Sonnenkollektoren auf der Balkonterrasse in den Bergen
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2024-07-01 VDE dialog

Debate: First boom, now bust?

After being flooded with requests from end consumers in 2023, this year is set to be a disastrous one for the solar industry, says photovoltaic expert Peter Knuth. This is because local suppliers are no longer benefiting from a consistently high number of installations.

By Peter Knuth

Portrait photo of Peter Knuth

Peter Knuth is the managing director and co-founder of Enerix, a full-service provider of photovoltaic and storage solutions. He has been active in the field of renewable energies since 2002, having himself started out installing solar systems on rooftops.

| enerix Franchise GmbH & Co KG

At the beginning of 2024, the German Solar Association (BSW) published a triumphant announcement: one million new photovoltaic systems had been installed in 2023, proving that progress was being made in the energy transition. You’d think this would be a reason for the solar industry to celebrate – but it's actually facing a serious crisis. It’s true that over 14 gigawatts of capacity were installed last year. That’s twice as much as in the previous peak year of 2012. The reason for this solar boom, however, lay in the perceived energy crisis of 2022. Energy prices rose drastically at the beginning of that year and were raised again by energy companies when the war in Ukraine began. The fear of losing a secure and affordable energy supply was widespread. This led to huge demand for solar systems, which homeowners saw as an opportunity to become self-sufficient. Meanwhile, there were shortages of materials and personnel, which resulted in expected waiting times of up to a year and prices that were as much as 25 percent higher. The potential profits created a veritable gold-rush atmosphere in the industry. Most suppliers expanded their capacities and many newcomers got into the solar business, enticed by the prospect of supposedly easy earnings. At the same time, China ramped up its production and flooded the European market.

In 2024, the concerns about energy dependency have largely disappeared – taking the high demand for solar installations along with them. What has remained are the expanded capacities and new providers, not to mention plenty of material languishing in warehouses. All that supply, coupled with low demand, has touched off a price war. How does this fit with the German government's enthusiastic reports of new record installation figures in the first quarter of 2024? The overall expansion of photovoltaics – if you only look at the increase in megawatts – is progressing, but local suppliers are in deep trouble.  What we are seeing is that ground-mounted systems in particular are thriving. Large installations have seen an increase, but the number of installations under one megawatt has fallen by almost 50 percent. The problem with this is that most large installations are being expanded using modules brought in from China (via warehouses in Rotterdam). Demand from end customers, meanwhile, is roughly the same as before the energy scare, with European suppliers benefiting little from the supposedly ongoing boom.

This part of the energy transition is therefore mainly being built with modules, inverters, storage systems, substructures and other components from the Far East. Not much reason for the local industry to stand up and cheer, in other words. The German government would do well to focus not only on the absolute expansion figures, but also on encouraging a greater proportion of European products and providing new incentives for homeowners.

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