The wave of bankruptcies in the solar industry continues unabated – and once again, investors lose a lot of money. Meanwhile, Germany’s large solar companies have lost almost 25 billion Euros on the stock market.
Yet again another failure of a solar company: the solar system builder Centrotherm has made the application for insolvency on Wednesday. “We are not insolvent,” laboured a spokeswoman for damage control. The share price collapsed by 80 percent to 0.42 Euros. One analyst commented: “Another solar bites the dust”, after the song “Another One Bites the Dust” by the rock band Queen.
The case of Centrotherm is the latest example in a series of bankruptcies that has hit the industry. In recent months, dozens of solar companies got into trouble, including the former market leader Q-Cells.
It is not only the employees who are victims of bankruptcies. The crisis in the industry has also hit thousands of green investors. Solar stocks were once seen as the big hope of the stock market. The future belonged to solar energy, it was said. In the first years, the share prices of solar companies increased dramatically. For most solar shares the peak was reached in late 2007. A share of Centrotherm cost around 67 Euros back then.
At its peak, the large German solar companies – SolarWorld, SMA Solar, Q-Cells, Conergy, Solon, Solar Millennium, Centrotherm, Phoenix Solar – – were worth more than 25 billion Euros, according to calculations by Handelsblatt online. Today, all together have only a market capitalization of 1.12 billion Euros.
Of this amount, 863 million Euros alone belong to SMA. The company based in Northern Hessen is the only one whose stock price has not totally crashed. The others have lost more than 97 percent of their value since the peak.
No chance against the low-cost competition
The reason for the decline: the balance of power in the solar market has changed. The cheaply-manufacturing competitors from China, such as Yingli, Trina Solar and Suntech go with predatory pricing in the market. The German companies cannot compete with the companies from the Far East because the production costs of German companies are up to 15 percent higher than those of the Asians.
In addition, the German companies made mistakes. For years, they failed to develop new products, but relied on generous government subsidies. But the state cannot and will not afford those subsidies any longer. “Many German companies did not have a clear and viable business model and they relied on too many technologies,” says Wolfgang Weger, energy expert at the consulting firm Oliver Wyman.
Particularly glaring is the case of Q-Cells – the company that like no other represents the rise and fall of the German solar industry. Q-Cells was once among the world’s leading solar cell manufacturers. On the stock market, the company was evaluated with more than 11 billion Euros. Now its market capitalisation is a just 23 million Euros. In spring, Q-Cells had to file for bankruptcy. The insolvency administrator is looking for an investor to continue operation.
According to a study by the consulting firm Oliver Wyman, “in the future, only about ten manufacturers will dominate the global solar market.” That a German company will be among them is unlikely.
Translation Philipp Mueller