China dominates the solar energy industry. The European Union wants to change that

Chemnitz, Germany — Bright yellow robotic arms appear to wave and then greet as they pick up silicon solar cells and gently snap them onto glass panels on the Heckert Solar assembly floor in the German city of Chemnitz, near the Czech border.

Employee Sasha Hahn watches quietly at the end of the assembly line, arms crossed, as his colleagues stack ready-made solar panels into boxes labeled “Made in Germany.”

He says they make 3,000 plates a day, 20,000 plates a week, but it’s not enough. “The market wants more.”

In Europe, it is suddenly difficult to get energy. The Russian invasion of Ukraine forced most European countries like Germany to dump their vast supplies of imported Russian natural gas, and they are Now looking for alternatives such as solar energy.

Now, Europe aims to make solar energy the largest source of energy by the end of this decade. This means tripling the amount of energy generated from solar energy by 2030. For Germany, it is It could mean a revival of a solar industry that last boomed more than a decade ago and has since succumbed to competition in China, which has come to dominate the market.

The solar energy market has moved since Germany’s boom

“We were one of the market leaders in 2012,” says Uwe Krautwurst, Head of Marketing at Heckert Solar, who fondly recalls the golden age of Germany’s solar industry in the first decade of this century.

That’s when the government incentivized solar panels through feed-in tariffs, paying solar panel owners to contribute energy to the grid. The incentives have made Germany a world leader in solar energy, placing the country at the center of research and development in the industry.

But in 2013 the German government changed the law, making renewables more affordable. Industry collapsed. Seventy thousand people in Germany’s solar industry have lost their jobs, and Heckert has found himself one of the only manufacturers left in the famous renewable energy park known as the Saxony Solar Valley outside of Chemnitz.

“The industry has moved from Germany to Asia,” says Krautwurst.

Without government subsidies, German solar panels were soon replaced by ones made in China, which, since 2011, has invested 10 times more in the industry than Europe.

says Joachim Goldbeck, CEO of Goldbeck Solar, another major German solar company.

For about a decade, he says, German companies have watched their Chinese competitors control every step of the global solar energy supply chain. Last year, China made 97% of the silicon wafers that go into solar panels and more than three-quarters of the world’s solar panels themselves.

The United States could also try to counter China’s dominance in solar energy

“The only way to get around that in Germany, or in the US, or anywhere else is to basically have someone develop a similar strategy,” says Goldbeck.

That person, Goldbeck says, could be it Biden administration. As part of the Inflation Reduction Act, a package of incentives has been put in place for solar panel producers and owners. “I think now with the US Inflation Act, there’s a strong will to do something similar, to bring this industry back to the US,” he says. This clear statement does not now exist in Germany.

Goldbeck, who is also president of the German Association of the Solar Industry, says German politicians talk about bringing the country’s solar industry back together, but they’re not walking along with subsidies and tax breaks like China or the United States.

But German lawmaker Katrin Uhlig begs to differ, saying she believes Germany and the European Union are ready to offer significant stimulus. She adds that the EU aims for “at least 80% renewable energies in the electricity sector by 2030”. “So we are changing the environment for companies to invest in Europe.”

Ten years ago, when the floor collapsed from Germany’s solar industry and Angela Merkel’s conservative government prioritized natural gas from Russia, Oleg was so frustrated that she decided to run for office. She is now a member of the German Green Party, representing the western city of Bonn.

She points to the EU’s Net Zero Industry Law, which proposes that 40% of all solar panels installed in Europe be produced in Europe. It says Germany is working on similar measures. “If we had more renewables, we wouldn’t generally be as dependent on fossil fuels as we are now,” she says. “But at the same time, you can’t change the past. So I’m looking forward.”

Europe can shift the global balance of industry

Europe’s solar industry is also looking forward. says Gunther Erfurt, CEO of Swiss solar panel manufacturer Mayer Burger The Net Zero Industry Act has not yet been passed European Union Parliament and it may take some time to do so. But if that happens, he says, it could shift the global balance of clean tech away from China, along with the US inflation act.

“Our industry requires a huge scale in order to become super competitive against Asian competitors and especially Chinese companies,” says Erfurt. “So I think it could be a double whammy if the EU also puts together temporary state aid packages, helping to put fertilizer into the industry to help it grow.”

But Erfurt says the biggest challenge is time. He says it is taking the European Parliament too long to pass a bill that would generate investment in clean technology. That’s part of the reason Meyer Burger has decided to build its next big solar panel plant not in the European Union, but in Arizona, to take advantage of tax breaks in the US Inflation Act.

Back at the solar panel assembly line in Chemnitz, Heckert Solar’s Uwe Krautwurst hopes the European Union and Germany will move quickly to help revive his country’s solar industry. He says China’s continued monopoly on solar panels in the world is dangerous. “One of the risks is that you have no industry here, no further research, no other developments here in the EU,” he says.

And that, he says, would be a sad end for a country that helped spur growth in the solar industry in the first place.

Esme Nicholson contributed to this report