The global solar industry has entered a brutal phase of consolidation and nowhere are the effects as dramatic as in eastern Germany. Several companies have already declared bankruptcy, leaving towns and cities in the region struggling with job losses and tax revenue shortfalls. The future bodes ill.
The sun, it was said, was going to save Frankfurt an der Oder, a city of 60,000 on the Polish border. After years of post-reunification economic doldrums, whose nadir came with the 2003 failure of a much-ballyhooed microchip factory project, the burgeoning German solar industry took an interest in the down-on-its-luck city.
Now, though, the future suddenly looks decidedly dark. Odersun declared bankruptcy in March and Conergy, while pledging to return to profit this year, has seen its share price lose 99.6 percent of its value in the last five years. Many doubt the company will survive. Worst of all, however, was the announcement earlier this month that First Solar was closing both of its factories in Frankfurt an der Oder; 1,200 people will soon be jobless as a result.
"We saw the solar industry as a chance to reindustrialize the region and invested significantly in incentives," Frankfurt an der Oder Mayor Martin Wilke told SPIEGEL ONLINE. "This is a serious setback. It is a very difficult situation."
Frankfurt an der Oder's pain is far from an isolated case. The solar industry, once a beacon of hope for an eastern German economy that struggled for years to revive following reunification in 1990, is undergoing a brutal phase of consolidation. There is a massive surplus of global production capacity and the bad news for eastern Germany keeps getting worse. Last December, the Berlin company Solon, which employed hundreds in the Baltic Sea coast town of Greifswald, filed for bankruptcy. Aleo-Solar, based in Prenzlau north of Berlin, lost over €30 million (about $40 million) last year after turning a profit of €31.8 million in 2010, leading many to fear for their jobs there.
The growing crisis in the solar industry has not chosen to exclusively victimize eastern Germany. Solarhybrid, Solar Millennium and Scheuten Solar, all based in western Germany, likewise found themselves making their way to bankruptcy court recently. The Sarasin report also stated that Freiburg-based firm Solar-Fabrik faces an uncertain future as well.
The problems currently facing the solar industry are not isolated to Germany. According to a report issued last November by the Swiss bank Sarasin, overcapacity in solar module production has made a market shakeout inevitable. "The imbalances between production capacities and demand have become too great," the report stated. In 2011, the global production capacity for solar modules soared to 50 gigawatts, but the industry only managed to sell 21 gigawatts of that photovoltaic potential. Furthermore, the growth of solar companies in low-wage countries such as China has contributed to plummeting solar-panel prices.
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The much hyped wind turbine industry is facing similar problems, when governments have began cutting subsidies.
The sad truth about the millions of "green jobs" political leaders and environmentalists both in Germany and many other countries have promised is; they will never materialize.