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Germany’s residential solar panel industry is facing “a lot of stress” following a wave of bankruptcies and layoffs in Europe’s biggest and most important market for the sector.
Many companies that distribute and install roof panels have gone bankrupt, taken over or forced to accept changes in strategy.
While the turmoil and overcrowding has led to a sharp drop in prices for consumers, industry experts have hit sentiment among investors and warned it could damage a sector vital to meeting Europe’s huge demand. Climate targets.
Dries Ake, deputy CEO of the industry lobby group Solar Power Europe, described the situation as “not a positive trend”.
“This is somewhat of a consolidation after a few exceptional years,” he said. But he added: “You can’t have a green transition with red numbers. The sector must be profitable.
In the year Demand for photovoltaic panels in Germany has increased due to Russia’s full-scale invasion of Ukraine in 2022, as consumers face higher energy bills. Solar energy.
Manufacturers and distributors are growing rapidly, increasing production and distribution capacity, hiring employees and training installers.
Germany In the year By 2023, 15 gigawatts of solar capacity will be installed by Solar Power Europe – up from 7.4GW last year and a record for any European country.
Dina Darshini, head of LCP Delta’s solar and battery division, said solar startups in Germany were “expecting double-digit growth rates to continue and each of them to individually capture significant market share.”
But in fact the opposite has happened – in 2024 the market has shrunk, there are many players and everyone is trying to compete for a small market.
In the year Germany is questioning its target to install 19GW of new solar power annually between now and 2030 as Europe’s biggest economy aims to become carbon-neutral by 2045.
After five years of rapid growth across all types of solar, growth in the world’s fifth-largest photovoltaic panels market will slow in 2024. Germany added 16GW in 2024 compared to 15GW in 2023 and 7GW in 2024.
The drop in demand in the Belgian and Dutch solar markets – partly caused by higher interest rates pushing up the cost of consumer financing deals that are often part of solar packages.
At the same time, the European market has become increasingly competitive with cheap solar panels and Chinese components. That has put pressure on European manufacturers such as Switzerland’s Meyer Burger, which announced in September that it would do so. He cut a fifth of the workforceAnd squeezed the edge of companies that provide roof installations. Generous government subsidies have also gradually decreased.
In the year Startup Zolar, which has raised nearly €300mn in funding since it was founded in 2016, announced in September that it would sell solar panels to homeowners and cut more than 50 percent of its 350-strong workforce.
Chief executive Jamie Heywood described the “unique” situation where the cost of installing solar systems has fallen significantly, but lower energy prices mean customers have less incentive to turn to solar panels. “While customers can save money over the life of their system by moving to solar, the payback is less attractive than it used to be,” he told the Financial Times.
The company, whose investors include Singapore’s sovereign wealth fund GIC, is committed to serving thousands of small local businesses, which account for 80 percent of Germany’s solar installation market. “While I’m excited about the opportunities in the loader space, it was a tough decision to make,” Heywood said.
Zolar is not the only company that has struggled. Berlin-based solar panel supplier Eigenson has declared bankruptcy at the end of 2023. ESS Kempfle, a solar panel supplier in southern Germany, warned of a “dark cloud” over the industry after it announced restructuring plans in August, including job losses.
Industry insiders expect Germany’s biggest players, which include popular startups such as Enpal and 1Komma5, to survive the turmoil. But they are not free from the pain.
Backed by SoftBank and TPG and valued at €2.2 billion by 2023, Inpal’s growth plans have been hit by a “tough year”, said the company’s “chief evangelist”, Wolfgang Grundinder.
He said that the company was able to double its market share in the solar sector by using the ups and downs, and by switching to heat pumps and smart meters, he benefited by opening a lighting trading platform.
However, Gründinger cautioned, “If more companies go bankrupt, it’s not good for us either.” Investors have seen it: the market is reeling. And you can’t plan.
Another big player is 1Komma5, estimated at €1bn by 2023, which bills itself as a one-stop shop for residential green energy, including solar systems.
According to CEO Philipp Schroder, despite the difficult market, the company’s orders in 2018 They continue to grow in 2024, thanks mainly to AI-driven devices that improve energy use in the home. But it has scaled back M&A for the time being, focusing instead on batteries as well as energy optimization to “grow more aggressively.”
Still, there were some bright spots for the solar sector in 2024. Demand for small photovoltaic systems installed on balconies continues to grow.
In Germany, 3 million residential roofs are equipped with solar systems, but industry figures remain optimistic in the medium to long term, with room for more.
“We expect the market to recover,” said LCP Delta’s Darshini, pointing to untapped demand from corporate customers and increasing electrification as German households and businesses continue to decarbonise.
It is unlikely to return to the highs of 2022-23 – unless there is a major stimulus package or event. It is more likely to see a gradual increase towards 2030.
That echoed Fabian Heilmann, a Berlin-based venture capital investor whose Ainu fund backs companies including Zolar.
Even with the threat of the re-election of Donald Trump and the rise of populist parties in Germany, he said that “the transition of power will not be reversed” and that “the market has been intact since the middle of the long term”. But he warned: “There will be a lot of stress over the next 12 to 36 months.”
