Several German producers of solar cells, panels and modules, including large market-leading companies, have reported massive first-half losses.
Q-Cells, one of the world's largest makers of solar cells, said it would cut 500 jobs, nearly a fifth of its workforce, to ensure its survival after it reported a first-half loss of $69 million before interest and tax. The sales of Conergy, Germany's second-biggest solar firm by revenue, were slashed in half in the first half of 2009 compared with a year earlier. Solarworld sales dropped 6 percent to $585 million in the first half, the company said in July.
Shares of those three companies dropped between 40 percent and 80 percent. "A large part of the German solar cell and solar module manufacturers will not survive," UBS analyst Patrick Hummel told the Financial Times Germany newspaper.
Thanks to a lucrative government-imposed feed-in-tariff, Germany has developed into the world's biggest solar energy market. But Asian giants, including China's Suntech Power, Yingli Solar and Trina Solar, are flooding the market with high-quality solar panels that they sell for 20 percent to 30 percent cheaper.
Conergy and Solarworld officials have accused the Chinese producers of price dumping and have called on Western governments to protect the European solar industry. According to newspaper reports, U.S. companies share that concern.
The Germans say Beijing is helping its companies with interest-free loans from state banks and by blocking foreign companies' access to China's quickly growing domestic renewable energy market. This should be answered with an EU import tariff for solar energy products from China, Conergy and Solarworld officials have demanded.
But economic experts have said protectionist measures could hurt the entire industry in the long run.
Meanwhile, German solar energy companies are pursuing two strategies to escape the economic downward spiral: Several firms have already set up or are planning production facilities in Asia to slash costs. At home, they are investing in huge solar power plants to make money with the feed-in-tariff stipulated by Germany's renewable energy law EEG.
And finally, all major industry players hope for the U.S. and Chinese markets to drive global demand for solar power systems to an extent that all companies can benefit from.