China dominates the world market for photovoltaic technology.
Germany is therefore also dependent on manufacturers from the People's Republic for its energy transition.
Capacities are now to be returned to the EU.
Frankfurt/Beijing – The sad story of China and the German photovoltaic industry is more than ten years old.
Who still remembers Solarworld, Q-Cells or Conergy?
They were the pioneers of the German photovoltaic boom: in the noughties, Germany produced more solar cells than any other country in the world.
Until China's solar manufacturers such as Suntech, Yingli Solar and Trina Solar entered the scene in 2010: Thanks to state subsidies and access to cheap raw materials and labour, they were able to offer their solar systems at unbeatable prices worldwide.
That made photovoltaics affordable in one fell swoop – but at the same time meant the end for German companies.
Because Germany and the EU did not counter that with their own aid for the sector.
On the contrary: Peter Altmaier, Minister for Economic Affairs at the time, even reduced the existing funding under the Renewable Energy Sources Act in Germany.
And so the production capacities for solar systems shifted from Europe, but also from Japan and the USA, to China.
“China has invested over US$50 billion in new photovoltaic supply capacity – ten times more than Europe – and has created more than 300,000 jobs across the photovoltaic value chain since 2011,” writes the International Energy Agency IEA.
China dominates the world market for photovoltaic technology
The result: In no other segment of the energy transition is the dependency on China as great as in photovoltaics.
This dependency ranges from the raw material polysilicon through intermediate products such as ingots and wafers to finished solar cells and the complete photovoltaic module.
When it comes to wafers – thin silicon discs that generate electricity with the help of the sun's rays – China's world market share is an incredible 97 percent.
"Over the past five to six years, this has meant that everything surrounding - i.e. equipment or consumables - settled in China and now comes from there in a similarly high percentage as the wafers themselves," says Jochen Rentsch, solar expert at the Fraunhofer Institute. Institute for Solar Energy Systems.
The consequences for the planned reconstruction of a domestic industry are dramatic.
“If you are looking for equipment for solar wafer production, for example, you will not find a competitive non-Chinese manufacturer at the moment.
If we want to implement the structure quickly, we would have to rely on China," explains Rentsch in an interview with
To put it simply: we need machines from China to free ourselves from our dependence on China.
Solar modules: Production is increasing, but components still come from China
In view of the energy crisis and climate change, photovoltaics are in vogue.
According to the Federal Statistical Office, around 2.5 million photovoltaic systems were installed on roofs and properties in Germany in November 2022, 14 percent more than in the same month last year.
The share of photovoltaics in German electricity generation increased by three percentage points to twelve percent in 2022.
For 2030, the federal government plans to triple the capacity to 215 gigawatts.
Ten years later it should even be 400 gigawatts.
This requires a lot of equipment.
Fortunately, the production of solar modules in Germany has recently increased significantly, as the statisticians report.
In the first nine months of 2022, 2.9 million units were built, around 44 percent more than in the same period last year and even 75 percent more than in the same period of the pre-Corona year 2019. But it is clear that the companies with raw materials and preliminary products have to work from China.
In addition, many complete solar systems are still imported - and 87 percent of them came from China in 2022.
Why China is problematic as a country of origin
Since the Russian invasion of Ukraine, diversification of purchasing and sales markets has been the order of the day, across all economic sectors.
Like Russia, China is an autocratic state that Berlin now believes is capable of triggering a crisis – for example by attacking Taiwan – or using export restrictions to exploit its market power.
Beijing is already considering making it more difficult for solar technology to be exported to the world.
A legislative process is underway that would force foreign buyers into complicated approval processes for a wide range of products, from wafers to solar array production machines.
It is still unclear whether the law will come into force.
But an export ban from China for parts of the photovoltaic value chain would definitely lead to delays in the development of a photovoltaic industry in this country, says Rentsch.
"Because the EU would then have to ramp up this industry itself - and that takes time."
But that's not even the only problem.
Almost 80 percent of the most important raw material, polysilicon, also comes from China - and almost all of the factories for this are in Xinjiang, where Beijing has been accused of serious human rights violations against the Muslim Uyghur minority.
In addition to the temporary imprisonment of up to a million people in re-education camps, this also includes forced labor in factories in the region.
The US has therefore banned the import of photovoltaic systems and components from Xinjiang unless importers can prove that their supply chains are free of forced labor.
ways out of dependency
The EU has not yet taken this step.
It wants to set up its own solar industry and needs the components from China for this.
In December 2022, EU politicians and European photovoltaic manufacturers founded an initiative called the
Solar PV Industry Alliance
, which aims to build up 30 gigawatts of photovoltaic production capacity in Europe by 2025, along the entire value chain.
That would be six times the current capacity.
The new alliance is to help with the financing with the help of a solar fund.
According to Rentsch, technological know-how is still available.
“It is important to create favorable conditions,” says the expert.
“The EU has already initiated this by allowing the member states to specifically promote energy transition technology companies.
This is normally prohibited by EU competition law.
For example, the member states can use funds from the 'Green Deal' pot.
They can also try to set up industrial clusters with the help of targeted location promotion.” Challenges remain.
According to S&P Global Commodity Insights, the production of solar modules in Europe costs about 50 percent more than in China, mainly due to higher electricity prices and labor costs.
Manufacturers are therefore pushing for government support and clear prospects.
But there is hope.
One example is the Swiss manufacturer Meyer Burger, which also operates locations in Freiberg, Saxony, and in Thalheim near Bitterfeld.
The company is growing strongly, as the management announced this week.
It was able to more than triple its net sales in 2022 and wants to expand the solar cell capacity in Thalheim.
In 2022 and early 2023, Meyer Burger signed contracts with two Norwegian suppliers to supply high quality silicon wafers with a low carbon footprint.
And so, very slowly, a supply chain is emerging in Europe again.