How the German Government promotes solar industry

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FRANKFURT AN DER ODER: Until the green energy company Conergy came along, the empty shell of a silicon chip factory in this city on the Polish border was just another monument to failed economic promises in Eastern Germany.

Now the factory, left standing after a consortium including Intel and investors from Dubai pulled out, is humming with activity again. Blue-helmeted workers are adding a second floor and installing modern silicon cleaning machines. When it is completed in early summer, Conergy's newest solar wafer, cell and module production plant will also be one of the world's most modern.

"It's like winning the lottery," said Martin Patzelt, the mayor here. "An absolute win-win."

Although hardly famed for a sunny climate, Germany is currently the largest solar market in the world, accounting for 55 percent of global production of solar electricity, according to Solarbuzz, a research and consulting company.

As a result, the country also is becoming home to a "solar valley" of green companies, spurred by a government subsidy program whose success has inspired copycat initiatives from France to Greece. German and foreign solar companies are setting up production facilities at a rapid pace to meet growing demand for solar panels and modules around the world.

But some analysts are cautioning against euphoria surrounding an energy source that has yet to prove its cost-effectiveness without government support - especially in a cloudy country like Germany.

"The consumers calculate sharply, and if it's not beneficial for their pocket anymore, then they won't do it," said Matthias Fawer, a sustainability analyst at Bank Sarasin in Zurich.

The Renewable Energies Act, a landmark measure passed in 2000, committed Germany to doubling the percentage share of renewable energy in its total energy supply by 2010. It also created a market for such renewables as solar and wind power with the help of a generous pricing schedule.

European Union funds aimed at economically distressed regions helped steer many of the new factories to the former East Germany. In the past five years, 21 solar cell production or research companies, including Germany-based global leaders like Q-Cells and SolarWorld, have established operations in the region - in areas known since reunification for their battles with unemployment, rightist violence and the flight of young workers to more prosperous environs.

"Germany's law made it possible for us to have so much success, and now we were able to give something back," said Stefan Heyn, Conergy's project manager for the Frankfurt operation.

Over all, the solar industry had sales of €3.8 billion, or $5 billion, in Germany last year, and is growing at a rate of about 20 percent a year. The industry employs more than 53,000 people in Germany and expects to add 5,000 new jobs this year, according to the German Solar Association.

That makes solar, alongside the automotive and high-technology sectors, "definitely one of the bigger industries in the East," said Ralf Segeth, a renewable energies specialist at the Industrial Investment Council, which is financed by the six former East German states and the federal government. "It's certainly the fastest growing."

Proximity to top technology research institutes like the Fraunhofer Institute, which has several offices in Eastern Germany, has helped lure businesses involved in the production of solar wafers, cells and modules, said Carsten Körnig, director of the German Solar Association.

In the next two years, seven companies will set up production facilities in Brandenburg, Saxony and Berlin, generating thousands of new jobs in a country where the unemployment rate has hovered around 10 percent since 1994.

Yet concerns remain about the long-term viability of solar power.

Solar continues to be one of the more expensive forms of renewable energies, and bottlenecks in silicon production globally last year raised prices and reduced demand, according to a study by Bank Sarasin.

"It was a bit of a disappointment in the last two years because everyone expected prices to go down," said Fawer, the analyst at Sarasin.

Under the German law, electricity grid operators must pay the providers of solar energy, whether private households or solar farms, 50 cents a kilowatt hour. The cost is 30 cents above the price for traditional energy forms. A fixed tariff is guaranteed by the law until 2020, but it must come down 5 percent each year.

Fawer said government pressure to bring solar energy closer to price parity with other energy forms will increase when lawmakers take another look at the act this year. But he and other industry analysts say they believe that there is little danger that the industry will lose the government support that has helped it grow.

"Germany is a technology leader and there are jobs created, and from a political viewpoint, it's important," Fawer said.

But solar companies in Germany, a country that had 1,780 hours of sunshine on average last year - compared with some 2,800 hours in Spain - are aware that their future may well lie abroad. SolarWorld, Q-Cells and other companies have been investing in smaller companies and production facilities in Southern Europe and the United States.

But even as they expand outside of Germany, solar industry executives remain adamant that they will not be abandoning their production and research facilities in the east of the country.

Conergy, which is based in Hamburg, will be joined in coming months in Frankfurt an der Oder by the U.S. company First Solar, based in Phoenix, Arizona, and a local company, Oder Sun.

By the time the facilities are up and running, it is estimated that close to 1,500 jobs will have been created in a city with 5,645 people out of work.

Patzelt, the mayor, said that there was too much at stake for the region to turn back. After the Intel project failed, he streamlined municipal processes like building permits and water connections, and formed an agency that responded directly to each investor's needs.

"We told ourselves we needed to rely on our own strengths," Patzelt during an interview. "In order to react more quickly we had to reorganize."

More than 2,000 people jammed the hall in which First Solar, Conergy and others set up shop during a job fair in Frankfurt an der Oder in December. An additional 3,000 waited outside.

By the time it hits full capacity within the next year, the Conergy plant in Frankfurt will produce 1.2 million solar modules a year. The city, it seems, is already reaping the benefits.
Article from International Hearld Tribune (Saturday)

"There are many who are trying to get jobs here at the moment," said Sylvia Lehmann, a local resident recently hired by Conergy. "The atmosphere has improved greatly."

Körnig, the German Solar Association director, said there was reason to believe the good times would continue.

"There are many different synergies in these solar clusters," he said "There will be a permanent exchange between them. What reasons should there be to leave?"

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http://www.iht.com/articles/2007/03/30/news/wbsolar.php?page=1

Capt'n Midnight

Spain is short distance away and since the 1st of jan new buildings over a certain size ( not houses ) there must have a certain amount of photovoltic installed. So not having a local market is not a problem for the German industry.

In an ideal world you would use a big lens/mirrors to concentrate the sunlight to get the temperature needed to melt the silicon

10-10-20

That's great about Germany, but there is a critical world-wide shortage of manufactured silicon and approximatly 35% of this is currently being used up on solar panels, up from 8% 5 years ago, putting pressure the electronics industry and such...
I wonder how they plan to mitigate this?

http://www.ft.com/cms/s/e50784ea-78cb-11db-8743-0000779e2340.html

silverharp

10-10-20 wrote:

That's great about Germany, but there is a critical world-wide shortage of manufactured silicon and approximatly 35% of this is currently being used up on solar panels, up from 8% 5 years ago, putting pressure the electronics industry and such...
I wonder how they plan to mitigate this?

http://www.ft.com/cms/s/e50784ea-78cb-11db-8743-0000779e2340.html

Isn't the future meant to be plastic based solar cells, maybe one of those things thats always just around the corner

10-10-20

That's the long term future, short term it's still silicon and glass.