable –
boost, offering plenty of opportunities for foreign companies.
Demand driven by Ukraine War
“The company is tackling the situation – which has also been driven by the war in Ukraine – proactively and is using the opportunity to add additional capacity in Germany,” Meyer Burger’s spokeswoman Anne Schneider said recently.
Meyer Burger is one of several foreign companies now jostling to enter the German PV market, which has rebounded from the decline of the last decade. Experts say the impetus to stop buying Russian natural gas in particular marked a turning point. “Demand has exploded since the war started,” says Germany Trade & Invest (GTAI) analyst Tobias Rothacher, “even without additional government support or programs.”
Solar strategies, large and small
The increase in demand includes all classes of PV installations, from major industrial projects to so-called “balcony solar” modules of just a square meter or so. Rising prices for gas and electricity, coupled with a steady decline in prices for solar panel technology, have convinced more and more people to invest in power generated by the sun. “People are seeking an alternative energy source, and solar is fast and easy,” Rothacher says.
The effects are visible nationwide. Solar covered 12 percent of Germany’s electricity production in the first half of 2022, and in June, which was unusually sunny, it generated 22 percent of the country’s total.
In 2021, Switzerland’s Meyer-Burger, a leading manufacturer of PV equipment, moved into some of SolarWorld’s former facilities in Freiberg © Meyer-Burger/Press
Investment opportunities abound
The German sector is particularly attractive to companies seeking to avoid the supply chain insecurities of sourcing PV panels in China. And with increasing numbers of solar manufacturers looking to build up manufacturing capacity in Germany, silicon manufacturers are also ramping up production.
“Right now, the biggest opportunity is to come to Germany and source raw materials and sell directly here,” Rothacher says. “You save on logistics costs and it’s secure from disruptions to the supply chain.”
Major players so far include Portugal’s EDP Renováveis, which acquired a majority share of German solar developer Kronos Solar Projects in the summer of 2022. And Rothacher says more such deals are in the pipeline. “It’s really a fast ramp-up,” explains GTAI’s solar expert. “Right now, you can hardly get orders filled – in every segment.”
This time around, the growth in German photovoltaic solutions is sustainable and all the indic rs suggest the industry will remain prosperous for a long time to come.
GTAI expert for solar energy
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