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Fri Apr 27, 2012, 11:42 PM

Eastern Germany Hit Hard by Decline of Solar

In 2006, solar-panel manufacturer Conergy moved into the never-used computer chip factory, joining Odersun, already headquartered in the city. In 2007, the United States solar giant First Solar opened a factory as well, followed by a second one last year.

Now, though, the future suddenly looks decidedly dark. Odersun declared bankruptcy in March and Conergy, while pledging to return to profit this year, has seen its share price lose 99.6 percent of its value in the last five years. Many doubt the company will survive. Worst of all, however, was the announcement earlier this month that First Solar was closing both of its factories in Frankfurt an der Oder; 1,200 people will soon be jobless as a result.

"We saw the solar industry as a chance to reindustrialize the region and invested significantly in incentives," Frankfurt an der Oder Mayor Martin Wilke told SPIEGEL ONLINE. "This is a serious setback. It is a very difficult situation."

Frankfurt an der Oder's pain is far from an isolated case. The solar industry, once a beacon of hope for an eastern German economy that struggled for years to revive following reunification in 1990, is undergoing a brutal phase of consolidation. There is a massive surplus of global production capacity and the bad news for eastern Germany keeps getting worse. Last December, the Berlin company Solon, which employed hundreds in the Baltic Sea coast town of Greifswald, filed for bankruptcy. Aleo-Solar, based in Prenzlau north of Berlin, lost over 30 million (about $40 million) last year after turning a profit of 31.8 million in 2010, leading many to fear for their jobs there.

http://www.spiegel.de/international/business/0,1518,830188,00.html

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Response to FarCenter (Original post)

Fri Apr 27, 2012, 11:58 PM

1. if there is a "massive surplus of global production" then solar should be dirt cheap right now! nt

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Response to msongs (Reply #1)

Sat Apr 28, 2012, 10:31 AM

2. The price of solar is cheap relative to its cost, which is why companies are getting out

Only China can make money on manufacturing solar panels.

Germany had big subsidies for solar installations, artificially inflating the price that buyers of solar panels could pay.

This inflation of the market incented companies in Germany, the US, and elsewhere to go into the business.

The idea was that this would "prime the pump" for solar, since companies would gain experience and reduce costs as volumes went up. This appears to have worked only for China. The rest of the world is left with companies that can only produce at costs that require subsidized prices.

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Response to FarCenter (Reply #2)

Sat Apr 28, 2012, 10:36 AM

3. The inflation of the market was false/created then by whom? What role did big oil play?

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