European Solar Industry Boom, Meet Bust

Cody Good
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Courtesy of Tenor

The EU is quickly learning that the continuously falling price of solar is not all sunshine and rainbows—rather, that the booms and busts of the energy industry can be cruel.

What happened: SolarPower Europe, a trade group for the European solar power industry, has written a letter warning the EU government that some of its members are being pushed to bankruptcy due to a “perfect storm” brewing in the photovoltaic (PV) sector.

SolarPower Europe reports a price drop in PV modules of over 25 percent to below pre-pandemic levels forcing EU manufacturers to devalue their stocks and enter into insolvency.

  • The writing is on the wall liquidation orders as Norwegian Crystals, a PV module manufacturer, recently filed at the end of August.

The perfect storm: Strong demand build up during the pandemic combined with the European energy crisis led to large investments into PV supply chains, particularly from China. Then, between a slowdown in demand during Q3 of this year, permitting and financing woes, and an oversupply of much cheaper Chinese solar products, the EU industry has been put on the ropes.

  • According to the Financial Times, the cost of manufacturing solar modules in Europe is more than double the current spot price for solar modules.

The bloc current gets nearly three quarters of its solar imports from China.

Big picture: Renewable supply chains in Western countries are currently dominated by Chinese products, a situation all too familiar to Russia and its natural gas exports. Cheap products are great, but energy security in the form of diverse supply chains that don’t support forced labour weighs heavily on the West.

With the first major boom-bust cycle being experienced by the European solar industry, there might be new bumper stickers on Peugeot EVs that read: “Please God, let there be another solar boom… we swear not to throw it away this time.”