First Solar to Write off $150 Million as it Pulls Out of German Market

On Tuesday the Arizona based First Solar announced that it would stop all production at its German plant in Frankfurt and cut its global workforce by 30 percent, around 2000 workers, as part of a broad restructuring plan to. Mark R Widmar, the CFO of First Solar, said that “we need to resize our business to a level of demand that is highly reliable and predictable. We do not see a business case for continuing manufacturing operations in Germany.”

The global solar market is struggling to adjust to several new realities; lower government subsidies, significant overcapacity of manufacturing around the world, and cheap solar panels from China offering intense competition.

For years Europe was the leading market for solar energy, offering generous subsidies and large demand, especially in Italy and Germany who accounted for over half the global market last year. However this year, with the economic downturn restricting government and corporate budgets industry analysts predict that global capacity will only increase by 10 percent this year, compared to 40 percent growth last year.

The German market has fallen on hard times, with lower government subsidies and reduced demand, so much so that First Solar have decided to pull out. They will return a $30 million government grant, spend up to $55 million on severance payments to its workers, and are willing to write off $150 million in assets.

Elsewhere, SunPower, another leading solar company based in the US, has announced that it will reduce manufacturing in the Philippines, and BrightSource Energy has cancelled its initial public offering due to weak investor demand.

By. James Burgess of Oilprice.com