Germany Notes - Part 1

Windturbines north of Berlin

I am beginning by going through my notes from the meetings I had in Germany. Since I will spend only about 30 minutes on each blog post each day, these initial posts won't be well constructed arguments, but rather glamorized note-taking.

When I visited Germany in August to September 2013, Germany was in the middle or perhaps at the tail end of a massive contraction in their domestic solar demand and in their panel manufacturing.

The decrease in solar demand within Germany was due to the dramatic cuts to the feed-in tariff (FIT) for solar PV. After three consecutive years of around 7 GW of solar PV installed annually in 2010 – 2012, the Germany government changed the EEG by dramatically cutting the FIT. The dramatic decrease reduced the annual installation capacity in 2013 to around 3.5 GW.

The halving of the demand of solar took a heavy toll on installation companies. The installation companies that didn't have strong balance sheets failed. Those with strong balance sheets were often pushed into new segments in search of higher margins and less competition.

On the production side, German manufactures were in an even worse situation. One person I interviewed said nearly 90-95% of all solar manufacturers in Germany have gone bankrupt. The demise of German PV manufacturing is not due to the reduction in the FIT. The main cause came from outside Germany.

The decade between 2004 to 2014 saw a massive scale up in solar panel manufacturing in China. One rough statistic I often use states that in 2004 Chinese manufactures had 5% of global PV manufacturing. By 2012, they had 60% of the market. Don't quote me on the exact statistics, but the order of magnitudes are correct. The scale up of Chinese manufactures produced a huge supply glut in the solar industry driving down prices and driving out competitors.

The effect of Chinese manufacturers will be something I come back to often when discusses the things I learned.

That will be all for today!

Old building in Berlin