16.05.2012
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Photovoltaics

Sovello files for bankruptcy

Sovello has become the second firm in Germany's Solar Valley to file for bankruptcy after Q-Cells. Local politicians are now calling for protection for German firms from Chinese competition, but a back-of-the-envelope calculation shows that local content already exceeds 60 percent in Germany even when panels are imported.

 - Sovello says it makes the thinnest crystalline solar cells in the world in the string ribbon process. The strategy was to make do with as little silicon as possible during the solar silicon shortage a few years ago, but the bottom has fallen out of the silicon market, making the thickness of wafers relatively irrelevant.
Sovello says it makes the thinnest crystalline solar cells in the world in the string ribbon process. The strategy was to make do with as little silicon as possible during the solar silicon shortage a few years ago, but the bottom has fallen out of the silicon market, making the thickness of wafers relatively irrelevant.
Photo: Sovello

Sovello has become the second firm in Germany's Solar Valley to file for bankruptcy after Q-Cells. Local politicians are now calling for protection for German firms from Chinese competition, but a back-of-the-envelope calculation shows that local content already exceeds 60 percent in Germany even when panels are imported.

Corporate management will remain in office during insolvency proceedings and continue to have control of the firm's assets. A court in Dessau-Roßlau appointed attorney Bernd Depping as the preliminary liquidator; creditors are to report their claims to him. In addition, a team of lawyers from Taylor Wessing under the direction of Matthias Kampshoff is advising the management board during the process. "The smoother business continues in the short term, the greater our chances are in the midterm to long-term to stay in business after insolvency," Depping says. "We will continue to pay staff up to the end of July 2012 and will immediately contact suppliers and customers. In light of the firm's very technologically innovative products and market position, we believe that it is likely we will be able to streamline the company in this challenging market."

Sovello covers the value chain from wafers to cells and modules in-house. This strategy is intended to ensure quality and increase customer trust. "You have to increase the share of in-house production, which is currently often below 10 percent, in order to protect the technology. That is the secret weapon used by globally successful firms," says Ulrich Blum, former president of the Institute of Economic Research in Halle, the next town to Solar Valley. Insolvency can be the first step in the right direction; after all, it gets rid of the cost burden. "Then, you have to see how the firm can reposition itself," Blum says. "I think German firms would be well advised to merge so they can reach critical mass. In the short term, competitive prices must be the goal, but over the long term you have to become a strong provider within a niche."

Only three months ago, market researchers at EuPD Research gave Sovello the Top Brand PV label. "The label is awarded to firms whose brand is the most recognized by consumers and who are recommended by installers," Thomas Olbrecht, senior research manager at EuPD Research, explained at the time. But the award did not turn things around; in the past two years, the firm has been in the red with revenue of 207.9 million euros last year.

Investments nonetheless continued, most recently with 35 million devoted to new high-tech furnaces. "We are keeping up with the Chinese," the company stated at the beginning of the year. The firm planned to increase production capacity from the current 180 megawatts per year to 250 megawatts by 2013. There was even talk of increasing annual solar panel production to 300 megawatts.

Local politicians in the state of Saxony-Anhalt, where Solar Valley is located, are now openly calling for local content to be required for feed-in tariffs eligibility. The state's Greens say (website in German) that such a requirement "would temporarily put an end to Chinese manufacturers flooding the market." German feed-in tariffs have always been available regardless of product origin – and with good reason. Germany has a trade surplus with China. A stipulation against the Chinese could result in retaliation in other sectors, and Germany, which is currently beating China under free-trade terms, would only lose a trade war with China.

Such a requirement would be pointless anyway. Installed systems smaller than 100 kilowatts currently cost around 1,900 euros per kilowatt in Germany, and panels only cost 700. The following figures are just ballpark estimates, but remaining 1,200 is roughly spread across inverters (around 300 euros), the installation substructure (200 euros), cabling (300), and labor (400). If everything but the panels comes from within Germany (which is not unlikely), a PV array installed in Germany already has 63 percent local content even if the panels come from China. (Sven Ullrich / Craig Morris)

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