Chinese exports crushing German solar industry

Tough competition, price pressure and dwindling subsidies - these are the woes facing the German solar technology production sector. While the outlook seems grim, some believe that things will improve.

The golden era of the German solar energy sector is over. At its peak, Germany had a 20-percent share of the global solar energy market, but now the figure stands at just 6 percent. After a rapid decline in recent months, more job cuts are expected to hit the industry.

"It has never been this bad," said German Solar Industry Association head Carsten K?rnig at the opening of Intersolar, the world's largest solar energy trade fair, in Munich. And this despite the fact that last year, more photovoltaic systems were installed around the world than ever before.

Price dumping blamed

The main reason for these losses is a dramatic price decline.

"Despite growing demand in recent years, production capacity has increased even faster, and this of course leads to huge price pressure," K?rnig told DW.

China in particular has been rapidly developing its solar industry. In March 2011 it declared solar energy a key market in its five-year economic plan. As a result, Chinese companies in this sector receive affordable state loans and special privileges for purchasing raw materials and energy. In the last 10, years the country has increased its global solar market share from virtually nothing to more than 50 percent.

The German government has also been supporting solar energy companies, but not just local ones. At the same time, a push for more solar energy from Germany's Renewable Energy Act has indirectly benefited foreign competition: billions of euros in subsidies have gone into solar energy, including when the solar panels in use were purchased in China.

Over the past years, an increasing number of solar modules were imported from Asia due to their cheaper prices.

"The Chinese offer their customers a price that's below cost," said Frank Asbeck, manager of German photovoltaic company SolarWorld. "By doing this, the Chinese government forces the good, technologically advanced companies into dire financial straits so they can ultimately monopolize the market."

As a defense measure, SolarWorld's U.S. subsidy - together with other companies - managed to successfully petition the U.S. Department of Commerce to increase tariffs on Chinese solar panels up to 250 percent. SolarWorld now hopes to achieve similar results in ENIKE AIR FORCE