Germany’s once-thriving solar industry has hit a rough patch, with domestic manufacturers and PV system providers facing significant challenges.
After a surge in solar power installations during 2022 and 2023, driven by the energy crisis, the growth in Germany’s solar capacity additions slowed in late 2024. Residential installations were hit the hardest as demand waned.
During the energy crisis, households rushed to install rooftop and “balcony solar” systems, motivated by soaring power prices. However, by 2024, moderating energy prices and rising consumer interest rates discouraged many from making similar investments. The higher upfront costs, coupled with lower power prices compared to the crisis years, made solar systems less appealing for many homeowners.
This decline in demand left German solar companies struggling with reduced revenues. Domestic firms also faced tough competition from Chinese manufacturers, whose lower-priced products further pressured the market. Many German firms had to sell their products at prices below production costs, deepening their financial troubles.
As the industry grappled with these challenges, some companies declared insolvency, while others slashed jobs or restructured their operations to survive.
Insolvencies and Job Losses
Several major players in Germany’s solar sector were hit hard in 2024. Photovoltaic (PV) systems provider ESS Kempfle filed for insolvency in October, following PV project developer Fellensiek, which faced liquidity issues and filed a month earlier. Solarmax, a supplier of residential PV storage systems and inverters, also entered provisional insolvency in November, unable to compete with the low prices set by Chinese competitors.
Job cuts swept across the industry as residential solar demand collapsed. Berlin-based start-up Zolar laid off more than half its workforce. “The years 2022 and 2023 were booming, but 2024 will be tough,” Zolar’s CEO Jamie Heywood said in September.
SMA Solar Technology, a leading German inverter manufacturer, announced plans in November to cut up to 1,100 jobs worldwide by the end of 2025, with two-thirds of those cuts in Germany. The company cited challenging market conditions in both residential and Commercial & Industrial (C&I) segments.
“The solar industry is undergoing a transformation,” said Barbara Gregor, chief financial officer of SMA Solar Technology.
Slowing Growth Despite Renewables Milestones
Despite these struggles, solar power remained a key contributor to Germany’s renewable energy progress in 2024. According to energy think-tank Ember, wind and solar combined accounted for 45% of Germany’s electricity generation from January to September 2024, surpassing fossil fuel generation for the first time.
However, the pace of solar growth slowed significantly. While new capacity additions in 2023 were double those of 2022, growth in 2024 for the same period was just 3%. By late 2024, residential solar installations had plummeted, leaving manufacturers and installers scrambling for survival.
Challenges Across Europe
Germany’s declining residential solar market is part of a broader European trend. According to SolarPower Europe, the EU saw a drop in residential solar installations in 2024, with new rooftop systems declining by almost 5 gigawatts (GW) compared to 2023. In total, 12.8 GW of residential solar capacity was added across the EU last year.
“The slowdown is a warning sign,” said Walburga Hemetsberger, CEO of SolarPower Europe. “It jeopardizes Europe’s goals for energy security, competitiveness, and climate progress.”
Underlying Issues
Economists at the Wiesbaden Business School highlighted the declining subsidies and rising investment costs as key factors deterring residential solar investments. They also noted that increased uncertainty about electricity prices has made the economic benefits of self-produced solar power less predictable.
As the industry faces these hurdles, Germany and Europe must act to address slowing solar adoption. Without intervention, the goals for renewable energy growth and sustainability could face significant setbacks.
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