Germany's solar panel industry, once a leader, is getting squeezed

https://www.nytimes.com/2024/03/25/business/germany-solar-panels-china-protectionism.html

91 133 2 years ago

hcfman• 2 years ago

I still don't see this as being a valid reason for disavantaging the planet. Like they did in the EU when the Belgiam politicial managed to get a tax imposed to make solar panels more expensive from Chain. One would expect Germanies business to be thriving now.

But to make solar panels artificially more expensive for any reason at all is extreme folly for the planet if anyone cares about that.

dubcanada• 2 years ago

It's rather silly if you ask me how protectionist most capitalist market pro countries are. Any solar panel worth buying at the moment comes from China. Yet we have insane tariffs on imported them into Canada or USA. But if you go down to Joe's Solar and ask for a quote, you're getting a quote on imported Chinese solar panels.

So all they are doing is artificially raising the price of every single solar installation while offering a rebate, the local manufacturer if they even exist does not make panels that produce enough energy to compete and still cost more then importing at 150% tariff.

palmfacehn• 2 years ago

Protectionism isn't generally regarded as pro-market. Command and control economies where states subsidize auto industries, put up grants for chip fabs or nationalize entire sectors are vaguely oriented towards market pricing at best.

jiehong• 2 years ago

Indeed!

And the "better for the planet if sourced locally" would be easier to handle if there was a carbon tax to account for it in the first place, and letting the market handle it.

balderdash2• 2 years ago

But you’re not comparing the same products, for example how much more should one pay to have a product not produced with slave labour?

fy20• 2 years ago

I am in Lithuania (EU) and when I had solar panels installed on my house, I got them installed and manufactured by a local company - whose factory is less than 10 miles from my house. I got quotes from a few companies, and this was was more expensive, but it was only around €1000 (10%) more than the cheapest company which offered Chinese panels. I figured if I need to make a warranty claim in 20 years time, this company is likely to still be around, plus I'm supporting the local economy.

Its not just assembly of panels, the solar cells are also made in Lithuania (this company started out creating optical parts). Last year they branched out and launched their own line of residential batteries (not sure if the cells are made in-house) and they announced plans to build a new PV factory in Italy.

Admitidely our labour is a bit cheaper than Germany, but it's not much, and the cost of doing business here in general is higher. If it can be done here, I don't see why it can't be done in Germany.

https://www.solitek.eu/en

z7• 2 years ago

What if higher energy prices in Germany lead to increased outsourcing to countries with fewer environmental regulations, causing a net negative environmental impact?

SiempreViernes2• 2 years ago

Still a win because the environment effects of solar manufacturing are basically local while the gains are global.

Neil44• 2 years ago

Because the 'just buy everything from china' strategy is risky and shortsighted. If you have zero local manufacturing capability you are under china's power.

brnt• 2 years ago

'Buy manufacturing from China' is a bit like 'buying gas from Russia', or so we will all say once that came crushing down too.

roenxi3• 2 years ago

Germany's energy production is below 1970s levels and their per capita figures are in a grim state [0]. As with much of Europe, it makes for worrying reading. It would be extremely impressive if they can remain a manufacturing leader through this. If there is less energy, someone will have to use less energy. As far as I can tell that means either compromising living standards or giving up some heavy manufacturing. I'm assuming that this is an expression of that dynamic unless it is proven otherwise.

German politicians should have taken their energy security more seriously back in the 2010s. My main hope is maybe the rest of us can learn from these energy starved European powers and do things differently.

[0] https://ourworldindata.org/energy/country/germany

_Microft• 2 years ago

Add a few other countries to the list and see how their curves look almost the same as Germany's...

(The situation is not much different on the other graphs)

https://ourworldindata.org/grapher/per-capita-energy-use?tab...

Edit: Here's the same (semi-randomly chosen) set of countries, applied to the same article (see parents [0]-link) in full:

https://ourworldindata.org/energy/country/germany?country=DE...

achates• 2 years ago

The US has also lost its lead in manufacturing during the same time period.

jddj2• 2 years ago

Without speaking to whether or not it's valid conjecture, it's become necessary to treat any Germany is dying material with a little extra skepticism due to it being used as a polemic talking point about what happens when you go all in on renewables, etc.

dependsontheq• 2 years ago

It really makes no sense to look at per capita figures this way. I am driving an electric car in Germany now and I built a new home with better insulation and I have LED lights. My per capita figures went way down, I am also taking my cargo bike in the city everywhere, so my per capita figures went down again.

There's a very relevant question about the viability of energy intensive industries in Germany, but even that is dependent on energy source. A lot of industries are switching to electric heating that will also lead to lower per capita energy use.

https://ourworldindata.org/grapher/energy-intensity?tab=char...

throwaway220033• 2 years ago

Congrats being an exemplary citizen but how does your electric car and cargo bike play role in Germany's manufacturing?

kennethwolters3• 2 years ago

I think the main point was that it is bad that Germany produces less energy over the decades. And that manufacturing in Germany might disappear as a consequence, which would be bad for Germany.

Rinzler894• 2 years ago

I am driving an electric car in Germany now and I built a new home

Most people in Germany can't afford to buy an apartment let alone build a new house and you're taking as if your situation si representative for the average German.

Just because you're wealthy enough to afford a new EV and to build a new modern house, doesn't eman Germany has no problems.

You're proving the point that ecology is a tax on the poor, as the wealthy can afford to buy EVs and build new well insulated homes with solar panels and heat pump making their running costs super low, while poor people who can't, will own older ICE cars and older homes that are much worse energy efficient meaning they'll pay way more in running costs than the rich despite having less income leading to ever increasing wealth inequality.

alephnerd• 2 years ago

Per Capita is a lossy indicator, and you bring up a key point a lot of people on here seem to forget - you cannot analyze economic metrics in isolation.

Economic Metrics are sort of like the dashboard of a car - you need to analyze the speedometer, the odometer, the gas gauge/battery level, tire pressure, etc when driving.

Concentrating on one metric alone is useless as it is a dynamic system.

There are changes happening in Germany. That said, it is slower than in other countries, but then again, better late than never.

There are some very prominent issues with Germany, but it appears that Germany and the US seem to get the brunt of bad takes (often by Americans and Germans respectively). I've found both countries to be so similar in personality and outlook that it leads to clashes ("I hate me" - Jerry Seinfeld)

dragonelite• 2 years ago

I think i saw a energy usage breakdown of the Netherlands supplied by our CBS central statistics bureau. Citizens living energy usage was around 14% of total energy usage of our country. Industry is by far the biggest energy user that is why people are talking about the deindustrialisation of Germany. Once companies germans could be proud of are moving to the US or China or getting closed off.

I read about companies that had survived both world wars but this trade war with Russia and EU they didn't survived.

helsinkiandrew2• 2 years ago

It's not just you and your electric car - Germany has been the world leader in increasing energy efficiency for several decades - 35% reduction in housing and 12% in industry since 2000. I think the national target is a further 30% reduction by 2030.

https://www.odyssee-mure.eu/publications/efficiency-trends-p...

sinuhe69• 2 years ago

That does not mean they produced less energy but a sign of much higher energy efficiency, speaks better processing and technology.

It’s the same for all advanced nations: UK, Japan, USA etc.

r00fus• 2 years ago

A lot of the industrial power use was built on the back of cheap natural gas from Russia - that got cut off after the Ukraine war.

0xQSL• 2 years ago

Primary energy consumption isn't a good indicator for this, as it also includes lost energy. If you replace a 50% efficiency coal power plant with wind or solar you'd reduce the primary energy by half but could still get the same amount of used electricity.

lenerdenator4• 2 years ago

German politicians should have taken their energy security more seriously back in the 2010s.

Energy security AND national security. It was insane to build an economy on natural gas from a country with a long history of imperialism and autocracy, but Germans did it anyways. To be fair, the US did much the same with China with regards to manufacturing.

The US was begging its NATO allies across the Atlantic to have a more skeptical view of Russia for most of the 90s and 00s, not just 10s, and concerns were brushed off as the ramblings of unsophisticated cowboys. I remember talking to Germans in January 2022 who still thought that the Russians wouldn't invade Ukraine.

mk892• 2 years ago

To be even more fair, US is still buying uranium from Russia...

Anyway, that's how it is. The german economy profited quite well from the cheap gas. It was actually a strong decision to drop it, as the economy has a lot of heavy industry that apparently requires gas/oil. We will see how it goes in the next 5-10 years.

guappa3• 2 years ago

The USA is not in a position to criticize… All of the computers are made abroad. I doubt banning Huawei will solve anything, if a foreign power has decided to inject malicious instructions into the hardware.

sofixa3• 2 years ago

Energy security AND national security. It was insane to build an economy on natural gas from a country with a long history of imperialism and autocracy, but Germans did it anyways

This is hilarious because absolutely the same argument could be applied to most of Europe getting closely integrated economically with Germany through organisations such as the European Coal and Steel Community, European Economic Area, European Union. Germany is a nation with a long history of imperialism and autocracy, why did they do it? Was France stupid to risk depending on a country that invaded them thrice in the last century?

The general hope was that economic integration will lead to closer relations and liberalisation in Russia (like it did in most of Eastern Europe). It sadly didn't happen, but it wasn't that out of the question.

The US was begging its NATO allies across the Atlantic to have a more skeptical view of Russia for most of the 90s and 00s, not just 10s, and concerns were brushed off as the ramblings of unsophisticated cowboys

Yes, because the US was doing this even when Russia was on its best behaviour, so it really really looked like nobody in the US had remembered to update the "who to be scared of" instructions. Now they have and they won't fucking shut up about China, which is annoying, same as it was back when it was about Russia.

mk892• 2 years ago

The energy use per capita can also indicate that people use less energy because of more careful consumption, modern appliances etc. I wouldn't see it as "wow, there is no electricity in Germany!!!".

There are some policies applied here since years such as the mandatory use of LED lights ( do they still sell non-led? Can't remember to be honest), etc. In the last 2 years alone it was crazy the amount of renovations in terms of eco-friendly measurements in terms of electricity/gas (things like deutsche bahn changing the bulbs to use LEDs, not a small company I mean). Etc.

On the contrary, I see it as a positive thing: you can have a good modern lifestyle with less energy consumption.

nradov5• 2 years ago

It's not just energy, but availability of cheap natural gas as a feedstock for the chemicals industry. That had been a key input for a large fraction of German heavy industry. Those sectors are now shrinking in Germany and expanding in other countries which have more gas.

https://www.reuters.com/business/energy/germany-energy-trans...

skrebbel• 2 years ago

A country’s energy production is driven mostly by demand. Your argument is “Germans use less energy, therefore it’s going badly”. I think this is a very outdated worldview, equating energy consumption with growth.

There’s been lots of technology development across the board that lets people have the same comfort, or businesses the same production, with lower energy consumption. I don't think you can just assume that those are a rounding error.

nradov5• 2 years ago

Has anyone figured out how to reduce the energy demand for refining aluminum or manufacturing ammonium nitrate? Efficiency gains in things like lighting, heating, and ground transport are nice but those only go so far. Heavy industry will always require enormous energy inputs.

eigenspace3• 2 years ago

In addition to things mentioned by other users, electricity production is also misleading there because Germany's grid isn't a closed system. It's strongly coupled to the wider european power grid. Germany's international grid connections are so wide that it's not even that abnormal for Germany to import or export more than a third of their total load from neighbouring countries.

A better metric would be to look at the total load on the German electrical grid, and if you look at that, you'll see that load has decreased a little over the past couple of years, reflecting the real economic downturn, but the dip is quite small compared to how much electricity generation has decreased.

Germany is simply exporting less electricity, and also importing more of it.

panick21_• 2 years ago

They should have built nuclear plants instead of ripping them down.

pfdietz2• 2 years ago

This wouldn't have helped replace fossil fuels when competing with cheaper energy elsewhere.

PurpleRamen• 2 years ago

Germany's energy production is below 1970s levels and their per capita figures are in a grim state [0].

Usage and harvesting has become significant more efficient in the last decades. And the changing climate demands for less consumption in certain areas. Outsourcing of lower levels of production has likely removed a significant amount of consumption too.

holgerschurig2• 2 years ago

and their per capita figures are in a grim state

- and Germany is one of the european countries with okayish inflation rate, most other european countries are far worse https://tradingeconomics.com/country-list/inflation-rate%20-...

- and it's by now economic-wise at position #3 of the world ranking, now even before Japan (which has twice the amount of inhabitants). If you look up Germany on a real globe, you'll notice how tiny it actually is

- the unemployment rate is quite low (especially given that people like you call the econimic sitation a "grim state") https://de.statista.com/statistik/daten/studie/1224/umfrage/... --- it's actually lower than in the years then people Germany "the locomotive of europe"

- the stock index "DAX" for german stock company is at an all-time high https://www.finanzen.net/index/dax

So really, the worrying thing here is that people tend to think binary. Either Germany is super-strong, even too strong for it's neighbors. Or it is too weak, so that people actually worry. In my book, both views are extreme and don't replicate reality.

It would be extremely impressive if they can remain a manufacturing leader through this

There is no indication that this will change. Examples: Germany's battery production has doubled in the last year. And there is no end in sight --- https://www.produktion.de/technik/co2-neutrale-industrie/bat...

For the solar industry, I identify two reasons of the decline:

- first, the "high" of the german solar industry was based on subsidies. That meant that the companies build plants ... but they didn't really optimize the costs. Once this large scale subsidies were reduced, the industry wasn't competitive

- second, the EU is blind on subsidies done in China. Over there, they have a weird conglomerate of socialism and capitalism. Basically the companies, even when privately owned, are still under control of the chines communist party. And the party decides that "this industry is vital, we push it so squelch abroad competition". They do this e.g. by heavy state investments. The EU turns a blind eye here, they don't ask for tariffs that equalize the market situation for the various competitors. Similarly, market access is asynchronous. If an abroad company wants to make a plant there, they have to accept a Chinese partner --- which will do industry espionage. Whereas Chinese companies buying or making plants in Europe (or USA etc) aren't required to have a local partner.

holgerschurig2• 2 years ago

German politicians should have taken their energy security more seriously back in the 2010s

Well, any country.

Did you know that Poland imported most of their fossil fuels from Russia also?

Or, that today, Bulgaria still imports all (that is, 100% !!!) oil from Russia?

People like to blame Germany, and they point to North Stream. Few people looked at a map of oil and gas pipelines of Europe ... noticing that MOST of them are in eastern- and southern europe. All of europe depended on cheap russian fossil energy, not just Germany.

Map of oil & gas pipelines, centered on central and western europe:

https://theodora.com/pipelines/europe_oil_gas_and_products_p...

Only gas pipelines, but showing eastern europe much better. Note that the amount of pipelines in Germany seems to be higher ... but also notice that a good part of them run from the northsea towards the industrial areas. The pipeline system was never designed to be run solely by Russian fossil fuel, unlike the ones in eastern europe countries.

http://www.mappery.com/maps/Europe-Proposed-Natural-Gas-Pipe...

negative_zero2• 2 years ago

Poland was legally obligated to purchase Russian gas based on an agreement signed in the early 90s.

The writing was on the wall for years. The difference is that Poland started constructing an alternative pipeline to Norway. Poland also appealed to an arbitration panel to have the Russian gas contract right to renewal clause removed (which it was successful in doing).

Germany meanwhile doubled down on Russian gas and built Nordstream 1 & 2.

majoe• 2 years ago

To add to what others already commented. The EU has been setting energy efficiency targets for itself for several decades now. In the most recent update to that target "EU countries will be required to achieve an average annual energy savings rate of 1.49% from 2024 to 2030" [0].

So it's not that surprising, that Germany's energy production is sinking, it is required to do so.

[0] https://energy.ec.europa.eu/topics/energy-efficiency/energy-...

wewxjfq• 2 years ago

The 1970s had several energy crises and Western countries went from wasteful energy consumption to energy conservation in an effort to strengthen their energy security.

Archelaos• 2 years ago

This reasoning is a too simple. It does not take the increase of energy effiency into account. On the contrary, these figures are proof of enormous success in this respect.

As of 2022, the German production industry (excl. construction) had a share of 23.5% of GDP[1]. For the US it was only 11% in 2023.[2] I would not argue that one is better than the other. It first of all demonstrates a remarkable difference between the two economies.

Another one is the legacy of the German reunification. If one wants to assess the performace of the German economy in the last 35 years, one should take into account that a lot of investments had been made by the German state to bring up the infrastructure of the Eastern part (about 25% of the population) to a Western European standard. Eastern Germany is in a much better shape now than any other Eastern European region. And this investment is just starting to generate returns.

[1] https://www.statista.com/statistics/295519/germany-share-of-...

[2] https://www.visualcapitalist.com/visualizing-u-s-gdp-by-indu...

thelastgallon• 2 years ago

Germany's energy production is below 1970s levels and their per capita figures are in a grim state

Two thirds of energy from fossil fuels is wasted[1,2]. Renewables don't have wasted heat. Germany has been going green for a while, energy production does not give us a full picture.

From: https://www.sustainabilitybynumbers.com/p/electrification-en... "This is shown in the chart below. It plots global final energy demand today2 compared to a ‘post-transition’ energy system where suitable sectors are electrified, and the rest is fuelled by hydrogen.

Electricity demand does increase – from 110 to 189 EJ, but total energy demand drops from 416 to 247 exajoules (EJ)."

[1]https://flowcharts.llnl.gov/ [2] https://yaleclimateconnections.org/2022/10/energy-loss-is-si...

jillesvangurp• 2 years ago

Exactly, Germany's economy has grown quite a bit since the 1970s. It's energy usage is indeed trending down. Which means they are doing more with less energy. Back in the nineteen seventies they had inefficient cars, trucks, electricity generation (mostly coal based), and industry. Now they have a bigger economy and are not using a lot more energy. That's progress.

Michael Liebreich [1] refers to this as the primary energy fallacy in his recent articles on why reaching net zero is both hard and easy. He traces back the origins of this fallacy to the nineteen seventies when people started tracking the notion of primary energy during the oil crisis. The issue is that this is based on the gross energy usage, not the net useful output of that energy. Which with fossil fuels is pretty terrible (<30%) and with clean energy typically a lot better (>90%).

The other problem is that to this day, people base their policies on reports that still center on primary energy by agencies such as the IEA. It's a fallacy because any policy or plan based on the notion primary energy is off by about 3x in terms of actually needed energy. So, any plan that assumes replacing dirty energy gw fo gw with clean energy is technically bullshit.

A good example is petrol which has about 9kwh of energy per liter. A typical car might have about 50 liters of petrol. So, that's about 450 kwh. Or nearly half a mwh. Comparable EVs tend to have more modestly sized batteries of maybe 60-70kwh. Does the petrol car go 7 times further? Not even close. Most of that is transformed into heat and noise rather than movement. Primary energy of nearly half mwh. Useful energy under 100kwh. That's a 5x difference. That's why EVs can be cleaner even if you do charge them using coal powered electricity plants. You simply get more km per kwh.

[1] https://about.bnef.com/blog/liebreich-net-zero-will-be-harde...

roenxi3• 2 years ago

I thought that was the strongest point bought up so far, and the orders of magnitude do seem to check out. Although I'd note that Germany's electricity production has also drifted back to the 20th century and prices seem to be ~3x the USs and 5x China's so energy-related pressure still looks like a potential root cause to me.

hannob• 2 years ago

If there is less energy, someone will have to use less energy. As far as I can tell that means either compromising living standards or giving up some heavy manufacturing.

That's total nonsense, I guess you never heard the word "energy efficiency".

jupp0r• 2 years ago

Energy consumption is a poor proxy for industrial output when policy is geared towards increasing efficiency and productivity.

snowpid• 2 years ago

It is very bad doing analysis of Germany between 1950 - 1990 as there was no unified economic but just two states. The Eastern German communist economy was just very inefficient, very energy hungry (and thus it failed 1989). So this trend isnt not bad.

zhengiszen• 2 years ago

They really did by letting the French continue the nuclear and by making gaz deal with Russia... But Russian-Ukrainian conflict reminded them that they are still an occupied country with no sovereignty.

kennethwolters3• 2 years ago

This is a classic story where Germans are amazing at doing the R&D on something but are squeezed so hard while scaling, that technologically less sophisticated competitors take over and dominate the market.

Imagine what German engineering could push into the market if it weren't for this self-flagellation. Maybe it is time again for German engineers and scientists to emigrate to greener pastures.

iammjm• 2 years ago

Part of the problem is the conservatives blocking the investments because they believe any debt is super bad

nradov5• 2 years ago

Is there some reason that solar power industry investments would have to be financed using debt rather than equity?

adr1an• 2 years ago

Maybe they are switching to other renewable sources, like windmills...

scotty79• 2 years ago

When EU was faced with insurmountable competition in the global food market they set up common agricultural policy and straight up fueled their agriculture with tax money since then making EU number one global exporter of food and beverages.

I wonder what obstacles there are for doing the exactly same in another key sector that is manufacturing means of energy production.

And chip manufacturing in the future probably.

If the obstacle to competitiveness is the high cost of labor due to European people being so rich it's only fair to alleviate the problem by using the tax money. It already worked for agriculture.

Gravityloss2• 2 years ago

This makes total sense, up to a limit when it's about strategic resources. Food is certainly a strategic resource. But if you subsidize it so much that you export massively, that doesn't make sense.

Energy technology and chips certainly are also strategic resources.

SiempreViernes2• 2 years ago

The main obstacle is that the EU became deeply neoliberal in its thinking, judging state subsidies as worse than slave labour.

For example, when the US rolled out the cornucopia of state protectionism that is the IRA the EU has mainly responded by saying "actually, that's not very free marked of you USA".

lock-the-spock• 2 years ago

The EU has its own subsidy programmes as well but it is a lot more complex. You need 27 governments to agree to make something happen, from 400.000 people Malta to 80.000.000 million people Germany. The small countries are terrified to be squashed by German and French power to give subsidies to their own national company, ruining the single market.

In fact you have the same issue in the US but the states have no direct say, and statistics are not done the same way - so you don't see the impact the same way and don't have discussions the same way.

ramshanker• 2 years ago

To me, solar panels are very simplified stuffs compared to say cars, machinery etc. At its core, solar panels are Billions-and-Billions of repetitive patterns of very few basic ingredients. So, whoever is good at scaling the manufacturing will win. Even if the scaled-out panel has efficiency few % lower than state of art.

jcfrei• 2 years ago

I'm not convinced that the US approach with heavy protectionism is a good idea in the specific case of solar panels. It's a pretty standardized product and if another country is willing to subsidize the European consumer with cheap panels - where's the harm? It's not an incredibly sophisticated product like chips manufacturing - where if we suddenly needed to manufacture entirely on our own we would be completely unable to for more than a decade. As some of the interviewed people in the article allude: We're probably better off investing the money saved on those solar panels into other parts of the economy.

nradov5• 2 years ago

If you're trading with an ally over secure routes then sure, that makes a lot of sense. But Pax Americana is breaking down and that threatens the stability of the whole global trading system. And China is growing increasingly expansionist as they attempt to secure their own sea lines of communication. A war over Taiwan isn't impossible within the next decade, and if that happens then all bulk trade between Germany and China could be cut off for years.

jamil7• 2 years ago

Before China came to dominate the solar panel industry, Germany led the way. It was the world’s largest producer of solar panels, with several start-ups clustered in the former East Germany, until about a decade ago when China ramped up production and undercut just about everyone on price

It was also around a decade ago that the conservative government in Germany basically killed the solar industry.

Gravityloss2• 2 years ago

I have seen comments that it was a German industry to export solar panel factories. Those technologies of course move forward and I assume nowadays China does its own development.

lacker• 2 years ago

Is China really selling solar panels at below the cost of production? There seem to be a number of Germans making this claim, but the article never really tries to analyze whether this is true or not.

It seems like a big difference whether China can forever sell solar panels at current prices or cheaper, or whether they will eventually jack up the prices because this is unsustainable.

rasz• 2 years ago

Below German cost of manufacturing for sure. I remember laughing at der8auer explaining how he must sell a bend piece of CNCed aluminum at ~20 euro because thats how much it costs to make in DE, while same piece of metal can be ordered from JLC for couple dollars including shipping manufactured in single quantities.

ZeroGravitas• 2 years ago

The impression I get is that China's solar panel industry is also continually getting outdated and replaced by new entrants in a near constant bloodbath of competition.

The only difference is the new entrants are also in China.

maxglute• 2 years ago

I like how the url is:

germany-solar-panels-china-protectionism

While the byline is:

Domestic manufacturers are caught between China’s low prices and U.S. protectionist policies, even as demand increases.

Germany's solar panel industry, once a leader, is getting squeezed

Related Stories