A longstanding solar company in Bavaria has filed for insolvency this week due to significant market disruptions. The firm cited aggressive price competition and other challenges as the reasons for its financial struggles.
The solar industry is currently experiencing significant upheaval. While the drastic reduction in prices for photovoltaic systems is good news for end consumers, the price drop is far from beneficial for companies in the sector. The main cause of this decline is the price-dumping practices by Chinese suppliers, making it difficult for local companies to compete. These market conditions have already led to consequences: Earlier this year, the solar company Meyer Burger shifted its production to the United States, while Solarnative GmbH and the Berlin-based company Eigensonne both declared insolvency over the summer.
This week, another German solar company followed suit: ESS Kempfle, based in Leipheim, Bavaria, filed for insolvency in self-administration at the competent court in Günzburg on Tuesday, August 13.
Job cuts already made
In a statement on the company’s website, ESS Kempfle reported that the prices for solar systems have fallen by a quarter over the past year, while the number of providers has quadrupled. “Just a year ago, the photovoltaic market in Germany looked much better,” said company CEO Wolfgang Kempfle, according to the statement.
The company had originally expected a revenue of €50 million with 1,500 installed systems this year. However, due to the current situation, it now anticipates only €20 million in revenue.
The price drop, according to ESS Kempfle, was driven by an “aggressive pricing policy of Chinese manufacturers.” At the same time, the construction crisis further complicated the company’s situation. To manage the crisis, the company has already significantly reduced its workforce from 200 to 140 full-time positions, as stated by ESS Kempfle.
ESS Kempfle’s strategy post-insolvency filing
ESS Kempfle has been in the market for 15 years, primarily installing solar modules in southern Germany. Through the self-administered insolvency process, the salaries of the 140 employees are secured through the Federal Employment Agency. Simultaneously, negotiations are already underway with an unnamed company that is considering a stake in ESS Kempfle.
“We are in the middle of negotiations,” emphasized Wolfgang Kempfle. He noted that a verbal commitment has already been made, and the discussions are now focusing on the details. Customers who have already placed orders with ESS Kempfle will receive their deliveries as agreed, the CEO assured.
Solar market growth continues despite industry challenges
Despite the ongoing price war in the solar market, demand for photovoltaic (PV) systems continues to rise. The market is thriving, according to the German Solar Industry Association (BSW). This year, newly installed solar power capacity is expected to grow by double-digit percentages, as reported by BSW Managing Director Carsten Körnig in June 2024.
According to the Federal Network Agency, Germany nearly doubled its solar capacity in 2023 compared to 2022, with an increase of 14.1 gigawatts. The BSW predicts continued high demand throughout 2024.
In the first four months of 2024, newly installed PV capacity on commercial roofs increased by 81%, while solar power plants on open spaces saw a 74% rise compared to the same period last year. “Solar and storage technology is increasingly becoming the standard,” said BSW Managing Director Carsten Körnig. “Following a veritable solar boom in Germany’s residential areas, commercial roofs and low-yield open spaces are now being increasingly electrified with the help of solar technology.” Körnig expects that the solar package introduced by the federal government will further boost expansion efforts.
