Swiss Investor Takes on China in Bid to Reboot EU Solar
(Bloomberg) -- A Swiss company is buying up cheap solar assets in a move to reclaim a key link in Europe’s renewable energy supply chain from China.
Meyer Burger Technology AG said it’s planning to restart module production in Germany’s “Solar Valley” from next year to feed growing European Union demand for green energy. Over the last decade, EU manufacturers have been crushed by Chinese panel makers that have grown to dominate the global market.
“I think it’s a problem that the world leaves solar panel production to China,” said Meyer Burger Chief Executive Officer Gunter Erfurt in an interview.
The company bought the stock and patents of Germany’s bankrupt Solarworld AG and rented a factory south of Berlin to build the solar modules. It’s raised 165 million Swiss francs ($180 million) to revive manufacturing, with a potential output covering almost a third of annual new European panel demand by the middle of the decade.
Researchers warned in May that the bloc has to massively ramp up solar generation in order to meet its 2030 climate goals. Bringing back manufacturing capacity from China could help spur employment and the development of new automated-manufacturing technologies, according to the report by the European Commission’s Joint Research Centre.
Meyer Burger, based outside of Bern, paid just 12 million euros ($14 million) for the assets of Solarworld, a company which achieved a peak market value of about 4.6 billion euros in 2007. Erfurt grew up in the mining region nestled along Germany’s border to the Czech Republic and was formerly a managing director at the defunct panel maker.
Solar Valley, an hour’s drive south of Berlin, is an industrial reminder of Germany’s solar boom-to-bust years. In the heyday of module production in the late 2000s, the region boasted 3,500 workers, most employed at Q Cells SE. Insolvent by 2012, only a fifth of that former workforce lingers in Germany.
Meyer Burger will seek to narrow Chinese advantages while trying to stay a nose ahead in technological superiority, according to Erfurt, who said that engineering talent in eastern Germany is now more cost competitive than in Shanghai.
EU policy makers too have been trying to support local production -- last month renewing tariffs as high as 75% on solar glass from China. However, that move drew criticism from Meyer Burger’s CEO, who said it could raise the price on panels that rely on Asian supply chains.
The tariffs on solar glass are “a problem and not an advantage,” Erfurt said in an email on Tuesday.
Current solar growth rates in Europe lend a measure of credence to Erfurt’s gamble. Led by Spain, the trade bloc added 16.7 gigawatts of solar last year, a jump of more than 100% on 2019. Counting on solar to feed power to electrical mobility and heating, Germany last year almost doubled its target for solar to about 98 gigawatts by 2030, more than the U.K.’s current total electricity capacity.
A 2019 study commissioned by Meyer Burger, and undertaken by the independent Fraunhofer Institute, suggested that the company’s future panels may be three years ahead of the competition, potentially generating more energy per square meter than similar technologies.
Still, Meyer Burger’s plan is ambitious, said Jenny Chase, the head of solar analysis at BloombergNEF.
“Solar manufacturing is an incredibly difficult business to make money, and retrofitting old factories has not always historically been as easy as the firms doing it hope,” she said. Chinese mono modules are currently 19 US cents a Watt, so Meyer Burger’s units would still have to be “very, very cheap,” according to Chase.
Meyer Burger rose as much as 3.5% and traded at CHF0.158 at 3:30 p.m. in Switzerland. While its shares are “only suitable for risk-tolerant investors” the stock is “clearly undervalued,” wrote Zuercher Kantonalbank analyst Richard Frei in a note this week.
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