German solar companies are being pushed out of the solar market they developed by the ruthless assault of Chinese solar panel companies. Already stalwarts of the German solar industry like Q-Cells, Solon etc. have shut down their operations as they see no economic viability. Thousands of solar manufacturing jobs have been lost in the last year, despite solar demand in Germany surging to unheard of levels of 7.5 GW a year. Despite the first quarter of 2012 seeing another record 1.8 GW being installed, German solar companies are dying like flies in the face of Chinese solar panel competition.
The remarkable growth in the Chinese Solar Panel Industry has been due to the supportive government, low labour and capital costs and aggressive competition. This has made the higher cost solar panel manufactures cut their prices in order to retain their marketshare. Trina Solar has shown the best growth amongst the solar panel producers and it now competes with Suntech which is the world’s biggest solar panel producer. China has also got a number of Tier 2 and Tier 3 producers of solar panels. These small solar panel companies sell mostly in the spot market and quote very low prices.
Prices of Chinese solar panels are almost half that of the costs of German made solar panels which has led to scores of German factories closing down. Schott Solar had already closed down its solar wafer location at Jena as solar wafer prices crashed by 90%. Now the company is getting out of the business completely closing down 4 factories out of which two are in Germany and one in Poland. Note Schott Solar was one of the biggest German solar panel makers left with around 450 MW of capacity in solar panels and cell. The company whose primary business is glass making has a good balance sheet and well diversified revenue base. This closure which was not forced by debt payments like other solar companies implies that even big conglomerates like Samsung, Hyundai may exit the crystalline solar panel business as the economics have turned bad for them long term. Note Schott Solar will continue its thin film panel and solar thermal lines of business. However it remains to be seen how long it will manage those given the economies of thin film panels are even worse.
Continuing market constraints and unattainable cost bases have conspired to force Schott Solar’s management to withdraw from c-Si PV manufacturing completely. Although the company’s thin-film and CSP activities are unaffected by this news, this exit from the c-Si sector will affect around 870 employees as well as its Mainz and Alzenau plants in Germany, Valasske Mezirici in the Czech Republic and Albuquerque in New Mexico.
The company’s main focus has been on manufacturing wafer-based cells and modules and in 2010 it had reached a global production capacity of 450MW per year of both cells and modules. In January this year, Schott announced the closure of its multicrystalline wafer operations in Jena, Germany impacting 290 workers, but stressed that its monocrystalline wafer production in the same location would continue.
Chinese Dominance Forces German Solar Closures originally appeared in Green Chip Stocks. Green Chip Review is a free 2x-per-week newsletter, is the first advisory to focus exclusively on investments in alternative and renewable energies.