German Chancellor Angela Merkel’s effort to create jobs in renewable energy is faltering as subsidy cuts and competition from Chinese manufacturers forces the industry to stop hiring for the first time in eight years.
Employment in Germany’s clean energy industry probably will “stagnate” this year after creating about 31,600 jobs a year since 2004, said Claudia Kemfert, senior energy analyst at the DIW economic institute in Berlin. Four German solar companies filed for protection from creditors since December including Q- Cells SE, once the world’s biggest cell maker.
Merkel is paring solar incentives after a boom made Germany the largest global market for the technology, piling pressure on domestic manufacturers as Chinese manufacturers led by Suntech Power Holdings Co. (STP:US) take market share. The forecast underscores the difficulty Germany will have in reaching its ambition to replace nuclear power within a decade.
“The German government is running the German solar industry into destruction,” Hans-Josef Fell, a Green Party lawmaker and one of the inventors of Germany’s renewable energy subsidy system, said April 17, adding that he’s concerned about more “insolvencies, plant closures and job losses.”
Germany led industrial nations in promoting renewables since 2004 with the first above-market rates for solar energy. It prompted the U.S., Britain and Japan to follow with similar initiatives aimed at generating “green jobs.”
In the U.S., President Barack Obama’s ambition for a “Sputnik moment” spurring renewables has crumbled into partisan bickering about whether he was right to subsidize Solyndra LLC before it failed. That’s halted debate on tax credits that wind turbine makers rely on, leading Vestas Wind Systems A/S (VWS) to threaten 1,600 jobs in the U.S. The concerns about green jobs also are resonating in the U.K., suffering its first double-dip recession since the 1970s.
“As major economies face tougher fiscal conditions, indications suggest growth is slowing” for renewables, U.K. Energy Secretary Ed Davey said as ministers from 23 nations met in London on April 25. “New industries could suffer.”
The Environment Ministry in Berlin counted 381,600 people working in the clean energy industry last year, up 4 percent from 2010, a fraction of Germany’s total workforce of about 41 million. Growth in wind and solar jobs helped cut the unemployment rate to 6.7 percent, the least in two decades. The Federal Labor Agency will release monthly jobs data on May 2.
“We’re seeing a major step backward regarding clean-energy jobs because of a lack of strategic industry policy coming from the federal government,” Steffen Streu, a spokesman for the economy ministry in Brandenburg, said by phone on April 18, a day after First Solar Inc. (FSLR:US) said it would close its biggest European plant located in the state. “It was always said that each coal job given up will re-emerge in the renewable sector. That’s not the case at the moment.”
Solar manufacturers are feeling the biggest pinch. German Environment Minister Norbert Roettgen, responding to concerns that a surge in solar installations was driving up the cost of electricity, is planning monthly cuts for subsidies to match the decline in panel prices.
A surge in output from Chinese panel makers such as Suntech have cut the price of a solar cell 67 percent to 48 cents per watt of electricity generated, according to Bloomberg New Energy Finance data. Germany and the U.S. so far haven’t backed calls from companies including Bonn-based Solarworld AG (SWV) to rein in what they say is illegal dumping by the Chinese.
Roettgen said the industry will have to adjust to live with lower subsidies, though he expects employment levels will continue to rise across the renewable energy industry. The government also is providing incentives for wind farms, especially offshore.
“The success story in the job sector continued last year, and everything points to that it will continue this year,” Roettgen said April 25 in Berlin. “If enormous overcapacity exists in the solar sector, this will lead to adjustments that we can’t and shouldn’t stop with excessive subsidies.”
Sixty-two percent of Germany’s photovoltaic suppliers expect to dismiss workers, the VDMA machine makers’ association said on April 2. Its members expect sales to drop as much as 22 percent on average this year.
Q-Cells, Solon SE (SOO1), Solarhybrid AG (SHL) and Solar Millennium AG (S2M) all filed for insolvency since December. Solar Millennium, a developer that had 318 workers in June, fired its remaining 40 employees on Feb. 28.
Blow for East
Eastern Germany, where the solar industry settled to reap state and European Union subsidies meant to make up for the closure of strip mining, has been hit hardest by the collapse.
Q-Cells employs about 1,300 people in Saxony-Anhalt and Berlin. First Solar, the biggest U.S. solar manufacturer, said on April 17 it will close its manufacturing site in Frankfurt an der Oder in Brandenburg by the end of the year. That plant employs about 1,200.
“Thousands of solar jobs are at risk,” said Joerg Mayer, managing director of the BSW-Solar lobby. Companies that employ 110,000 people are bracing for a “drastic downturn.”
Job cuts may extend to the wind energy industry, which employs about 100,000. Turbine makers including Siemens AG (SIE), Vestas and Hamburg-based Nordex SE (NDX1) are seeking to reduce costs as they lose market share to Chinese rivals Xinjiang Goldwind Science & Technology Co. (2208) and Sinovel Wind Group Co. (601558)
‘Struggle’ for Wind
“The wind industry struggles with low margins,” Felix Ferlemann, chief executive officer of Siemens’s wind power division, said April 16. “This is not a sustainable situation. We are under pressure to reduce costs quickly.”
It’s not certain that all of the bankruptcies in Germany will lead to significant job losses.
Solon was snapped up by Middle Eastern solar-cell maker Microsol in March. The Berlin-based company, which since mid-2011 reduced its workforce by 25 percent to about 600, had to fire “only 18 employees,” said Karin Evers, a spokeswoman.
“I had expected a stagnation in the solar sector for the past years, and it never materialized,” said Marlene O’Sullivan from the German Aerospace Center’s Institute of Technical Thermodynamics, which helps compile the renewable energy employment data for the government. “Any forecast is clouded by uncertainty. If the German solar market collapses by 50 percent, that doesn’t mean 50 percent of jobs will be gone.”
Q-Cells shares climbed 21 percent in Frankfurt on April 23 after its administrator said several financial and strategic investors had shown interest in the company.
The DIW predicts the industry will create jobs in the long run. It estimates renewable energy companies may employ about 600,000 in 2025.
“Innovative companies will still have a chance, they have to go for research and education and export markets,” Deputy Environment Minister Katherina Reiche said in an April 19 interview. “If a company just counts on subsidies, it can’t be successful as a global player.”
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