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The German Solar Disaster: 21 Billion Euros Burned

Thiemo Heeg, Frankfurter Allgemeine Zeitung

Large German companies such as Siemens and Bosch are abandoning the solar industry. Their strategies resulted in debacles – their investments in solar power companies cost them billions.

The author and former television journalist Franz Alt is a militant solar lobbyist. On his website, the 74-year-old, who wrote his doctoral thesis about Konrad Adenauer, gushes: “The sun sends daily 15,000 times more energy than all six billion people consume currently. This offer, we feel, is a godsend. We use the energy from the boss himself very much. It is environmentally friendly, climate-friendly, it’s free and yet sufficient for 4.5 billion years. We assure you that the sun has never sent us a bill.”

Could it be that Alt has solar panels on the roof (and thus has benefited from the lush subsidies for solar power for years), but no solar stocks in the portfolio? If he had, he would see the thing about solar energy being “free” a bit different: because the sun does send an invoice after all. Although not to him; but to the broad band of small shareholders, for example, who believed in the growth of the industry in the good times and eagerly bought shares – or to many large corporations which also invested in solar power and solar heat, and now withdraw disillusioned from their investments.

Green strategy resulted in debacle

Recently, Siemens had to make this expensive experience. On Monday, the group announced that the solar division will shut down. By the spring of next year, the loss-making division is to be completely closed. Thus, a final attempt, lasting seven months, to find a buyer was ultimately unsuccessful. Affected by this decision are 280 employees, most of them in Israel. With the purchase of the Israeli company Solel, CEO Peter Löscher entered the market for solar thermal systems, from which he had expected rapid growth. The strategy resulted in a debacle: All in all, Siemens lost around one billion Euros. The closure alone will cost the company a double-digit million amount.

Wertverluste in der Solarbranche

Losses in the German solar industry

For Bosch too, the eclipse came faster than expected. In March, the automotive supplier announced its withdrawal from the business with solar cells and solar modules. The production will end in early 2014, as will its sales and development. Due to the withdrawal, 3,000 employees at locations in eastern Germany, especially in Thüringen, are facing unemployment. Bosch board chairman Franz Fehrenbach, the main man in charge, had been driving the entry into the solar business since 2008 . When the Frankfurter Allgemeine Sonntagszeitung asked him “Is the industry doomed to die?”, he answered depressingly, “For Germany, it looks like it is, unfortunately.”

The reasons for pulling out of solar are similar to those of the other manufacturers of solar modules and cells, which, one after another, slipped into the red or even had to file for bankruptcy since the end of 2011: Bosch had failed to restore the competitiveness of the division Solar Energy – because of the strong price erosion of up to 40 percent. The investment in the photovoltaic industry has cost the electronics company even more money than Siemens: around 2.4 billion Euros. Additional costs will be incurred by the social plan. The company has fully depreciated a total investment of 1.56 billion Euros by the end of 2012. In addition, there were also operating losses of 750 million Euros.

Capital losses of more than 21 billion Euros

Compared to what investors have lost as a result of their investments in solar stocks, however, these sums are almost negligible amounts. The former stars at the stock exchange, SolarWorld and Q-Cells, have destroyed tens of billions of capital. In December 2007, the solar cell and module manufacturer Q-Cells, listed with a market value of more than 11 billion Euros, was one candidate for promotion to the first tier in the stock exchange. As sufficiently known, this did not happen after all.

Instead, the company had to file for bankruptcy in 2012 and was bought by a Korean company; the private investors lost practically everything. SolarWorld AG, whose founder Frank Asbeck was called Sun King in the good times, now depends on new investors.

Translation Philipp Mueller

Full story (in German)