Zhitong Finance has learned that European governments will take action this week to support their own photovoltaic manufacturers. European energy ministers will meet in Brussels on Monday in a move that will show support for the struggling energy industry. But it may be too late to stop photovoltaic panel manufacturers from moving factories.

For example, Meyer Burger, a Swiss-listed photovoltaic panel manufacturer, packaged a German factory and moved production to the United States. The plant in Freiburg, eastern Germany, closed in mid-March, cutting 500 jobs, and the company joined a growing list of European renewable energy manufacturing plants closing or relocating. Over the past year, at least 10 photovoltaic manufacturers have reported financial difficulties.

During a recent on-site interview, workers at the plant were preparing to shut down the last production line. A company spokesman said talks with the German federal government to secure the future of the plant failed at the end of March. Germany's Economy Ministry said it was aware of the "very serious situation" facing German companies and had been studying financing options with the industry for more than a year. It agreed to provide an export credit guarantee for Meyer Burger's equipment produced in Germany that will be used at a U.S. plant, which will help a nearby plant but will not save the Freiburg plant.

It is difficult for European photovoltaic companies to survive: local subsidies are limited and overseas competition pressure is high

Although wind and solar energy are booming in Europe, the closure of Meyer Burger's German factory has reduced European photovoltaic panel production by 10% and opened a new chapter. Data from the International Energy Agency (IEA) shows that renewable energy capacity, including photovoltaic panels, is growing at a record rate. But European manufacturers that supply these photovoltaic panels are being hit by competition from China and the United States.

China is expanding solar production and now accounts for 80% of global photovoltaic capacity. It costs about 12 cents per watt to produce photovoltaic panels in China, compared with 22 cents in Europe, according to research firm Wood Mackenzie. Subsidies announced in the United States as part of the Inflation Reduction Act of 2022 allow some renewable energy manufacturers and project developers to apply for tax credits, attracting companies from within and outside the EU.

The situation poses a dilemma for European governments keen to tackle climate change: either provide more support to ensure local production remains competitive or allow unrestricted imports to keep pace with installations.

Meyer Burger said its plans include building a solar panel factory in Arizona and a photovoltaic cell factory in Colorado. Gunter Erfurt, the company's CEO, said in an interview: "Without any industrial policy support in Europe, we made a bold move and moved a photovoltaic cell expansion project from Germany to the United States."
Likewise, battery company Freyr, which operates mainly in Norway, has halted work at a half-completed factory near the Arctic Circle and is focusing on plans for a factory in the US state of Georgia following the policy announcement in Washington. In February this year, Freyr said it had changed its registration location from Luxembourg to the United States.

"We did spend quite a bit of time trying to really make sure we didn't make a mistake, and we came to the conclusion that this form of policy-level response was not possible," Freyr CEO Birger Steen said. The company first Seek support from Norwegian or European governments.
Asked for comment, Norway's Ministry of Trade and Industry said it had launched an industrial policy framework for energy transition technologies such as photovoltaics and batteries, but did not directly answer questions about additional funding for the companies mentioned above.

Industrial policy promotion

At a meeting on Monday, the European Photovoltaic Industry Association will publish a voluntary charter for governments and companies to sign up to support PV manufacturing plants. However, the European Photovoltaic Association said that the charter stipulates that buyers of photovoltaic panels should include some domestically produced products in the products they purchase, and this provision is not mandatory.

Earlier this month, Michael Bloss, a member of the European Parliament representing the Green Party, launched a petition calling for action at European level to save photovoltaic panel manufacturers. Bloss said he was pushing the European Commission to set up a 200 million euro ($213 million) fund to acquire unused European-made photovoltaic panels, but Europe has been reluctant to do so. The European Commission declined to comment. Bloss said: “We are very supportive of creating our own PV industry in headlines and speeches, but in action, nothing has happened. The charter is more like a political declaration signed by member states, PV companies and the European Commission. It Longer term, there is no immediate effect.”

In February, European policymakers passed the Net-Zero Industry Act, which includes a target of 40% of the region's clean technology needs by 2030. Last month, the EU also approved nearly $1 billion in German government aid to help Swedish battery maker Northvolt build a production plant in Germany after Northvolt threatened to move its operations to the United States. This is the first time the EU has used a special measure that allows member states to provide aid if there is a risk of investments leaving Europe.

But aid for ongoing businesses has yet to arrive amid political disagreement over how much public money should be given to struggling businesses. A spokesman for the European Commission said decisions on supporting industry or companies like Meyer Burger depended on member states. A spokesman for Germany's Ministry for Economic Affairs and Climate pointed out that aid to maintain existing companies like Meyer Burger is not legal "if there is a lack of market prospects from the company's perspective."

Potential customers - renewable energy installers heavily reliant on cheap Chinese imports - have also opposed any new subsidies for local photovoltaic panels, saying such moves could damage their businesses by causing consumers to delay orders waiting for subsidies to take effect. Benefit.

Policy implementation and effects are complex

Consulting firm Rystad Energy and photovoltaic panel manufacturers say affordable imported panels have been waiting in European warehouses for more than a year to be installed. Rystad senior analyst Marius Mordal Bakke said that as China's production capacity continues to expand, the backlog of photovoltaic panels may increase. If all the plans announced by Chinese companies go as planned, by 2024 China will be able to produce twice as many photovoltaic panels as the world is expected to install.

Detlef Neuhaus, CEO of Dresden, Germany-based Solarwatt, said in March that the company's current inventory would last six to nine months, up from about six weeks previously. The company laid off about 10% of its workforce last year and said its local panel output was only about one-third of capacity.

Analysts say it's unclear what kind of support will actually work; companies like Meyer Burger produce only a fraction of what is produced in China or the United States. "They are small, so they will always struggle with volume and not only compete with Chinese producers but also U.S. producers," said Eugen Perger, senior analyst at Research Partners AG.

Furthermore, the local cleantech industry is so interconnected globally that it is difficult for European manufacturers to imagine a completely separate supply chain. NorSun, a company based in Norway that makes photovoltaic wafers (silicon thin films used in panels), noted that Chinese equipment is critical to both its factory in Norway and a proposed factory in the United States. The company has suspended production at its Norwegian factory while it decides whether to upgrade it. Most of the equipment for both projects must come from China. "There's basically no other option," said Carsten Rohr, NorSun's chief commercial officer.

Deja vu

A similar situation has occurred in Freiburg before. Since the 1990s, companies operating in the region have benefited from German federal funding programs aimed at rebuilding East Germany and helping it close the gap with West Germany's prosperity. New industries including photovoltaics and semiconductors have sprung up. But in the 2010s, Freiburg was hit hard after China's photovoltaic industry increased production and competitiveness.

In 2020, the German government lifted the cap on subsidies for photovoltaic power installations, which helped boost demand. In 2021, the EU's Green Deal signals political support for future needs, and the Russia-Ukraine war will also help the deployment of photovoltaic equipment.

Meyer Burger only established a production site in Freiburg in 2021, when the industry began to recover. It refurbished the factory of a bankrupt photovoltaic company that had been idle for nearly three years. The city's mayor, Sven Krueger, confirmed that at one point it became one of the town's largest employers.

A worker at the company's Freiburg factory said: "This is the second time the German solar industry is at risk. They have already failed once. If it fails again I doubt I will be able to continue a career in the European PV industry because I don't think it will come back."