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How one German solar startup is blowing against the wind

March 25, 2024

Dumped Chinese solar products are flooding the German market, forcing most domestic manufacturers to move abroad or close down. So why is German startup Sunmaxx expanding its production in the country?

A picture of Sunmaxx solar panels on the roof of a building
Sunmaxx's panels harvest more of the sun's energy, giving them a competitive edge over Chinese panelsImage: Sunmaxx

Walking into Sunmaxx's production facility near Dresden, Germany, what catches the eye is its manageable size and that it still appears rather empty. An assembly line is in operation, with shiny solar modules moving along the conveyor belt and through machines assessing their quality.

These modules can only be filmed from the front side, where the cells are placed and covered with glass. But the rear side is shrouded in secrecy. Sunmaxx CEO Wilhelm Stein is reluctant to share details about the technology.

Stein fears that even though Sunmaxx's technology is patented, it would not take long for Chinese manufacturers to replicate the same quality as they have done in the past.  

Germany buys around 90 % of its imported solar products from China, which dominates the global solar supply chain, including silicon, ingots and wafers, cells and modules. Experts see this dependence on China as a major vulnerability for the country's climate ambitions, which include producing 80% of electricity from renewable sources.

Once known for their low quality, Chinese solar products are now manufactured in so-called gigafactories and are of much higher quality, says Ralf Preu, head of the photovoltaics division at the Fraunhofer Institute for Solar Energy Systems. Chinese manufacturers are able to sell these products at lower prices and saturate the European markets.

"This is putting enormous pressure on prices and has driven almost all market participants in Europe out of production," Preu told DW. 

But Sunmaxx's Stein is optimistic their new technology will give the company a head start of one to two years over rivals.

How are Sunmaxx's solar modules different?

Typically, solar panels operate with an efficiency of around 20%. The remaining solar energy is dissipated as waste heat, some of which goes into the surroundings while the rest heats the solar module. "Our efficiency rate hits 80% overall," Stein claims. The high output stems from the fact that, in addition to electricity, 60% of the energy is generated thermally. 

As a photovoltaic-thermal (PVT) system, Sunmaxx's module not only converts sunlight into electricity but also captures the solar heat with its thermal technology. "This thermal management technology, originally used in the automotive industry, combined with solar technology, is unique to us," Stein told DW. 

The technology allows the module to harness solar energy to create electricity and heat, which can be used to power buildings and heat water.

The company says it is now focusing on scaling up its patented technology. Currently, Sunmaxx's annual production capacity is limited to 50 megawatts. It could be expanded to a maximum of 500 megawatts at this location.

An aerial picture of the production site near Dresden
Solar-panel production sites like Sunmaxx's are becoming increasingly rare in GermanyImage: Sunmaxx

A drop in the ocean

Experts at the Fraunhofer Institute for Solar Energy Systems say European solar companies will only be able to compete with Chinese manufacturers if they can produce more than three gigawatts through economies of scale and cost reductions.

Preu describes Sunmaxx's PVT system as "an exciting approach" but a "rather small photovoltaic market segment albeit with good growth opportunities." For Preu, the key question is how Germany can reclaim part of its former glory from the time when it was a major player in the solar industry.

"The solar industry in Germany can only thrive when we can create large-scale production hubs and supply chains. Unfortunately, it is not thriving at the moment because there are no large-scale production facilities," Preu said. 

In addition to manufacturing modules and cells, Preu says, German companies should also focus on producing wafers, where the dependency on China is greatest in the absence of any domestic manufacturers.

How risky is the reliance on China?

Considering the events following Russia's invasion of Ukraine and the subsequent Western sanctions on Moscow that exposed Germany's overreliance on cheap Russian fossil fuels, many industry insiders warn of the country's dependence on the Chinese solar industry.

However, Nils Redeker, industrial policy expert and deputy director at the Jacques Delors Centre, says the comparison between Germany's dependence on Chinese solar goods and its former reliance on Russian gas is flawed.

"If the conflict with China comes to a head, it could hurt Germany's solar installation plans. But the risk is much lower [than with gas]," Redeker argues. 

Solar warehouses in the European Union are currently filled to the brim. Experts estimate there are enough stocks to meet the bloc's demand for up to 1 1/2 years, giving it time to find alternatives, including boosting domestic production. Redeker points to the United States and India as potential suppliers. 

German solar on the brink

What's next for Germany's solar industry? 

While countries such as the United States, with its Inflation Reduction Act, are heavily subsidizing green technologies to combat climate change, German solar producers and research institutes complain that too little funding is available. 

Companies like solar -panel maker Meyer Burger, which earlier this year announced plans to shut down its factory in Freiberg, Germany, and set up operations in the US, are trying to push the federal government to introduce a so-called resilience bonus to offset the higher cost of domestic production.

Critics say subsidies are not a sustainable solution to save the sector, while supporters call for support to get productions off the ground.

"Whether a domestic solar industry can enjoy the support of its government in the ramp-up phase of solar factories" is decisive for local companies' competitiveness, says Carsten Körnig, managing director of the German Solar Industry Association.  

Sunmaxx argues stricter import controls on Chinese goods, which are often linked to human rights concerns, could level the playing field. 

There is a reluctance to call for tariffs on Chinese imports, as they contributed to the collapse of the German solar industry over a decade ago.

The German government has yet to decide how to rescue the domestic solar industry. In addition to Meyer Burger, solar firms such as Solarwatt and Heckert also recently said they may close or reduce production facilities in Germany or even exit the country. 

But not everyone is throwing in the towel  

Though many predict the demise of the German solar industry again, a handful of companies continue to believe in their technologies and are expanding.

Sunmaxx is one such example in solar module production; Oxford PV is starting to produce high-efficiency cells in Brandenburg. With their perovskite-on-silicon tandem cells, they set a new world record for photovoltaic cells with 28.6% efficiency.

But this company is also small in scale compared to its Chinese rivals. "Right now, everyone is just focusing on the price. But if there are better technologies — people might be ready to pay more?" says Oxford PV Chief Financial Officer Frank Nowroth.

As of now, Sunmaxx and Oxford PV can hardly compete with Chinese manufacturers, and the sector overall remains highly reliant on imports. But they are banking on their innovative technologies to offer the German solar industry a fresh lease of life.

Edited by: Ashutosh Pandey