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Written by Sarah MacFarlane and Riham Alkousa
FRIEBURG, Germany (Reuters) – European governments are planning moves this week to support their own solar power producers, with solar panel maker Mayer Berger planning to move to Germany to send production to the United States. It will be too late to stop packing factories.
The factory in Freiberg, eastern Germany, closed in mid-March, resulting in the loss of 500 jobs. The Swiss-listed company joins a growing list of European renewable energy production plants closing or relocating. At least 10 people said they had experienced financial hardship in the past year.
A recent visit to the site showed a giant white robotic arm resting above empty wooden pallets as workers prepared the last production line for closure. Talks with Germany’s federal government to secure the factory’s future ended without success in late March, a company spokesperson told Reuters.
Germany’s Economy Ministry said it was aware of the “very serious situation” for German companies and had been considering financing options with the industry for more than a year. Agreed to give Mayer Berger export credit guarantees for German-made equipment used in U.S. factories, which will help nearby factories but will not save the Freiberg factory. It doesn’t matter.
The shutdown caused a 10% drop in solar panel production in Europe, despite a boom in wind and solar energy in Europe. The installation of renewable energy, including solar panels, is progressing at a record pace, according to data from the International Energy Agency.
But European-based manufacturers supplying these panels are being overwhelmed by competition from China and the United States, where governments are increasing support for producers.
The situation poses a dilemma for European governments keen to combat climate change. Either provide more support to ensure local production is competitive, or allow free imports to maintain the pace of installation. The meeting of European energy ministers in Brussels on Monday will signal support for the struggling industry.
China has expanded its solar power output and now accounts for 80% of the world’s solar power manufacturing capacity. According to research firm Wood Mackenzie, the cost to manufacture panels in the country is about 12 cents per watt of energy generated, compared to 22 cents in Europe.
US subsidies announced as part of the 2022 Inflation Control Act will allow some renewable energy manufacturers and project developers to claim tax credits, putting companies from within and outside the European Union in the spotlight. There is.
Meyer Berger said its plans include a solar panel factory in Arizona and a solar cell factory in Colorado.
“In the absence of industry policy support in Europe, we took a bold move and moved our solar expansion project from Germany to the United States,” CEO Gunther Erfurt said in an interview with Reuters. Told.
Similarly, battery company Frey, which operates primarily in Norway, halted work at an unfinished factory near the Arctic Circle after Washington’s announcement, focusing instead on plans to build a factory in the US state of Georgia. .
Freyer announced in February that he had changed his registration from Luxembourg to the United States.
“We spent a lot of time really making sure we didn’t make any mistakes,” says Frey CEO Birger Steen. The company first sought support from the Norwegian and European governments.
“We have come to the conclusion that there is no immediate policy-level response of that type.”
Asked for comment, Norway’s Ministry of Trade and Industry said it had launched an industrial policy framework targeting energy transition technologies such as solar cells and batteries, but did not directly respond to questions about additional funding for companies mentioned in this article. Didn’t mention it.
charter
Industry association Solar Power Europe will present at a meeting on Monday a voluntary charter for governments and companies to sign to support solar power production plants. However, Solar Power Europe says the charter, which requires buyers of solar panels to include some domestic production in their purchases, is not legally enforceable.
Green Party MEP Michael Bross launched a petition earlier this month calling for action at European level to bail out panel manufacturers.
Bros said Europe is reluctant to ask the European Commission to set up a 200 million euro ($213 million) fund to buy unused European solar panels. The European Commission declined to comment.
“We’re all in favor of creating our own solar power industry in the headlines and in speeches on Sunday, but when you put it into action, nothing happens,” Bros told Reuters.
“The Charter is like a political declaration signed by member states, solar companies and the European Commission; it is more long-term and has no immediate effect.”
In February, European policymakers adopted the Net Zero Industry Act. It includes a series of measures, including a goal to produce 40% of the region’s clean technology needs by 2030.
Last month, the EU also approved about $1 billion in German state aid to Swedish battery maker Northvolt to help it set up a production plant in Germany after the company threatened to bring its operations to the United States. . It is the first time the European Union has used an exception that allows member states to intervene with aid if there is a risk of investment leaving Europe.
But aid for ongoing operations has yet to materialize due to political disagreement over how much public money should go to struggling companies.
A European Commission spokesperson told Reuters it was up to member states to decide whether to support industry and companies like Meyer Berger. Germany’s Economic and Climate Ministry believes that aid to keep existing companies like Mayer Berger afloat is not lawful “if there is a lack of market prospects from the company’s point of view,” a spokeswoman said. told Reuters.
Potential customers, renewable energy installers who rely heavily on cheap Chinese imports, also oppose new subsidies for local panels, and such a move would threaten to trigger subsidies. They argue that waiting could cause consumers to put off their orders, potentially harming them.
intertwine
Consultancy Rystad Energy and solar panel manufacturers say more than a year’s worth of low-cost imported panels have been sitting in warehouses across Europe, waiting to be installed. Reuters could not independently verify that estimate.
That backlog could grow even further as China’s production capacity continues to expand, Rystad said. “If all the plans announced by Chinese companies are implemented, Chinese industry will be able to produce twice as many panels as are expected to be installed around the world in 2024,” Marius said. said Modal Bakke, senior analyst at Rystad.
Dresden-based SolarWatt’s inventory holdings will increase by about six weeks to six to nine months, CEO Detlev Neuhaus told Reuters in March.
The company said it laid off about 10% of its workforce last year and local panel production is operating at about one-third of capacity.
“This industry is too important for our future to allow us to lose all our capabilities,” Neuhaus said.
Analysts say it’s unclear what help will actually help companies like Meyer Berger because they only produce a fraction of the output of companies that produce in China or plan to do so in the United States. It states that.
“Because they are small, they will always struggle with production volumes in competition not only with Chinese producers but also with U.S. producers,” said Eugen Pelger, senior analyst at Research Partners AG. Ta.
Additionally, the local clean technology industry is so intertwined globally that it is difficult for European manufacturers to imagine completely independent supply chains.
Norsan, a Norway-based company that produces solar wafers, thin silicon films used in panels, said the Chinese equipment is essential to both its Norwegian factory and its planned facility in the United States. The company has suspended production at its Norwegian factory while it decides whether to upgrade. that.
Most of the equipment for both projects will need to be sourced from China. “We basically have no other choice,” said Carsten Rohr, NorSun’s chief commercial officer.
déjà vu
Freiberg has been here before. Since the 1990s, companies setting up operations in the region have benefited from federal government funding programs to rebuild East Germany and close the gap with West Germany’s prosperity.
New industries such as solar power generation and semiconductors have sprung up. However, Freiberg suffered a major blow in the 2010s as China’s solar industry ramped up production, squeezing competitors.
In 2020, the German government removed caps on subsidies for solar power installations, helping to stimulate demand. In 2021, the EU’s Green Deal signaled political support for future demand, and Russia’s full-scale invasion of Ukraine also boosted the uptake of solar power.
Mayer Berger, headquartered in Gwat, Switzerland, opened a production site in Freiberg for the first time in 2021, when the industry began to pick up steam. We renovated a power plant owned by a bankrupt solar power company that had been unused for nearly three years.
For a while, the company became one of the town’s largest employers, acknowledged Mayor Sven Kruger.
“This is the second time Germany’s solar industry is in crisis. It has already failed once,” he says, greeting his colleagues with a silent nod as they clean idle machines on the factory floor. said apprentice Max Lange, 19.
“If I fail again, I don’t think I can pursue a career in the solar industry in Europe, because I don’t think it will come back,” he exclaimed, adding that he would instead pursue a career in the solar industry in the United States. I was wondering if I would be able to find a job at a photovoltaic power generation company. industry.
(1 dollar = 0.9397 euro)
(Reporting by Sarah MacFarlane and Riham Alkousar; Editing by Sarah Ledwith)
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