Are rumours of Germany's solar industry implosion greatly exaggerated?

Hi there, I’m Jervis Whitley. Today is Friday, 12th of July, and you’re listening to WindFront, the weekly roundup of the wind industry from Australia and around the world. Hey, today I’ll cover the weekly top three earners, who went the most in wind this week, and the German solar industry. Can the growth continue?

So in wind this week, there was a huge week in wind. We’ve had almost close to $8 million earned by wind farms across the NEM, and Macarthur coming out once again on top, well over $1 million earned this last week. Capital wind farm coming 2nd and North Brown Hill coming in 3rd, and this with Macarthur, despite having been offloaded earlier on in the week because of a fault and a transmission line nearby, which meant for security reasons they needed to be ramped down very quickly to zero output.

Today I’ll talk about the German solar industry, where this last week it was reported that they had their peak day in solar, almost 24 gigawatts. I wasn’t able to find any confirmation of that report from more official sources, and in fact, they sort of point to a more a lower 22 gigawatt level, but that is a huge amount by any standard. So Germany really having a huge level of solar generation. And imagine 22 gigawatts just from solar alone. It’s really huge, considering that in Australia, nationwide, or at least in the national electricity market, we could have around 20 gigawatts running in total. I’d had a look at last year’s levels and they were around about 16 gigawatts for around this time for their peak days. And so from then till now we’ve had about a 6 gigawatt increase, just in one year alone, in solar, which is really, really a large amount.

That comes down to. I did some back of the napkin calculations and found that that comes down about 350 new installations per day if each installation is about 4 kilowatt. Which, by some sort of prices, I worked out to be about $700,000 a day total for German solar, just in the installations and the panels. Which is really, sounds like they’re really flush with cash. There’s a lot of money going into solar at the moment there. A lot of growth, 350 new installations per day. And a growth of, well, I mean, 6 gigawatts in a year, but I mean, that’s just a growth in the peak output. So obviously the install capacity is increased above that. So it’s really, really quite large.

So I mean, amongst all of that, how can the German solar industry be struggling. And yet recently there was a report by Forbes suggesting that the solar industry in Germany isn’t just struggling, imploding. They point to a few specific examples, they point to Siemens and Bosch, both exiting and shutting their solar plants, and their solar, I guess, divisions, and a couple of German companies who are downstream that are filing, they’re sort of insolvent and what not, no longer be trading, it looks like. So, based on those examples, they’re saying that the German solar industry is imploding. So I found that difficult to believe. So on the one hand, we’ve got this huge increase in the amount of installed solar panels and solar capacity in Germany. But on the other hand, this article is saying that it’s imploding.

So I had a look at some of these companies because I don’t recall Siemens being too involved with solar in the past, but they are definitely a German company. And I found that they were actually involved with solar thermal rather than solar photovoltaic. And their technology was purchased in 2009. Siemens didn’t really have a solar arm, and they bought an Israeli company actually that did solar thermal in 2009. And at that time, I think a solar thermal had an advantage over PV, that technology was cheaper for the scale that I think that they were trying to install that. But since that point, they’ve had a very hard time because the PV installation cost has come down significantly and caught up to their solar thermal technology. So since Siemens purchased the Israeli company and their solar thermal technology in 2009, they’ve really had a hard time of it, culminating in recently them announcing that they’re going to shut that arm altogether.

Now, Bosch are quite a large producer of PV panels and other equipment to do with solar. And they’re closing their solar division too. Now, they entered the solar game, I guess in 2008, they purchased another company then too, to produce their solar panels, and they’ve actually done quite a lot of work on research and development of thin film sort of technology. However, they weren’t by no means a market leader in any of these cases. They were just a small player, I guess, you could say. They were the largest maybe in Germany, I guess, but there was still a small player on the world stage in terms of PV production and things like that. So they’re shutting down, and the CEO was discussing in his statement, and he said that one of the reasons he was shutting down was because it’s so competitive. Now they weren’t able to compete on price anymore. Now, it looks like he was sort of pointing to the fact that there’s a large amount of, I guess, panels coming from competitors outside the EU. I guess most of the large manufacturers of solar now are coming from China.

And the EU, the European Commission has taken an interest in this. And they’ve actually labelled the Chinese manufacturers as dumping their panels in Germany and across the EU. And their definition for dumping, I had to look that up, and it meant selling their goods for much lower than market rate. And in this case, they estimate that the solar panels have been sold for 88% lower than their fair market value. So in the face of this, the European Commission and I guess Bosch are claiming that this is impacting local producers that aren’t able to compete against someone who can reduce their rates to 88% lower than fair market value. And as recently as a couple of weeks ago, they released a new duty that will be placed on these imported solar panels of around just over 11%. But there’s a threat that they will increase that again, to over 47%, to be exact. So they’re going to increase the duty to around 47% if they can’t reach an agreement with the Chinese manufacturers of solar technology. And that’s not going to be ongoing, that’ll be a 6 month and I think they might have a review after that 6 months. So it’s not set in stone that they’re going to place this hefty duty, I guess, on the imported solar panels. So it’s not set in stone right yet, but if they aren’t able to reach an agreement, then definitely they’re going to apply that one in 2 months’ time. So it’d be interesting to sort of follow along and see if that does have an impact on the local market over there for producing solar panels. But I mean, it really looks like the world has shifted, and most of the large manufacturers are based in China now, according to Wikipedia anyway. So, maybe the tide has already turned on German solar.

So to sort of cap this off, I’ll go over some of the companies that have shut down their operations in solar or searching for an insolvency solution. So we’ve got Siemens and Bosch, and the article also mentioned Conergy and Gehrlicher Solar. And there’s another 2 that I found, Q-Cells and SolarWorld, which produce panels and they’ve sort of shut down too. So it does look like a bit of a dire situation in Germany at the moment for solar, even despite that huge, huge increase.

All right, well, thanks again for listening and keep buying those green electrons.