Chinese Conquer the Solar Market

German solar manufacturers are increasingly under pressure.

Among local solar producers, worries are growing: The new Federal government wants to reduce the compensation paid for electricity fed into the grid. In addition, Chinese competition is becoming increasingly stronger and is producing good quality more cost-effectively. On the other hand, machinery and plant manufacturers are benefiting from the Far Eastern solar boom: Their technology is greatly in demand in China.

Recently, Frank Asbeck has appeared unusually cooperative towards politics: By the middle of 2010, the photovoltaic (PV) sponsorship stipulated in the German Renewable Energy Law (EEG) could be reduced by an additional ten percent, says the head of Bonn-based solar corporation, Solarworld. As scheduled, the remuneration will be reduced by nine percent for PV roof-top installations and eleven percent for large-scale outdoor power stations in the new fiscal year. As of 01 April or 01 July, another reduction could be made, according to Asbeck.

The reason for the Solarworld boss’ sudden willingness to cooperate is that criticism of the solar tariffs in Germany is increasing and, with it, the concern that the new CDU-FDP Federal government could savagely slash the EEG sponsorship. Due to overproduction and aggressive offers from China, solar modules have become 40 percent cheaper since the end of 2008. On the other hand, the sponsorship tariff for new installations was “only” reduced by eight to ten percent on the basis of the degression integrated into the EEG. Lastly, the prospect of outstanding profits has driven masses of investors onto rooftops and into open-air plants.

Consequently, experts believe that the German market could almost double in 2009. Growth amounting to three gigawatt (GW) is the prognosis of Berlin-based market researchers pvXchange. In Germany in 2008, approximately 1.5 to two GW solar power capacity was installed. The crisis-ridden manufacturers are benefitting from the boom in demand: Warehouses that still were stuffed with stock in summer, are becoming empty. Lines are moving again.