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How solar tariffs destroyed tens of thousands of jobs in Germany

September 24, 2023
in General
How solar tariffs destroyed tens of thousands of jobs in Germany
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From pv magazine Germany

On Sept. 3, 2018, the European Union’s anti-subsidy, anti-dumping tariffs, and minimum price regulations on solar products from China came to an end. Despite the disastrous experience, it appears that parts of the solar industry and politicians are once again advocating for protective measures, five years later. It’s crucial to reflect on the past.

The disaster was preceded by an unprecedented and world-first build-up of production for solar products in Germany, which began in the mid-1990s and then progressed rapidly with the German renewable energy law, the so-called EEG issued in 2000. In Germany and Europe, factories were built along the entire value chain for crystalline silicon photovoltaics, from ingots, wafers, and cells to module production, including factories for various thin-film technologies.

The cost of the products fell rapidly. In China, too, solar pioneers were able to build factories and grow quickly. Thanks to the EEG and similar subsidies in Spain, the Czech Republic and Italy, the markets and production figures grew quickly. For a long time, Germany was responsible for more than 50% of the global installation market.

With the end of the Spanish boom at the end of 2008, the first major sales crisis began. The massive problems in the young PV industry began in 2009. At that time, statistics from German PV association BSW revealed that there were around 32,000 industrial jobs in the German solar industry out of 61,000 jobs in the German solar industry overall.

The year 2009 initially got off to a weak start, with many companies going into crisis mode. Then the second half of the year was very strong in terms of installation numbers. This was due to massive price cuts. Therefore, the thunderclap on the eve of the major EU PVSEC conference in Hamburg in September 2009 came as a surprise to many: Qcells, the model company at the time, announced the layoff of 500 employees. Due to the crisis, co-founder and board member Anton Milner also had to vacate his seat in March 2010. It should not be forgotten that Anton Milner has twice built a company valued at billions of Euros in a short period of time. In addition to Qcells, he achieved this together with his wife Dagmar Vogt at Ib Vogt, which quickly became one of the largest global EPC/IPP companies with 1,000 employees.

Qcells was restructured, but the company’s insolvency was unavoidable during the crisis in 2012. Bitter, but from today’s perspective the story ended relatively well. With South Korean group Hanwha, an investor was found who expanded the brand globally and still maintains a large global development site in Thalheim.

Installation numbers in the European Union grew rapidly after 2009. However, it became apparent that competition from China grew quickly in production capacities and learned even faster to deliver good quality products. It also became clear that the Chinese government “believed in solar.” A brutal contrast to the black-yellow government that ruled Germany from the autumn 2009, which had very little knowledge of photovoltaics and had no kind of strategic industrial policy.

This was followed by the notorious EEG guillotine amendment in February 2012, which broke the German solar industry’s neck.

The center-right winged government immediately went to work to “severely slow down the photovoltaics market” with several amendments to the EEG. That had an effect. Solon, a large module manufacturer, went bankrupt in 2011. Although prices fell, the installation market remained stable despite this braking policy. In 2010 and 2011, installations grew by around 7 GW. This was followed by the notorious EEG guillotine amendment in February 2012, which broke the German solar industry’s neck. With the announcement that they wanted to implement an extremely large reduction in the subsidy tariffs within a week.

With the announcement that they wanted to implement an extremely large reduction in subsidy tariffs within a week, the government determined a total loss of confidence on the part of the capital markets in the further development of the German solar industry. Euler Hermes even terminated their credit lines and the retail trade on a massive scale.

We were all shocked by this absurd form of politics of destruction. Nevertheless, thanks to further price reductions, the installation part of the industry was able to hold on and in 2012 even achieved over 8 GW of new installations. It seemed as if the system integration, installation and project market had done its homework despite the massive incentive cuts and could now still operate at the lower funding level.

The German government made it clear it was not ready to pay more than this small amount of funding – if at all. In Spain, there were retroactive funding cuts. The markets also collapsed completely in the Czech Republic and Italy.

Solar jobs

Despite the crisis in the German photovoltaic industry that has been ongoing since 2009, the rapid growth created many new jobs in system integration, assembly system production, power electronics, trade, planning, operation and maintenance and other areas. According to Statista, there were over 150,000 jobs in the industry in 2011 – despite the layoffs and the first bankruptcies among manufacturers. For 2012, the statistics registered 126,300 solar jobs.

Solarworld was able to benefit massively in the years up to 2010 and 2011, in addition to growing competition, from its wafer exports to China and the import of OEM-manufactured solar modules from China, which came mainly from Suntech. When this fruitful relationship with China ended, Solarworld was forced not only to complain massively about China, but also to ask for the introduction of tariffs on China. Solarworld, however, had previously repeatedly rejected the request for such tariffs from other German manufacturers, which had been made since 2008 – for understandable selfish reasons.

In late 2012, as Solarworld’s fight for import tariffs on all competitive solar products from China intensified, many in the non-industrial part of the solar industry could not imagine the disaster these tariffs would unleash.

In 2013, the non-industrial part of the industry was shut down – but not through further cuts in the EEG. The support provided by the EEG was no longer changed abruptly, but instead decreased again in a predictable manner. Meanwhile, the anti-dumping and anti-subsidy came as a second “guillotine”. The introduction of import tariffs on wafers, cells and solar modules first created brutal uncertainty and then the sheer impracticality of projects or installations.

Unfortunately, no one wanted to pay for solar power anymore. And certainly not for the modules that generate this solar power. A bitter experience – one that the EU manufacturers of solar modules, which are tiny and bring expensive products to the global market, are having to go through again.

The EU had started registering imports of solar products as part of its customs procedure. Orders were no longer possible without registration, and some shipping companies stopped transporting solar products due to the uncertainty. A brutal phase of uncertainty and wait-and-see strategies began. When it became increasingly clear that duties were coming, the German federal government, which otherwise had little to say about it, suddenly became concerned about the important economic relationship with China and took action in Brussels. The tariffs then became minimum prices with effect from August 2013. These had an equally devastating effect on the installation market in Germany and the EU – but without any advantage for the European Union.

The German solar market fell from over 8 GW in 2012 to 2.6 GW in 2013 and 1.19 GW in 2014. Without any abrupt cuts in subsidies in the EEG. A “sales blackout” took hold and companies started dying like flies. German high-tech manufacturing companies such as SMA Solar were also hit hard by the loss of almost their entire domestic market and, as a result, had to cut many of their industrial jobs in Germany. SMA Solar has now recovered and is currently doubling its production in Germany (without any extra subsidies) and today offers world-leading solutions in the large inverter segment. And this occurred through brutally tough competition with direct competitors from China. The fact that companies like SMA Solar were drawn into the vortex of Solarworld, which in my opinion was mismanaged, was a bizarre but direct consequence of the import tariffs on modules and raw materials.

Five bitter years followed. In terms of technology, too, the German installations were ultimately left behind by the design of the minimum prices. While the more efficient Mono-PERC technology became established globally in 2016, it was only possible to use it in Germany at reasonable prices and, above all, in relevant quantities from the end of 2018. Solarworld had not managed to scale and develop this technology, which was protected by particularly high tariffs. SolarWorld, however, had been one of the first on the world market to use PERC technology. But this is precisely where the brutal failure of the tariff instrument becomes apparent. It does not provide strategic, stable political and financial support for the domestic industry.

Between 2013 and the lowest point of the crisis, which peaked around 2016, over 80,000 jobs and hundreds of companies were destroyed. Lives were destroyed and many colleagues were permanently traumatized.

At the same time, the duties had no added value for the industrial sector. On the contrary, Solarworld went bankrupt twice during that time, despite tariffs being in place in its main markets in the United States (since 2012) and the European Union (since 2013). The company has now completely disappeared and the board of directors around the once dazzling Maserati and Rolls Royce driver Frank Asbeck is now on trial in Bonn. The insolvency administrator wants to claim a proud €731 million ($778.7 million) in damages.

Politicians and employment

Currently, we still have duties on solar glass in place in Europe and this continues to drive up costs for EU manufacturers and is a disadvantage for local module manufacturers. Although there is now only one solar glass manufacturer in the European Union, the entire EU manufacturing scene has failed or not even tried to abolish this tariff.

Many colleagues ask themselves again and again why small and medium-sized businesses of all kinds, which are often described as the pillars of our society, receive so little attention. While “coal buddies” or other factory workers – no matter their background – receive massive media and political attention for their concerns. Why do you make politics for a few that massively harms many?

The answer, not only in the solar sector, is the disastrous misperception of the number of jobs in industrial companies. There are a lot of people in one place and they organize themselves well for their own interests. They appear correspondingly united.

The solar manufacturing industry has been a smaller part of the German solar sector since 2009. A maximum of 32,000 jobs (probably fewer at that point) out of over 150,000 jobs in the solar industry were industrial jobs. The policies of the CDU/CSU/FDP government, together with the EU tariffs, had destroyed large parts of the solar industry.

The very low number of installations between 2013 and 2021 slowed down the energy transition and unnecessarily delayed technical progress in the European Union, including towards higher efficiencies, and the fight against climate change.

On Sept. 3, 2018, the tariffs were history. For 2022, the BSW again reported over 65,000 jobs, although industry only plays a marginal role. Meyer Burger, for example, had around 1,000 jobs in Germany and Switzerland in 2022. These 65,000 installed over 7 GW of photovoltaic power in one year. In 2023, with further growth on the way, 12 GW can definitely be achieved. With probably over 95,000 jobs in the German solar industry in 2023, with still only a marginal share of the manufacturing industry. I hope that this time politicians understand the dominant importance that the non-industrial part of the solar industry had and continues to have.

Milton Friedman, a Nobel Prize-winning American economist, expressed these connections as early as 1978 around the discussion about the then “evil” Japanese steel and car imports to the United States.

There, in the context of subsidized steel that Japan exports to the United States, he asks a rhetorical question: “If Japan decides to subsidize clean air exports to the USA, why should we object?” He gives his answer as to why free trade is still preferable.

Author: Karl-Heinz Remmers

Karl-Heinz Remmers, a solar entrepreneur since 1992, initially focused on solar system planning, installation, and solar thermal collector production. In 1996, he founded Solarpraxis, which later established pv magazine Group. The company now specializes in PV project development. More details: https://www.remmers.solar/ueber-mich/

The views and opinions expressed in this article are the author’s own, and do not necessarily reflect those held by pv magazine.

This content is protected by copyright and may not be reused. If you want to cooperate with us and would like to reuse some of our content, please contact: editors@pv-magazine.com.

>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : PV-Magazine – https://www.pv-magazine.com/2023/09/22/how-solar-tariffs-destroyed-tens-of-thousands-of-jobs-in-germany/

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