Sun appears to be setting on the solar energy sector in Germany

Decline in price of panels hits industry once expected to be a major business

REUTERS DECEMBER 17, 2011

When Tino Blaesi joined the solar sector gold rush, he thought his career was made. Seven years later, he is looking for a job outside the industry after his company slashed more than a third of its workforce in one day.

Workers in Germany's once booming solar energy industry face a shakeout of major proportions following declines in the price of solar panels over the past year.

Cuts in subsidies for solar energy, weaker demand for panels and fierce competition from cheaper Asian rivals are eating into what was once the world's biggest hub for the production of solar cells, taking the shine off an industry that was effectively born in Germany.

A decision by the German government earlier this year to phase out nuclear energy has done little to reignite the sector. The resulting power gap is likely to be filled by coal and gas rather than solar and wind energy.

"I don't want to work in this sector anymore, I'm sick and tired of it," said 44-year old Blaesi, who worked for seven years at Vogt Group, a German support services firm that deals with the planning and logistics for solar plants.

Berlin-based Solon, Germany's first solar energy company to go public, said on Tuesday it would file for insolvency, becoming Germany's biggest casualty so far.

SMA Solar, Germany's top solar group, said last month it would lay off up to 1,000 temporary workers by the end of the year, citing weak demand for its invertors, a vital piece of equipment in solar systems.

"It's the worst year the industry has seen in its short history," Andreas Haenel, chief executive of German solar company Phoenix Solar said.

The bloodletting is particu-larly bitter since most of the industry's jobs are located in the formerly communist eastern part of the country, a region that has suffered from an exodus of young, educated people for two decades.

Legislation introduced a decade ago by a centre-left coalition of Social Democrats and Greens led by then-Chancellor Gerhard Schroeder offered generous incentives and turned Germany into the world's largest market for solar panels, sparking thousands of startups, some of which became global leaders.

But the incentives, because they were focused on energy production rather than panel manufacturing, also benefited cheaper Asian rivals, which elbowed their way into the market and drove down prices.

The crisis has led to a wave of bankruptcies in the United States, notably of panel maker Solyndra LLC, showing that European solar players are not the only ones suffering from the industry glut.

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