Move in full swing
One of the latest companies to move beyond the Antarctic is Swiss solar module and cell manufacturer Meyer Burger, which closed its plant in Freiberg, Germany, in mid-March. Despite the efforts of both the company and the German government, their negotiations ended in failure. The closure of the plant caused a 10% drop in European production, in addition to the loss of 500 jobs. The company will move its production to the US, where it plans to set up two factories, one for solar panels in Arizona and the other for solar cells in Colorado. Freyr, a Norwegian company that produces lithium-ion batteries, has also decided to follow the same route. The latter has ended funding for a plant in Norway and in early February this year, according to an official statement on its website, announced it was relocating to the US, where it plans to focus on its plant in Georgia.
Lack of support
Both of these companies only add to the list of other European companies that, due to lack of support and subsequent financial problems, are closing their factories or moving their business to other continents. According to Reuters, at least 10 companies have reported financial difficulties in the last year. The German Ministry of Economic Affairs is aware of the seriousness of the situation and is trying to identify all financing options, as is the Norwegian Ministry of Trade, which has introduced a new industrial policy on green energy. The European Union is also lending its support, launching a voluntary charter in mid-April this year for companies and European governments to ensure that a proportion of solar panel purchases are domestically produced. However, Solar Power Europe, the coordinating association, warns that the charter is not legally binding. Rather, Michael Bloss, a Member of the European Parliament, is of the opinion that the European Commission should set up a fund in order to help companies buy back unused panels that have been manufactured in Europe. While, for example, the Swedish company Northvolt has received help from the German Government in an effort to keep production in the country, Meyer Burger has not received support. Political disagreements over the level of financial support, then, are forcing companies to look for alternatives outside Europe.
A long-standing cry for help
Meyer Burger's exit from the European market is only the beginning, according to Johan Lindahl, Secretary General of the European Solar Manufacturing Council (ESMC). European manufacturers have been asking for support for some time now, and the reason is simple - huge competition from China with cheap products, which is pushing European manufacturers' prices down. The Chinese Government is putting huge amounts of money into promoting green energy, whether it is photovoltaics or electric cars, and is also expanding beyond the country's borders. It currently accounts for 80 per cent of global solar energy production. According to researchers at Wood Mackenzie, the panels are half the cost of producing them in Europe, where the price is 22 cents, while being comparable to European products. Cheap production allows products to be sold at better prices, which means that seemingly expensive products from Europe are not in such demand and manufacturers have unused solar panels, for example, sitting in warehouses. As a quick fix, the European Commission established the Net-Zero Industry Act to help boost domestic production to 40 percent by 2030 by speeding up bureaucratic procedures and further improving conditions. One of the regulations is that products sold in the EU must not come from forced labour. Despite the above-mentioned steps, which could bring about change, it must be reckoned that improvements will only be visible in the future. It will not help the European market immediately.
Better conditions in the US
It is no wonder that companies are attracted to the American continent. The Inflation Reduction Act (IRA) signed into law there in 2022 supports both inflation reduction and a 40 percent reduction in emissions by 2030. This law includes investments in green energy not only at the industrial level, but is intended to help households and communities, revitalize industry and increase employment in areas such as Georgia, South Carolina or Texas. Unlike the European law, the US government offers grants, loans, tax breaks or other incentives for this purpose. Such steps eventually lead to decisions by European manufacturers to change their field of activity and move production across the pond.
Impact on localities after companies leave
Plant closures not only have a widespread impact on the European economy, but can also cause particular problems at local level.The German city of Freiberg has been functioning since the end of the 20th century, mainly thanks to financial support, which has expanded industry and created new sectors.However, in 2010, Chinese competition expanded into the area, which also affected the city considerably. It took 10 years for the German government to amend the subsidy cap and for both demand and industry to take off again. As Reuters reported, the plant of a local bankrupt company was taken over in 2021 by Meyer Burger, which for a time was the largest employer in the city.The company's departure, therefore, may once again cause problems for residents or surrounding towns and set them back in time.
Olivia Lacenovaá, principal analyst at Wonderinterest Trading Ltd.
