Solar power plant construction – Current status in Germany: The situation in the photovoltaic industry will remain tense in 2025 as well

The photovoltaic industry is currently facing a challenging phase, shaped by economic, political, and technical factors. Companies are grappling with shrinking margins, declining demand, and difficult regulatory environments, while policymakers strive to promote the expansion of renewable energies while simultaneously ensuring economic stability. Although some observers are critical of the future outlook, photovoltaics remains a key technology for the energy transition. In an era where climate change is becoming increasingly apparent, solar energy continues to be a beacon of hope for many. The following section examines the situation in the solar industry in 2025 in detail, providing a comprehensive overview of current developments, challenges, and potential solutions.

Economic situation of the industry

The economic situation in the photovoltaic industry has deteriorated significantly since 2024. A wave of insolvencies has shaken the market and left numerous stakeholders uncertain. Not only startups and small businesses have been affected, but also established companies that had built a stable market position over many years. "The current wave of bankruptcies shows just how fragile the business environment is," said one insider. Indeed, several well-known companies, including Eigensonne, Amia Energy, Enersol, and Wegatech, have been forced to file for insolvency. Observers speak of a veritable chain reaction, as the insolvency of a major market player often also plunges suppliers and service providers into considerable difficulties. In the economic context, this creates a vicious cycle in which growing uncertainty can lead to further insolvencies.

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Demand slump and decline in investment

"Demand for photovoltaic systems has plummeted," report industry representatives who have become increasingly worried about the future of their businesses in recent months. High energy prices, a persistent economic crisis in Germany, and rising unemployment are leading both households and companies to critically examine their spending. Investments in photovoltaic systems—which promise savings and environmentally friendly electricity generation in the medium to long term—are often associated with high initial costs. Especially during periods of economic uncertainty, individuals and businesses tend to postpone such expenditures until better times. The result is declining orders and a noticeable drop in sales of solar modules, inverters, and other components. Those who previously stockpiled large quantities of materials are now struggling with a rapid price decline, further shrinking their profit margins.

Intensity of competition and price decline

Competition was already intense long before. Manufacturers, retailers, and installation companies are experiencing cutthroat competition, with suppliers undercutting each other. Some players are calling these "self-destructive price wars," which may secure individual projects in the short term but ultimately destabilize the entire market. Companies with large inventories are caught in a bind: "Either you sell at rock-bottom prices and reduce losses, or you wait for the market to recover," says one CEO. In both cases, the risk remains high, as it's uncertain whether and when the industry will truly recover.

Political and regulatory challenges

Political and regulatory factors are also contributing to the tense situation. At the beginning of 2025, a reduced feed-in tariff came into effect, making the operation of newly installed photovoltaic systems less lucrative. The feed-in tariff is now only 7.94 cents per kilowatt-hour. By comparison, systems commissioned before August 2024 received 8.03 cents per kilowatt-hour. "This change may seem small at first glance, but in total, every cent makes a big difference to the profitability of a solar project," explains one expert. This further weakens the financial incentive to invest in solar energy. Added to this is the planned elimination of the tariff during periods of negative electricity prices, which will guarantee operators no revenue at all during certain time windows. One operator puts it this way: "If we earn absolutely nothing during periods of negative electricity prices, we have to calculate very carefully whether a new construction project is even worthwhile."

Bureaucratic hurdles and approval processes

In addition, bureaucratic hurdles in some regions not only appear to persist but are even intensifying. While the government repeatedly announces plans to simplify approval processes and expedite bureaucratic procedures, the reality in many places is quite different. "The processing time for some inquiries with grid operators has almost doubled," several installation companies complain. Instead of fewer formalities, they often have to prepare for even more complex processes to obtain, for example, a grid connection agreement. This leads to further delays and planning uncertainties, which are felt most acutely by developers of large-scale projects. For medium and large projects, the timeframe for realization can extend over several years. If banks are also more cautious about lending due to the uncertain market environment, the financial risk for project developers increases enormously. They often bear the main responsibility for preliminary planning, land acquisition, expert reports, and coordination with authorities and grid operators. If investors withdraw at short notice or decisions are delayed, substantial losses are imminent.

Technical limitations of the network infrastructure

In some regions, the technical limitations of the grid infrastructure are also becoming apparent. While the low-voltage and, in some cases, the medium-voltage grids have been upgraded in recent years, this has not always kept pace with the implementation of photovoltaic projects. "The capacity limits of many local grids have been reached," says one grid operator. As a result, new PV systems can sometimes no longer be easily connected to the grid without first undertaking expensive grid reinforcements. This not only frustrates investors but can also jeopardize local expansion targets.

The importance of photovoltaics for the energy transition

Despite these challenges, it is undisputed that photovoltaics plays a significant role in the energy transition. Solar energy is considered one of the cleanest technologies for electricity generation and has gained importance worldwide due to its rapid efficiency improvements and decreasing production costs.

Political framework

The German government continues to view photovoltaics as a key solution for the planned transformation of the energy supply. While the goal of installing a total of 215 gigawatts of new solar capacity by 2030 is more ambitious than ever given the current situation, it remains unchanged. Official statements suggest that the crisis can also be seen as an opportunity: "We want to recover from the current downturn and make our companies fit for global competition." Corresponding support programs and deregulation measures have already been announced, but not yet fully implemented. Industry representatives are therefore calling for even more decisive action. "If we truly want to accelerate the energy transition, we must now invest massively in solar energy and create faster approval processes," said one lobbyist.

Innovative approaches in the solar industry

Alongside policymakers, the solar industry itself is also being challenged to pursue innovative approaches. Some companies are attempting to tap into new markets through specialization. For example, there is a growing focus on integrating photovoltaics and e-mobility. Charging stations for electric cars are to be powered by solar energy, creating new revenue streams. Other companies are investing in research and development of high-performance modules that promise higher yields for the same surface area. Furthermore, the issue of energy storage is gaining increasing relevance. "Battery storage could be a crucial component in balancing peaks and troughs in the electricity grid," says one researcher. By storing solar power and releasing it as needed, fluctuations in generation can be better managed. This could further improve the economic viability of photovoltaic systems and simplify their integration into the existing grid.

Sector coupling and its challenges

Another approach is sector coupling, where energy from photovoltaics is used for heating and transportation. Buildings can thus be heated or cooled with solar power, and there is also potential in industry. However, Germany's pioneering role in renewable energies in recent years is threatened with a significant setback if the current crisis leads to a prolonged backlog of investment and innovation. Beyond the purely ecological aspect, the core issue is also competitiveness and securing Germany's economic future. Companies that are forced to withdraw from the market now may not be easy to replace when demand recovers.

Financial prospects and challenges

Banks and investors are observing developments with mixed feelings. On the one hand, solar energy is still considered a market of the future. The potential is enormous, not least due to the global trend toward renewable energies. On the other hand, the current uncertainty, price volatility, and reduced subsidies are creating increased investment risk. "Many financial institutions are currently very cautious and are more likely to grant loans to established companies with solid balance sheets," according to banking sources. Start-ups with unconventional business models, in particular, are therefore finding it difficult to secure the necessary capital to develop and market new technologies.

Optimism despite challenges

Nevertheless, optimism is also emerging. Some industry insiders see the insolvencies as a kind of market correction, in which only the financially strongest and most innovative companies survive. These could then benefit in the long term from less competition and expand their position in a promising segment. As the saying goes: "Those who survive this turbulent time will emerge stronger." At the same time, it shouldn't be underestimated that every insolvency costs jobs and expertise. The goal of installing massive amounts of new solar capacity by 2030 can only be achieved if there are enough qualified specialists and a close-knit network of service providers. The industry therefore needs both a favorable political environment and economic stability to fulfill its central role in the energy mix.

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Consolidation phase in the photovoltaic industry

Despite significant challenges, the photovoltaic industry in Germany plays a central role in the energy transition. Massive bankruptcies, declining demand, margin pressure, and tightening regulatory frameworks are currently stumbling blocks for solar companies of all sizes. Added to this are technical problems such as grid bottlenecks and lengthy permitting processes. "The industry is undergoing a tough test," acknowledges a government representative, who simultaneously emphasizes that the situation must be used to improve structures and lay a stable foundation for future growth.

That photovoltaics still holds great potential is undeniable: Technological progress, the ever-increasing importance of climate protection, and the global orientation of many companies are arguments against its eventual collapse. Rather, it is expected that the industry will emerge from this consolidation phase in a new, more robust form. A combination of targeted support, the removal of bureaucratic hurdles, the expansion of grid infrastructure, and continuous innovation could put the photovoltaic sector back on a growth trajectory. Whether this scenario actually materializes depends primarily on whether all relevant stakeholders – politics, business, finance, and society – pull together and sustainably support the expansion of renewable energies. One thing, however, seems clear: Photovoltaics will remain a fundamental building block for successfully mastering the climate and energy policy challenges of the coming years and decades.

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The photovoltaic industry, once a shining example of the successful implementation of renewable energies, is currently facing a multitude of challenges that call its future viability into question. Economic, regulatory, technical, and infrastructural problems have placed the industry in a precarious position. Nevertheless, photovoltaics remains a central pillar of the energy transition and offers significant long-term potential. This text examines the current situation, analyzes the obstacles, and presents possible solutions.

Economic challenges

Wave of bankruptcies and insolvencies

The solar industry is being rocked by an unprecedented wave of bankruptcies. Well-known companies such as Eigensonne, Amia Energy, Enersol, and Wegatech filed for insolvency in 2024, and this negative trend continued in 2025. Experts describe the situation as critical, as smaller and medium-sized enterprises are also increasingly affected. The bankruptcies are often caused by a combination of financial constraints, overcapacity, and intense competitive pressure.

"The industry is experiencing a correction phase that is forcing companies to rethink their business models," says an industry expert. However, this consolidation process is initially leading to a decrease in market diversity, which could restrict competition in the medium term.

Decline in demand

One of the main reasons for the difficulties in the photovoltaic industry is the noticeable decline in demand for new systems. The economic situation in Germany is strained: High energy prices and a persistent economic crisis are causing both private households and companies to postpone investments in renewable energies. In addition, many people are deterred by uncertainty about future subsidy conditions or unclear economic prospects.

“Many households simply can no longer afford to invest in photovoltaic systems despite government subsidy programs,” explains an analyst.

Price decline and margin pressure

Another problem is the ongoing price decline in solar modules and other components. While this initially appears positive for consumers, it puts massive pressure on companies' margins. Inventory costs and cutthroat competition, especially from international suppliers, further intensify this pressure. Some industry experts are already describing the competition as "self-destructive," as price wars could ultimately jeopardize the quality of the products and services offered.

Regulatory and political factors

Changes in the feed-in tariff

The political framework has also deteriorated for the industry. From February 2025, the feed-in tariff for newly installed photovoltaic systems will decrease to **7.94 cents/kWh**, down from **8.03 cents/kWh** in August 2024. These reductions mean lower revenues for operators and pose a particular economic challenge for smaller systems.

In addition, the German government plans to completely eliminate feed-in tariffs for photovoltaic systems during periods of negative electricity prices. This plan is drawing criticism from industry representatives. "We need stable and reliable framework conditions to guarantee planning certainty," demands one association representative.

Bureaucratic hurdles

Despite political promises to reduce bureaucracy in the energy sector, processes in many areas have become even more complex. In particular, processing times at authorities and grid operators are a major obstacle. The period between application submission and final grid approval has increased to several months in some regions. This significantly delays projects and increases uncertainty for investors.

Technical and infrastructural problems

Network capacity and overload

Another key problem is the limited capacity of the electricity grids. In many regions, especially in rural areas, the **low- and medium-voltage grids** are already operating at full capacity. This means that new photovoltaic systems cannot be connected to the grid, or only with significant delays. Large-scale projects that could deliver high electricity yields often fail due to the lack of infrastructure.

Risks for project developers

The situation is also difficult for project developers of medium-sized and large solar parks. The planning lead time for such projects is immense, and the financial risk often lies solely with the developer. Banks are increasingly skeptical of business models based on feed-in tariffs exceeding the statutory EEG subsidies. Without additional collateral, financing such projects remains a challenge.

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Positive aspects and opportunities

Photovoltaics as the key to the energy transition

Despite current challenges, photovoltaics remains one of the most important technologies for implementing the energy transition. Solar energy is not only an environmentally friendly but also an increasingly cost-effective energy source. The German government has set ambitious goals: By 2030, the installed capacity of photovoltaic systems is to be increased by 215 gigawatts. This corresponds to a significant increase in current capacity.

The importance of photovoltaics is underscored by its versatility. From single-family home roofs to large-scale solar parks, this technology can be used in a variety of contexts. Integration into innovative energy systems such as battery storage or smart grids also offers great long-term potential.

Technological innovations

The photovoltaic industry is known for its innovative strength. New technologies, such as bifacial solar modules that can absorb light from both sides, or perovskite solar cells that promise higher efficiency, could significantly increase the economic viability of installations. Furthermore, the combination of photovoltaics and electromobility is gaining increasing importance, as solar installations in parking lots or at charging stations could become an integral part of modern mobility concepts.

Adjustments in funding policy

To stabilize the industry, associations and experts are calling for adjustments to funding policies. The goal should be to create reliable framework conditions that promote both private and commercial investments. For example, tax breaks for companies investing in photovoltaics or low-interest loans for private households are conceivable.

International opportunities

New opportunities are also opening up for German companies on an international level. Countries like India, Brazil, and African nations are increasingly investing in the expansion of renewable energies. German technology enjoys an excellent reputation worldwide, and exporting know-how could unlock new revenue streams.

A path with challenges, but also opportunities

The photovoltaic industry is undoubtedly going through a difficult period. Economic uncertainties, regulatory restrictions, and technical problems are putting considerable strain on companies. Nevertheless, the long-term opportunities outweigh the challenges. With the right mix of technological innovations, policy adjustments, and a stronger focus on international markets, the industry could emerge from the crisis stronger.

The coming years will be crucial in setting the course for a sustainable and economically successful future. It is up to policymakers, businesses, and society to work together on a solution that meets both climate goals and the needs of the industry.

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