German wind and solar energy companies are not doing well. After years of rapid growth, more and more companies involved in green energy are running into trouble. This is reported by news agency Bloomberg.
This month, one of Europe's largest solar park operators filed for bankruptcy. The German Enerparc owns about 500 solar parks but ended up with a debt of approximately 3 billion euros. Earlier, the wind energy company Sowitec Group also filed for bankruptcy.
Other German companies also need to take action. Among others, Baywa and Abo Energy have started reorganizing. Both companies are also active in the Netherlands.
Turning point
The problems show a turning point in the renewable energy sector, Bloomberg writes. In recent years, companies received support from the German government, but those subsidies are being phased out. German banks warn that green energy companies could get into trouble as a result.
Like in the Netherlands, companies in Germany struggle with pressure on the electricity grid. Especially when the sun shines brightly, solar panels produce a lot of electricity. Sometimes so much that the electricity grid cannot handle it. To encourage people and companies to consume electricity, the price drops.
"For electricity consumers, that is favorable because they have to pay less," says climate economics professor Sandra Phlippen from the University of Groningen. "But a supplier of electricity, such as a solar panel operator, then earns less or no money."
Chinese panels
Solar panels from China also pose a challenge to European solar energy companies. Companies in China can produce solar panels much cheaper than in Europe. "If you are a solar panel company in Europe, that is tough, but if you are a farmer with a large roof, then with Chinese panels you are much cheaper off," says Phlippen.
A solution for the green energy companies is complicated. Protecting the market against Chinese subsidized products is a risk because German manufacturers of various construction components actually depend on China.
Cheap borrowing
What also plays a role is that companies could previously borrow cheaply, professor Phlippen explains. "Interest rates have risen in recent years and therefore borrowing money has become more expensive," she says.
Especially green companies benefit from low interest rates because they can make large investments cheaply. "Once a solar park is built and the power cables are connected, the solar park can simply deliver," says the professor. "Fossil energy companies have already made their biggest investments and therefore need to borrow less."