Who is behind the closure of the European photovoltaic market?

In recent years, the European photovoltaic market has been mired in the quagmire of the closure wave. Many photovoltaic companies are facing layoffs, bankruptcy, and closure. The once booming industry has fallen into a haze. This phenomenon has attracted the attention of the global photovoltaic industry. Who is stirring up the storm behind the scenes and causing such a heavy blow to the European photovoltaic market? To explore the reasons behind it, it is necessary to conduct in-depth analysis from multiple dimensions.

After the outbreak of the Russian-Ukrainian conflict in 2022, energy costs soared sharply. In order to seek alternative energy, consumers turned their attention to solar energy, and Germany's demand for photovoltaics also rose sharply. Against this background, manufacturers and distributors expanded rapidly, production and distribution capabilities increased significantly, and a large number of people were hired and trained to install to meet market demand. In 2023, Germany installed 15GW of solar power capacity, higher than the previous year's 7.4GW, setting a record for European countries. However, this rapid growth in the short term overdrew subsequent market demand.

Entering 2024, the German photovoltaic market began to shrink. Although the newly installed solar capacity was 16GW, an increase from 15GW in 2023 and 7GW in 2022, the overall growth momentum was much weaker than before. With the increasing number of market participants and increasingly fierce competition, the "cake" of demand is shrinking, while the number of sharers is increasing, which has severely compressed the living space of many companies. European manufacturers such as Meyer Burger in Switzerland announced in September 2024 that they would lay off one-fifth of their employees and reduce the profit margins provided to third-party companies; Zolar, a startup that has raised nearly 3 million euros since its establishment in 2016, also announced in September 2024 that it would abandon the business of selling solar panels to homeowners and lay off more than half of its 350 employees. The experience of these companies is a microcosm of the imbalance between supply and demand in the European photovoltaic market.

At the peak of the energy crisis, households equipped with photovoltaic systems and heat pumps could save up to 84% of their energy bills, which greatly increased the willingness of households to invest in photovoltaics. However, as the impact of the energy crisis gradually weakened, natural gas prices stabilized, and the pressure on household energy bills eased, the enthusiasm for photovoltaic investment also decreased. In 2024, the demand for residential rooftop photovoltaics declined, and the newly installed household photovoltaic systems decreased by nearly 5 GW to only 12.8 GW.

The easing of the energy crisis also poses new challenges to Europe's energy security and competitiveness. The low electrification rate has suppressed the demand for photovoltaics, and the lack of flexibility in the energy system has led to frequent photovoltaic power abandonment and negative electricity prices. Negative electricity prices mean excess electricity, which not only weakens investors' confidence in photovoltaic projects, but also frustrates residents' enthusiasm for installing photovoltaic storage systems. In Germany, the duration of negative electricity prices in 2024 was as high as 468 hours, an increase of 60% year-on-year. Negative electricity prices also occurred in France, Spain and other countries. This situation is spreading in Europe, further hindering the development of the photovoltaic market.

Government policy support and subsidies are crucial to the development of the photovoltaic industry. In the past, European governments have given photovoltaic companies a lot of subsidies and preferential policies in order to promote the development of renewable energy. However, as time goes by, the subsidy policies of some countries have begun to adjust, and the subsidy intensity has gradually decreased. This puts photovoltaic companies under greater pressure to develop, especially for those companies that rely on subsidies to survive.

Swiss solar manufacturer Meyer Berger plans to close its photovoltaic module production plant in Freiberg, Saxony, Germany in stages in 2024. Its CEO Erfurt pointed out that the delay in the implementation of European subsidy policies is one of the reasons for the closure. The reduction in subsidies has limited the source of funds for enterprises in project investment, technology research and development, and it is difficult to maintain normal operations and development. In addition, policy uncertainty has also increased the investment risks of enterprises, affecting investors' confidence in the photovoltaic industry.

The emergence of the wave of bankruptcies in the European photovoltaic market is the result of multiple factors such as imbalance between supply and demand, weakening of the impact of the energy crisis, and policy adjustments. In order to get rid of the current predicament, the European photovoltaic industry needs to conduct deep reflection and adjustment. On the one hand, enterprises should strengthen technological innovation and improve the competitiveness and added value of their products; on the other hand, the government should formulate more stable and sustainable policies, increase support for the photovoltaic industry, and promote the flexibility of the energy system and the increase of electrification rate. Only in this way can the European photovoltaic market get out of the predicament and usher in the spring of development again.