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As Europe tries to close the energy gap, Germany’s Solar Valley could shine once again. By Stocksak


© Stocksak. FILEPHOTO: A general view of photovoltaic (solar), panels near Munich, Germany, August 24, 2016. REUTERS/Michaela Rehle/File Photo

By Riham Alkousaa

BERLIN (Stocksak), Germany has sought help from Brussels in order to revive its solar panels industry and improve its energy security. Berlin, which is still reeling from the effects of over-reliance upon Russian fuel, is trying to reduce its dependence to Chinese technology.

It is also reacting a new U.S. legislation that has raised concerns the former-dominant German solar industry could be relocated to the United States.

Germany was once the world’s largest producer of solar power. But a decade ago, the government cut subsidies faster than expected. Many solar firms fled Germany or went bankrupt.

Heckert Solar is located near Chemnitz, in what is now Saxony’s Solar Valley. Heckert Solar is one half of a dozen survivors surrounded with abandoned factories that Andreas Rauner, the regional sales manager of the company, described as “investment ruins”.

He stated that the company, Germany’s largest solar panel-maker or module-maker, was able to weather the effects of Chinese competition and the loss in German government backing through private investments and a diverse customer base.

The conservative German government of 2012 cut solar subsidies to meet the demands of traditional industry. This was in response to their preference for fossil fuels, particularly cheap imports from Russia, which were exposed by disruptions in supply following the Ukraine war.

“We are witnessing how fatal it can be when the energy supply is totally dependent on others.” It’s a matter of national security,” Wolfram Guenther (Saxony’s state secretary for energy) told Stocksak.

Germany and Europe are seeking alternative sources of energy to replace Russian supplies. This is partly to meet climate goals and partly because there has been a huge interest in rebuilding an industry that produced every fourth global solar cell in 2007.

According to a report from Germany’s Fraunhofer institute, only 3% of global PV module production was contributed by Europe in 2021. Asia, however, accounted for 93%. China made 70%.

Separate data from European Solar Manufacturing Council ESMC also shows that China’s production is around 10%-20% less than Europe.

UNITED STATES ALSO HAS AN ENERGY RIVAL

The United States have increased competition in Europe, resulting in more people requesting assistance from the European Commission, an EU executive.

In March, the European Union pledged to do “whatever is necessary” to rebuild European manufacturing capacity for solar panels. This was in response to Russia’s invasion and subsequent energy crisis.

The U.S. Inflation Reduction Act of August was signed into law, providing a tax credit of 30 percent of the cost of new or improved factories that make renewable energy components.

Additionally, each eligible component manufactured in a U.S. plant and then sold is eligible for a tax credit.

Europe is concerned that this will reduce investment in its renewable industry.

Dries Acke is the Policy Director of industry body SolarPower Europe. He said that the body had written the European Commission requesting action.

The Commission responded by approving the EU Solar Industry Alliance. It will be launched in December with the goal of installing more than 320 gigawatts of new photovoltaic (PV), capacity in the bloc by 2025. This compares to a total of 165 GW installed by 2021.

Stocksak was notified by the Commission in an email that the Alliance would map the availability for financial support, attract private investments, and facilitate dialogue and match-making between producers/offtakers.

It did not include any funding amounts.

Stocksak also heard that Berlin is working to create a framework to allow European PV manufacturing to be done in a manner similar to the EU Battery Alliance. Economy Ministry State Secretary Michael Kellner said this to Stocksak.

The battery alliance is thought to have played a major role in developing a supply network for Europe’s electric car industry. The Commission said it would ensure Europe can meet up to 90% of demand from domestically-produced batteries by 2030.

The solar demand is expected to continue growing.

Data from Germany’s Solar Power Association (BSW), showed that Germany’s residential photovoltaic systems registered rose by 42% over the first seven months.

Carsten Koernig, head of the association said that he expected the demand to continue growing throughout the year.

Regardless geopolitics, relying upon China is problematic because supply bottlenecks, exacerbated in Beijing’s zeroCOVID policy have doubled the waiting times for delivery of solar components compared to last.

Zolar, a Berlin-based residential solar energy supplier, said that orders have increased by 500% year-on–year since February’s Ukraine war. However clients may have to wait six to nine months before a system is installed.

Alex Melzer, chief executive at Zolar, stated that “we’re basically restricting the number of customers we accept.”

European players from outside Germany love the chance to meet demand by restoring Saxony’s Solar Valley.

Last year, Meyer Burger in Switzerland opened solar module and cell plant facilities in Saxony.

Gunter Erfurt, its Chief Executive, said that the industry still requires a specific stimulus or another policy incentive if it wants to reduce Europe’s dependence on imports.

He is nevertheless positive, especially since last year’s arrival of Germany’s new government, in the which Green politicians hold the key economic and environment ministries.

He said that the signs for Germany’s solar industry are “much, much better now”.

($1 = 1.0006 euros)

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