Europe’s Solar Industry Is Now Collapsing Due To Cut-Price Competition From China

Europe’s Solar Industry Is Now Collapsing Due To  Cut-Price Competition From China

In recent times China has been giving Europe’s solar power industry a run for their money. They have since driven SolarWorld, a German-based company to insolvency and further reduced the overall profits of SMA Solar, the world’s largest maker of solar inverters feeding solar power to various electricity networks.

This stern competition saw shares in SolarWorld drop by about 8% on Thursday alone, leaving the company to issue a statement saying that they would now need to file for insolvency. Chief Executive Officer, Frank Asbeck also issued a further statement acknowledging the poor step forward, not just for SolarWorld but also the solar industry as a whole in Germany [1].

Regardless of the massive government subsidies that aided Europe in building their well-known global solar industry, even industry giants like SMA Solar reported a drastic drop in their first quarter profits by about 90 %. Overtime, the reduction in government support has led to a decline in the industries reproducibility and this coupled with the rise in Chinese competitors like JinkoSolar, Trina Solar and Canadian Solon have further contributed to the decline in their popular European counterparts like Q-Cells, Conergy and Solon [2].

China continues to dominate

While Europe had hoped that cutting costs would help them once again gain momentum, they were wrong as China has continued to grow, now becoming the world’s largest market for solar products, having encouraged leading local firms to increasingly supply other regions with products. This has not only resulted in cheaper prices but also affected Europe further [1]. SMA Solar has since commented on this, stating that China has raced to the forefront due their intensive pricing policies, their attempts to tap into foreign markets and their abilities to overcome and compensate any form of shortcomings in the sales and services sector. SMA Solar further said that they hoped to expand their energy management businesses in March in the hopes that the market would then show higher entry barriers for their Chinese competitors [3].

In addition to statements issues by SMA Solar, the popular German wind turbine maker; Nordex also issued a statement saying that its intake of orders in the first quarter had also dropped drastically by about 40%. They too confirmed that this was most likely due to the increasing competition within European markets. That being said it was also noted that their shares dropped by 6% to the bottom of Frankfurt’s technology index while SMA shares dropped by a further 2% [2].

References
[1] Steitz, C. 2017. Sharenet
[2] Prodhan, G and Potter, M. 2017. Reuters
[3] Steitz, C. 2017. Energyworld

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