SolarMax insolvency: Lack of pan-European policy harms industry, says expert

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Yesterday’s news that Swiss inverter supplier SolarMax is to file for insolvency this week may have surprised some industry experts at the speed in which the matter was announced, but as solar suppliers across the value chain in Europe continue to face a tough competitive environment, the lack of a cohesive and supportive policy landscape is a failure of the continent’s politicians, says Winfried Hoffman of private consulting firm A-S-E.

Speaking to pv magazine at the 15th Forum Solarpraxis, Hoffmann, who also sits on the advisory board of SMA and Solar-Fabrik, said that SolarMax’s insolvency left him unhappy – largely because in Europe there appears to be very little political will to ensure a level playing field at a global scale.

pv magazine: What does SolarMax’s insolvency say about the European inverter market?

Hoffmann: I will put it into a greater context. This issue is not only about the manufacturing of inverters within the PV chain of PV. Insolvencies are happening along all parts of the value chain. Be it solar cell module manufacturers, system companies, inverter suppliers – it is not uncommon right now.

We in Europe, and this is something we can be proud of, take financial issues very seriously. So if – for whatever reason – things are happening at a company where there are financial difficulties, then you get these insolvencies.

But if you look at a global scale, I would appreciate it if the same procedures were enacted similarly everywhere else. To my knowledge, that is not the case.

That is what makes me unhappy about the SolarMax insolvency, and not only this one but all of the other recent insolvencies in Europe. Because Europe has failed. We have failed in having an industry policy, something that exists in most of the Asian countries. If politicians in Europe just sit back and say "OK, that is their business, the financial constraints are well known, and if there are difficulties then they must leave the market", that is not enough.

For an industry [solar] that is definitely going to be one of the largest in the coming years and decades, it is a failure of the politicians in Europe and specific countries to not give adequate support. That does not mean that if companies are not delivering what they promise then they will be propped up regardless – of course there should always be consequences to that – but it is a highly complex situation that requires at least some dialogue and input from governments.

Having said that, what can European inverter suppliers and other solar companies do to survive in the face of increased international competition and a lack of political support?

Whether it is China, Japan or the U.S., you cannot say that the tier 1 manufacturers in these regions do not deliver quality. They do deliver quality. The big players for sure know about the importance of quality, and they deliver.

So if we in Europe would like to keep our manufacturing capability, then we need to have a clear strategy. European quality alone is no longer enough.

I was involved in the European Commission taskforce for key enabling technologies, and there we had a clear understanding of what was required. Namely, that if we here in Europe are only thinking in terms of developing new products and new technologies to then make blueprints and get that product developed somewhere else, that approach will not work in the future. So we have to have large-scale volume production for all products that we feel are important.

Whether it is future batteries, or windmills, solar cells and modules, silicon, whatever… we either have a good base for volume manufacturing here in Europe or, sooner or later, these industries will no longer survive.

And in places like Singapore, the Philippines, Taiwan or China, you name it, the politicians and finance ministers are on board; they are aware of how to attract industries in order to invest in those countries. They provide support for infrastructure, building, financing etc. If you add these issues up and compare them to the landscape a manufacturer here in Europe is faced with, for example, you end up with an uneven playing field. This has to be understood and appropriate measures taken. If not, then poor Europe.

Are you at least hopeful that this landscape of scant support will at least change in the future?

I would hope so. But to be honest, I do know that before the old European Commission taskforce closed, there was a second round that talked about the implementation of what we discussed three years ago. Unfortunately I haven’t heard too much about their decisions. Maybe it’s because the new Commission wants to find its own way, perhaps. I hope there will be a far greater understanding of how to not only keep but encourage industry investment in Europe. Otherwise, we will have a really big problem.