Germany's green power push cools in the face of cutbacks, competition

THE German green power revolution is facing hard times because of government cutbacks and stiff competition from Asia.

THE German green power revolution is facing hard times because of government cutbacks and stiff competition from Asia.

In addition, the decision to abandon nuclear power in the wake of the Fukushima disaster in Japan is not having the positive spin-off that German solar companies may have expected.

Some of Germany's biggest and best-known industrial companies are questioning whether they can afford to continue to do business there. A string of recent profit slumps by German solar-cell companies underscores the depth of the crisis for solar business.

One-time industry leader Q-Cells has announced a second quarter loss of almost E355 million ($486.6m) and will shift production to Malaysia and close half its German manufacturing capacity.

Another solar company, Solon, has reported a first-half loss of E63m because of weak demand.

And Phoenix, a solar photovoltaic company, has reported a 60 per cent sales slump to E141m.

Not all of Germany's solar companies are in the red but it has been a dramatic turnaround for a sector that has always had a special status in the country that has led the world in rooftop solar rollout.

But as demand increases, production of solar technology is increasingly moving to China which will soon account for 85 per cent of all solar-cell production.

Germany is still the world's largest solar market, with about 54 per cent of all systems installed, but almost half of all new systems installed in Germany come from Asia.

German manufacturers cannot compete with China on price, but price is not the only problem they face.

The German government can no longer afford to continue its generous rooftop subsidy scheme in the face of falling prices.

The feed-in tariff has been cut from 33c to 28.74c per kilowatt hour, dampening demand.

Meanwhile, German chemical giant Bayer has warned that rising electricity prices may force it to relocate its manufacturing base to China.

Bayer employs 35,000 people in Germany, but chief executive Marijn Dekkers told the German weekly business magazine Wirtschaftswoche that energy prices posed a genuine threat to the company's manufacturing operations in the country.

Mr Dekkers, a Dutchman, complained that Germany, which has the highest energy prices in Europe, was becoming less attractive to energy-intensive sectors such as the chemical industry.

German energy prices are expected to rise following the decision by German authorities to phase out nuclear energy by 2022, making the country the first major industrial power to take the step in the wake of the disaster at Japan's Fukushima plant.

WITH AGENCIES