Season 2, Episode 3: Gunter Erfurt, (Former) Meyer Burger
In a special extended episode of The Solar Journey, Torsten speaks with influential industry voice, Gunter Erfurt, former CEO of Meyer Burger, in his first interview since parting ways with the European manufacturing giant.
From his beginnings as a student of physics to one of the most well-known faces in Europe's solar manufacturing segment, Gunter's solar journey has taken him to unexpected places. He opens up about Meyer Burger’s bold pivot to solar cell and module production, how policy delay and eventual inaction represents a missed opportunity for Europe, and his vision for the future of solar manufacturing (spoiler: he's still hopeful).
Despite his persistent optimism, he doesn’t shy away from discussing the tough lessons learned, how younger German solar companies opposed pro-manufacturing policies, and why China’s solar dominance represents a risk to global energy security.
Informed and insightful, Gunter does not take a backwards step in defending the strategic decision to transition Meyer Burger's business toward making modules. "I decided let's go for it, and I have never regretted it."
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Show Notes:
How Meyer Burger pivoted to making solar cells and modules.
Why bringing solar manufacturing back to Europe is essential—and what stands in the way.
The intersection of politics and solar tech, from the U.S. to Europe.
Gunter’s take on navigating global competition, especially in the shadow of China’s solar dominance.
Transcript
Torsten Brammer (00:04)
Welcome everybody to another episode of The Solar Journey. Today, I have the pleasure to welcome solar enthusiast, prominent figure in the PV industry, and former CEO of Meyer Burger, Gunter Erfurt. Welcome, Gunter.
Gunter Erfurt (00:22)
Hi Torsten, thank you for having me.
Torsten Brammer (00:24)
12 days ago, Meyer Burger released an ad hoc announcement that you are no longer the CEO of Meyer Burger. How has your life changed since then? What are the positive aspects of your post Meyer Burger CEO life?
Gunter Erfurt (00:44)
What's really positive nowadays is that I find time to sleep and to relax a bit and to recharge batteries after this crazy ride of the last few years. That's a real relief. I really enjoy it.
Torsten Brammer (01:01)
When you look back at your time at Meyer Burger as CTO, but also CEO, what are you most proud of when you look back?
Gunter Erfurt (01:12)
Meyer Burger is a great company, more than 70 years old, that has shaped the industry quite a lot in the past decades. I think what makes me really proud is that the company has made this bold move and this transition into a solar cell and module manufacturer in a difficult environment.
And there's a strong team behind it and I'm really proud of the teamwork that the company did and the achievements of growing three gigawatt factories in such a short time.
Torsten Brammer (01:47)
And on the other side, are there regrets that you have now when you look back?
Gunter Erfurt (01:56)
Well, I would say there are many, in particular that there has been no support in Europe from the political side despite bold and bullish announcements in the past two years, in particular after the breakout of the Russia-Ukraine war, the invasion of Russia into Ukraine, and all the attempts from the political side to help the sector to regrow. Obviously this has not come to any fruition. This is something I shouldn't say, but it makes me really sad, because it's a lost opportunity not only for the industry but also for the sovereignty and for the economic growth of Europe.
Torsten Brammer (02:46)
The US had similar thoughts and they put into action the IRA, so there's been success in the US, but there's also question marks. For example, the IRA has not managed to bring back a considerable amount of cell manufacturing at the scale many expected. What do you think is the key reason for that?
Gunter Erfurt (03:31)
I would say we have to look at this topic I think in a couple of years if it really is that no cell factories are growing. I don't think so to be honest. Building a solar cell factory simply takes a bit longer than building a module factory. The module goes much much quicker. You don't need a clean room, equipment, and things like this. So it's a faster construction process. That's why I'm saying time will show.
There are many announcements for solar cell manufacturing. In fact, think where there's a bit of an imbalance in the IRA, that the module gets more support financially with seven cents per watt peak for every module produced and sold in the US. Whereas the cell only receives four cents per watt peak. There's a difference in it.
Nevertheless, there is a change also in what's called the ITC tax credits, investment tax credits, in the US. That means that customers of domestically produced product receive another incentive, also a tax credit, when they buy and install domestically produced panels. So there is an incentive. I think the US government is also adjusting the measures according to the needs, probably also sometimes out of the view of the industry a bit too slow, but nevertheless I think there's still a great momentum when it comes to building solar cell factories.
I think one element with a bit of a downside is that in the US there are so many construction activities ongoing not only in the clean tech sector but also in other areas, public spending also that's endorsed by the IRA that generates a bit of an inflated environment in terms of costs associated with infrastructure and construction and that is potentially also something that is holding back some projects because it's, for the time being at least, more expensive than originally budgeted.
Torsten Brammer (05:44)
We'll come back to building fabs in the US, in Europe, et cetera. But before we do that, I would like to go back in time a little. Go back in time in your time, in your life. So you hold a PhD in physics. You started to work in the solar industry in 2003. And that was with SolarWorld back then, with one of the big global players in what I would call the first industrial phase of solar. So you are one ahead of one year ahead of me. I started my industrial career in 2004 at Qcells, also here in that area in the south east of Germany. Actually, we're both now in Saxony talking as we are talking. So Qcells was then back then also one of the big global players within solar world.
You climbed up the ranks with roles in R&D, investment planning, tech transfer. And then you moved on to Meyer Burger, one of the suppliers of SolarWorld back then. That was in 2015. And at Meyer Burger, you held positions as Managing Director, CTO, and finally CEO. And today, you're a member of the board at Oxford PV, the UK/German perovskite company, that just shipped the very first perovskite silicon tandem modules. And I think it was to the US actually, to some utility. Yeah, and you won the Becquerel Prize in 2023, maybe the most prestigious PV award in Europe. So quite a career. Congrats on that.
This all roots in one decision that you took a few years back, which is to study physics. When did you know you want to study physics and why did you do that?
Gunter Erfurt (07:52)
I'm a person born to parents that were both engineers and I think studying something technical or science related was something that I grew up with in some way. Nevertheless, after school I took the decision to do an apprenticeship in Germany, so became an electrician before I went back to high school and then to college.
So doing something in physics I think was more a decision related to the fact that at the time I wanted to do something that had a positive environmental impact, but it was in the mid-90s and there were not so many opportunities. So I thought that studying physics or something that's related to physics would keep a window of opportunity open because physicists tend to acquire a broad knowledge. Maybe some do very specific things also you become a generalist and can do many many things once you've graduated, and this was probably the reason why I studied it.
I think it played out well, because then in the beginning of the year 2000, the environment changed and an industry grew in cleantech and I was so happy when I my first contract with Deutsche Solar, at the time a SolarWorld company, that made wafers. And by the way, we may have met at Qcells because I remember Qcells has been one of my wafer customers that I had to take care of as a technical marketing guy.
Torsten Brammer (09:37)
I like it.
Gunter Erfurt (09:52)
I remember the good old days when Qcells were shipping solar cells to SolarWorld and SolarWorld was shipping wafers to Qcells and both parties would complain about quality issues. So it's been a fun time.
Torsten Brammer (10:02)
Actually, my first project at Qcells was actually to introduce thinner wafers or thin wafers. We switched from 300 microns to 240 microns.
Gunter Erfurt (10:10)
What a big step, considering where we ought to be.
Torsten Brammer (10:17)
What a big step, yeah. Nobody wanted to do that out of the other technology guys. And I was a new guy on board and they dropped that project on my desk. And I was very happy about it actually, because that made me interact with the whole company, right? From purchase to product management and sales. Of course, including production where the key task was to avoid breakage. So, yeah, so we might have met already 20 years ago. Interesting.
Gunter Erfurt (10:36)
You with less grey hair, of us.
Torsten Brammer (10:48)
Less, way less, yeah. I'm covering mine today – bad hair day. You already mentioned your interest for the environmental aspects and that was the motivation to study physics. So how did that come about? Was there a special moment, a spark, or did that interest for the environment grow over time?
Gunter Erfurt (11:15)
Well, think it's been more kind of a process. I grew up in the East Germany region, as we know and remember, with many, many issues in the environment due to coal mining and coal-fired power plants and other, I would say, environmental disasters. And it was so obvious that something needed to be done. So when the wall came down, people are enjoying new freedom, buying new cars, traveling. And I think inside me, it generated more of a decision, you know, we need to do something.
And then when I started studying, I read books by Paul Crutzen, the Nobel Prize winner who investigated the ozone depletion in the atmosphere. That really made me very sad, I have to say. So that's why I was transitioning into this environmental thing. And as I said, in the beginning there were not so many opportunities, but then all of sudden, late 90s or beginning of 2000, solar took off and it was a great moment for young people who then could finally lift their passion into their professional careers.
Torsten Brammer (12:40)
Very much. I always call that a DNA changing phase in my life when I joined Qcells, because finally after let's say 10 years of working as a scientist, working on projects, suddenly the industry took off and it was just this great phase where everything was possible, right? And you could be part of it.
What was it like for you to be of that industry back then. Maybe you can switch back to that time. You already mentioned that you were so happy to get that first contract in your preferred industry. Maybe you can elaborate a bit on that phase at Deutsche Solar, SolarWorld.
Gunter Erfurt (13:30)
So I think what I'm most thankful about, and I can only hope that every young person who has finished their studies and is going into a first job can enjoy the same opportunity, was that an industry with such momentum, requiring so much creativity, a startup mode-like thing, it was the best first socialization into a professional career.
I know some young people may join companies which are a bit more old-fashioned or super conservative, or maybe slowly moving and things like this. It was exactly the opposite then and there were no real boundaries. Whenever you were, you were creative, and you know that probably from Qcells. When I was there I sensed the same spirit and that was great because I'm convinced that the first years in a young professional career, they are pretty much deciding the entire career, what you get used to, who are the first people you are interacting with, and there being so many creative and bold and smart people in solar has been a lot of fun.
What I'm also finding super interesting is that even nowadays the people that I initially worked with from external parties, equipment suppliers, they are still around. I mean, look at all these great companies that also have made it through in the past decades in Europe and globally and they are still there, sometimes even with the same people. So I think this has been a lot of fun and was a perfect start into a professional career.
Torsten Brammer (15:24)
Yeah, totally agree, totally agree. What's the biggest learning from that phase which still forms your decisions today?
Gunter Erfurt (15:39)
Well, I would say never give up. There are so many reasons for people to drop an idea or give up on a project or get distracted or whatever. And I think this time has has taught me that it's always worth fighting. Not for useless things clearly, but even if there's a slim chance, give it a try. Find a setup that has an increasing chance to win and also motivate others, because there are different types of people and some need a good vision to follow through, and I believe that's something I learned in my initial five years in the industry, and I still find this to be a real gift.
It was also taught to me by my previous supervisors and bosses that I had, and also a big thank you goes to those people who supported this working style also for the benefit of the company at the time, and I think this is why I have actually only good memories when I think back. This has been a super interesting and time with a great spirit behind the people.
Torsten Brammer (17:14)
You just mentioned the phrase to "fight for your ideas". And I think it's correct to say that you have also been in recent years fighting very publicly for bringing back solar cell manufacturing to Europe and Germany. And for that, you even appeared twice on German national television on the late night show of Markus Lanz. And you must have met top politicians behind the scenes, and also officially, of the current German government, and I believe also on the European level.
So you moved from being a solar scientist up to that level, to the top level. What did that feel like? Did you ever see you in that position when you started in solar 21 years ago?
Gunter Erfurt (18:07)
Probably not. This was not foreseeable. But as I said, physicists are generalists per se. Going on late night shows and discussing the political arena is something you can also do. So joking aside, I think it was absolutely necessary to raise the voice here and try to fight for a solution for the entire industry. It's sometimes been interpreted as lobby work for Meyer Burger only, which I think is totally untrue. All the concepts that have been discussed at the late night show, also with politicians, were concepts that were actually initially created by the European Union or by the European Commission that has requested the SEA Group, the European Solar Industry Alliance, to work it out and find ways that could be applied in 27 member states. And Germany was probably the most prominent, as it is the biggest economy with the most vibrant solar industry.
And I'm still thinking that the big fight that the industry entirely did, and probably myself too, has definitely been worth it because it was a chance, a huge chance, even beyond 50% likelihood until March of this year, when politicians were totally undecided what to do and what not to do. That Germany missed this opportunity is in my opinion, and now speaking for the entire clean tech industry, a huge strategic mistake. And I'm also fully convinced that the day is going to come when we regret it.
Torsten Brammer (20:09)
Yeah, we'll come back to that in a moment when we talk about the political process and the implications of where we are today. But let me just briefly switch back to your personal situation. How did you master that transition from being an expert to a global manager? So you have operations in the US, in Germany, your appearance on TV shows, on radio. How did you grow your leadership skills, management skills? Was that a conscious process or did you just fall into the next role and you mostly learned on the job? How did you balance the demand and your skill set?
Gunter Erfurt (21:00)
I would say it's been a process of more than two decades finally to grow into such a role and it's not happening overnight. I had the great opportunity to do great learning on the job, but also in other trainings of course, throughout my career. Again, I am very grateful to those people who enabled it and allowed it to happen. But I think it comes with continuous learning and even if you go to the media and become a spokesperson for the industry, that also comes with learning. So you need to learn a few basic rules about media communication, and if you are open to something like this and open having fun and continuous learning, then that's where you can get. If you ask me what I enjoy more, sitting on late night shows or being a physicist, I would probably say the latter is true.
Torsten Brammer (22:27)
You just mentioned the learnings, your media training, maybe on the job but also on a formal level. What's the most important thing you would like to pass on to the audience?
Gunter Erfurt (22:42)
Well, what I personally find super-effective when you are a manager or a leader in a company, in terms of people following you, is if you can convince them through your expertise, if you can prove that if something ever happens, you yourself as a manager could go back to work – you could do the real thing and you're not just sitting there and pushing the delegate button and telling people do this, do that, but your team understands that you as a manager understand them.
And not only from a pure communications point of view, but also technically or through methods you are discussing, that you understand it and that you have done it yourself before. And so you understand the problems and the challenges of your team and can help them to resolve them. I find this to be most effective. So just looking into receiving an MBA and then believing you are a great manager, I think that's the wrong attitude. You should always be open to learning and to understanding what your team's challenges are. And ideally, you have gone through the same issues and can teach and guide from your own experience.
Torsten Brammer (24:04)
Let's move from your personal experience to Meyer Burger, the transformation of Meyer Burger. So Meyer Burger was originally a equipment manufacturer. And then there was the decision taken to become a solar module manufacturer. Can you outline the the thinking behind that.
Gunter Erfurt (24:38)
I think when we look at how the entire industry evolved and also in particular the manufacturing part happening in China, it's true that Meyer Burger and other European companies have been pretty strong in the equipment business throughout the years, and for decades setting many standards in the industry.
But finally, China came forward to publicly play this in 2007-2015 with its Made in China 2025 initiative, which is now one year to completion, aiming at owning the industry entirely to make it very short and crisp, including the equipment business so, for example, the Chinese market already four or five years ago was forcibly closed for Western companies – all of them.
I think when Meyer Burger made the move to do this change and still be an equipment maker, but using the products in its own manufacturing, other companies did laugh at the company. But if we look into what's happening nowadays, I think almost all European or Western equipment makers have given up on the Chinese market because China is wanting to have the full control over the sector itself, including equipment. So I think there was a rationale at time, understanding that this standard old model of bringing European equipment into China and they produce it, is no longer working, and the current reality has been proving this is right – and I think this was the major rationale behind this bold move.
Torsten Brammer (26:27)
And with that change of the business model, you became its CEO. So why did you want to take on that new role? You were the CTO before.
Gunter Erfurt (26:39)
As I said, it's been a huge opportunity and also important to do this shift. And I love challenges. I always did and always will. And I think it's been a huge challenge transforming from equipment to producing cell and modules.
But I did it also because I knew there was a strong team behind it. We talked about teamwork and what's required to be successful and it only works if you have a strong team standing behind a project. And these prerequisites were all there. And I decided let's go for it, and I have never regretted it. Not at all. Not a single second.
Torsten Brammer (27:38)
Yeah, let's go for it. Meyer Burger stands for heterojunction solar cell technology. It's the major focus of the company. So in your personal view, what do you think is attractive about the heterojunction technology over others?
Gunter Erfurt (28:04)
Well, I would say what's most attractive is the simplicity once you know how it works. So there's a lot of secret sauce in it, as all the heterojunction makers know. But when I look into the process sequence of heterojunction versus TOPCon, I see a clear benefit by having four process clusters as opposed to more than ten, and probably also more to be added to squeeze out the last opportunities of increased efficiencies from TOPCon, so it may require additional process steps.
I also think from an environmental impact point of view, if you look into TOPCon versus heterojunction, TOPCon generates nitrous gases, which is is nasty, which is not the case for heterojunction. TOPCon requires multiple wet processes in manufacturing that generate waste water that needs to be treated – heterojunction requires only one wet process that can easily be treated with chemicals. And it's a low temperature process – you need less electrical energy.
So i think from a from a real 360 degree point of view looking into the efficiency potential, the environmental impact of manufacturing, the simplicity, it's got many, many benefits over TOPCon. What's also a big concern when I compare the two technologies, I think it's a pretty exciting story how quickly TOPCon evolved. For the first time in the solar industry's history, the technology has made it within less than 10 years from its first appearance in academic literature, into mass manufacturing. We've never seen that before. All other technologies took decades until they were fully deployed into manufacturing.
But it also comes with many caveats which we have recently learned and even though I have not attended EUPVSEC, I read in the news that this has been one of the major topics – EUV degradation of YOPCon. And I recall some product testings also recently where I've seen alarming degradations of TOPCon by various manufacturers and this is something which is a great concern, which heterojunction at least the companies that know how to make it, have already resolved.
Another huge benefit in my view is when we think ahead to what's going to come next with solar cells, currently achieving 25% plus/minus in cell efficiency, in manufacturing 0.5%, as we know absolute percent increase per annum, more or less (is possible). So we will sooner or later reach the ceiling of what's possible with single junctions. So then we have to move into the next thing, which is obviously tandems. And a heterojunction solar cell forms a great base cell for a hetero perovskite on silicon solar cell. So I do think that for the future evolution of the industry and maybe also with little revolutions, perovskites being one of them, I think heterojunction is a great technology. That's my conviction.
Torsten Brammer (31:50)
And yet despite the advantages you mentioned, complexity, environment, impact and readiness for tandems, right now in terms of volume, TOPCon has outcompeted heterojunction at this point. Why do you think that's the case?
Gunter Erfurt (32:14)
The reason, I think, when you look into the production equipment needed for TOPCon, it's more or less, with a few exceptions, the same fleet that is known already from aluminum VSF and PERC. So it's a pretty robust technology, that's what I would say, at least from a manufacturing point of view.
So that's one reason, and the other one is that the second biggest cost driver in solar cell manufacturing after silicon, is silver. The standard approaches of heterojunction – they have not yet mastered silver consumption to levels where TOPCon is, and if you have this under control, then you have a chance. But the silver topic is clearly a challenge, that's true.
Torsten Brammer (33:12)
We'll come back to technology at the end. I would like to jump now to the political aspect. So when we look back, when we started, you and I, Germany provided the market for the first industrial phase of solar with its feed-in tariff called EEG. Fortunately, its public solar R&D institutions and equipment manufacturers provided excellent ground for production of solar cells – not only the application but also the manufacturing of solar cells.
I guess you can say that China took it to the next level by first using mostly German technology. There were some US, and I think maybe French manufacturers as well, of equipment. So with the help of German technology transferred by equipment manufacturers, China took it to the next level, and they managed to scale. They introduced very cost efficient operations. There were subsidies by central government and but also the provinces, which are now the main money lenders or resource lenders as of today. But also what they managed is to establish an environment with fierce competition among equipment manufacturers that drove down costs, but also drove up the technology. And there's also fierce competition between cell and module manufacturers.
And all that being said, the benefit for the world is crazy cheap modules, right? So one could argue, and many do so, why not relax? Why not move on? Just install these cheap modules. Why is bringing back manufacturing to Europe, also to US and India, why is it such an important task in your view?
Gunter Erfurt (35:40)
So I think I do have multiple answers to this. It is an argument to simply relax and rely on a single source supply chain, which China currently and obviously is. Nevertheless, I think one argument in terms of local economies is, and I found this an interesting statement by the former Volkswagen CEO Herbert Diess, who said about a year ago that in his expectation the solar industry globally will have more jobs than the current global automotive industry, and it would be an example of an industry that would be outstanding, in terms of there being no other industry like this where only one country is the supplier.
Honestly, also companies in Southeast Asia that are not China are usually Chinese companies, just as a satellite factory in these countries. And so there's a reason for the economy. It would make a lot of sense to also grow such factories in Europe as they are generating jobs. They create a pretty solid environment also for equipment makers, for material makers, for other industries. So it generates a momentum.
Secondly, a solar module is not just a simple product, it is an energy infrastructure product. There's no other example in the world where countries have been so naive when it comes to the energy business. Why relax and rely on a single source? Europe did it with natural gas, as we know, with not a single source but a big source, with gas supplied by Russia, and we know what's going on right now.
So I think the mix of sovereignty and prosperous industry growing, in particular in times when other industry may go away or fade out as old technology products are no longer needed. I think Europe in particular would be a great spot to have such an industry. The US is currently doing it for the same reasons, a reshoring program for cleantech and other industries. India is doing it. Other countries are also attempting this industry. So, you know, I think that's a complex mix. As you said, there has also been a lot of technology development in Europe, with it still being a leader in technology development for today and future solar cell and solar module technologies, without an industry that's also manufacturing.
I am afraid that also the great R&D base in Europe might fade away or disappear in the mid and long term because nobody needs these results anymore. And so, these are the reasons in my view, science on the one hand economic growth on the other, but also energy sovereignty, that provide the arguments for a domestic industry.
Torsten Brammer (39:15)
Have you found a study which looks at the impact on the national economy? Not just for the privately held economy, but on the national economy – if one or the other project would be developed, how does the effort compare with the benefits?
Gunter Erfurt (39:38)
Yes, is, in fact, there has been a study in conjunction with what was called the "resilience bonus" that Germany was considering to pay to customers for buying domestically produced products, which fell through, as we know, in March of this year. And the German Solar Association, BSW, has come forward with an analysis of the impact this would have, because if people work in that industry they make a salary from which they pay taxes, they buy goods.
The auxiliary industries are growing also, that are needed to produce panels, and there has obviously been a hugely positive impact, even over the subsidies provided to help the industry to grow mid and long term – it would have been a positive case in terms of tax returns for the government. You know a good state subsidy has to be like that, and that I also think the IRA in the US is working like this in the mid and long term – it's going to be positive for the government.
Torsten Brammer (41:04)
It'd be interesting to understand, because you were talking to the decision makers, why it didn't come through.
Before I jump to that aspect – China must have seen their future role. Why is it that China has developed such a role? What were the major measures that allowed them to take over the industry?
Gunter Erfurt (41:43)
With my full respect to China, I think they have developed a great ambition to exactly reach this goal. And they are keeping up also during decades of pushing this through, which is different in Europe and maybe also in other countries where we are thinking a bit more short term. And I think that's the big difference.
The difference also might be that when you look into the debate of how do we do what we do, or how do we cope with the challenges of energy supply in Europe and the future demand for electrical energy, we're still having the discussions about what's called in a political term "technology openness." I mean we are physicists and engineers and we know how a technology's readiness level process in development works and I think it's fair to say that engineers and scientists already do know what's going to happen in the next 10 years. We know this because the technology readiness process takes a while until something goes into mass manufacturing. And I think there's a bit of a naive belief among non-technical politicians that, out of the blue, tomorrow somebody generates something that we have never seen before. And that's how they translate or refer to the term of "technology openness."
And I believe from what I'm noticing is that China has a roadmap in terms of how this transition is going to function with renewables. And that's what they are holding on to and provide the support that the industry needs to grow big time. Because it would also be naive to think that an industry that is requested to grow so massively within a short period of time can manage this on its own. It doesn't work. It's not the precise definition of an inorganic growth, but it's not an organic growth where a company generates revenues and then it grows slowly. But here we need to see a growth big time. And I think that's what China understood back in the second half of the first decade. They started from 2000 and now we see where they are. It's unbelievable.
I think if other regions want to grow the same, at least to become resilient, they should carefully look into what China did well and what they maybe also did not so well. There are probably also aspects where they have learned their lessons, but it would actually be a good chance for any second mover to just take the learnings, drop what has failed and go from there and make it better.
Torsten Brammer (45:02)
So, at the core, you see a long-term vision, a long-term roadmap that China had roughly 20 years ago, and they just executed on that end and did not trust in some crazy miracle that, you described as the "technology openness" is quite often used here in Germany to, I would say most times delay, the awkward decisions for some industries.
You just mentioned the things that did not go so well in China. Is there anything that comes to your mind?
Gunter Erfurt (45:42)
I think what's not good in my view is when you look at the balance sheets of most of these companies, they are not making money nowadays or are themselves in some sort of a crisis, but they also did not make a lot of money when the business went better.
So I think in an ideal world, after years of initial subsidies that are required to help an industry grow big time in the shortest period possible, the world should find ways to go back to a non-subsidized solar industry or cleantech industry that basically gives fair chances and the opportunities to other companies also. And that's probably within China a problem because some companies benefit more than the others depending on what province you are working in.
It has now generated an industry that is way too big for what actually the global market can absorb, creating many damages, also domestically in China. So it's gotten a little bit out of control, I would say, but the overarching strategic target is still in sight. So it would need to be releveled here and there or rebalanced in order to get back to more profitability and prosperous growth. Because as we know, solar requires a lot of investments, i.e. CapEx money, but also a lot of R&D to tackle the next challenges.
And I also do think what I find critical when I look at China, is why is China gifting modules to the world at 8 cents? Why are they doing this? They are generating all the problems they are having right now. I'm convinced if a module would be twice that price, let's say 16 cents, the market growth would be the same because it's unbelievably cheap comparing to where you and I came from 20 years ago when the module was, I don't even recall, three years ago it was 50 per watt peak or something like this. So there is actually no need why they are doing this because they have the monopoly anyway so you know they could manage, but they don't and I think this is something that's hard to understand from an economic point of view, why so much money is invested, so much value is generated and then it's being gifted for free to the world. That doesn't really make sense.
Torsten Brammer (48:24)
Well, I would assume that they are simply all private, most of them privately held companies and there's competition, right? And the warehouse is full of modules and they need cash. And that's why they just push it onto the market. I could imagine that there's no national strategic thinking behind it, right? It's just trying to survive. That's what I would assume.
Apparently there was a panel discussion at the SNEC show in Shanghai earlier this year, there were 10 CEOs of 10 large solar manufacturers on stage. One said, well, next year, if business continues like that, there'll be only a few left, right?
So I think they do see the urge for a change. But everybody just tries to survive right now. And there have been massive layoffs and a lot of consolidation in the market. And after all, solar's still an industry with lots of players, which is a sign of its immaturity. So there's plenty of things to come. We can watch and observe and draw conclusions.
You were involved in lots of the political discussions. Can you describe what the political process was like in the last two and three years? And maybe you can compare that also with the discussions that were ongoing in the US and you exchanges with local and national politicians. What would you describe as similarities and where do they differ?
Gunter Erfurt (51:16)
I think what has been totally interesting is that Europe actually was a first mover on potential cleantech industry support when Russia invaded Ukraine. My favorite quote is by Kadri Simson, the Energy Commissioner for the European Union at the time, when she said at the end of March 2022, "we will bring solar manufacturing back to Europe, whatever it takes." So this was pretty drastic. And I think this was a start signal for the associations for the industry to look further into this topic and discuss how it could be managed. And the European Union has come forward with many concepts which were considering state aid when needed for the industry. And again, not only for solar, but also for wind, for batteries, for EVs. The most prominent ones are probably the European Green Deal and Repower EU and finally the Net Zero Industry Act.
The problem though, and this is probably a good point doing a bit of a comparison between Europe and the US, is given the fact that Europe is constituted of 27 member states, the process in Europe is a bit more time consuming and takes a bit longer than in a country like the US that's got a federal government, and also states which do their own thing, but I think they were simply quicker in executing.
What I also found pretty remarkable comparing both Europe and the US is there is a better understanding of the necessities among politicians in the US than it is in Europe. The industry specific point of view is so much more understanding of what's needed and that has resulted in the respective law documents. If you look up the IRA document, I think it's on page 152 or 154 if I remember correctly, there are the terms of what you are receiving as a manufacturer for solar manufacturing – it's written in this law. This is unthinkable in Europe where you have an overarching European law that it needs to be nationalized by the member states, then you have specific execution rules that take another year until they are there.
So what I'm saying by this is, the entire process is diverted a bit when politicians in Europe first understood there's a necessity to do something, and I give them credit for it, that they understood it. But executing takes usually way too long compared to the industry dynamics. And we know how our solarcoaster is functioning and that we actually need solutions within ideally 12 months to get started – solutions which last as long as needed for deciding to go into an investment cycle. I think Europe has considerably failed on doing this and now we are there with pretty much nothing – at least for the solar industry.
Torsten Brammer (55:19)
At EUPVSEC just last week, there was kind of hope that it's not the end for the EU, but it's still coming because we now have the Net Zero Industry Act, which is now on the level of the EU, and now the member states have to turn tha into a national law. And it seems that France and Austria have committed to put that into national law very quickly. What's your hope? Do you think that the Net Zero Industry Act has the power to turn the tide and bring manufacturing to the EU?
Gunter Erfurt (56:29)
I mean, as much as I have described myself in this podcast to be an optimist, I don't think so. I don't think that the NZIA as a single instrument can resolve the problem. And why don't I believe this? What would be the economic rational to endorse or support subsidizing industry in the current environment in Europe to produce fairly priced panels in in the EU that generate a decent cross profit margin? That pay for R&D, CapEx and also investor margins? As long as there's no restriction on what's being imported, why would anyone invest in an environment where a module can be purchased at eight or nine cents per watt, as currently is the case?
I think without generating a level playing field and making sure there's fair competition happening – nothing against competition, also not from China, but it needs to be fair. Unless we have fair competition in Europe, it's not going to work. And the NZIA as a standalone tool is not helping fair competition to be reinstalled.
So that's why I'm saying the countries that successfully have made a foundation for their own domestic industry, i.e. US and India, have done a two-way approach, one being endorsement or support for CapEx, but also making sure there is a level playing field in terms of whatever is required from a trade policy point of view. I'm not saying there need to be tariffs, but something that basically sets the boundaries and restricts what other importers are doing. Without it, I'm less hopeful that it works for Europe.
Torsten Brammer (58:40)
So you basically say it requires supportive schemes but also protective schemes to grow regional manufacturing. At EUPVSEC, it was quite often mentioned that it has to comply with the World Trade Organization rules.
What do you think of the IRA and the Indian and Chinese regulation? Do you think they comply? It's a big question, right? But do you know if there's legal study on the analysis of that?
Gunter Erfurt (59:19)
I'm not a trade policy expert but I think Europe, at least officially adhering to WTO is something that is a bit strange. Even though I mentioned earlier when you asked what I might think are the shortcomings or caveats of the Chinese strategy, and I said ideally in the mid and long term the solar industry and cleantech industry is able to work without any subsidies. That would be the final target clearly globally, because that would obviously generate fair competition everywhere.
Nevertheless, for the time being, when you look into what's real and hundreds of billions of subsidies paid into the Chinese industry and also now the US is doing it, India is doing it – why would a continent like Europe let others grab the technology and the industry to flourish elsewhere and adhere to WTO, which obviously has not had any forceful impact on this entire development anywhere? And I also do think from a procedural point of view, the WTO court is currently not even active. So why does Europe adhere to it when nobody else does and even WTO is not really in operation? I think it's an idealistic approach. As I said, mid-long term, that should be the case, but for the time being, you need to respond to reality, and that's clearly not adhering to WTO.
Torsten Brammer (1:01:07)
So that's the global picture. And when we bring down the discussion on what happened in Germany.
One has to state that the current solar community was and still is divided. There are some large EPCs. So companies who built big, large solar parks were never really in favor of political measures to support EU-made solar modules. And there's also the so-called New Solar Interest Group, mainly 1,5 N-PAL, I think EKD.
What comes to your mind when you think of that time? And what was the impact on the "resilience bonus" discussions back then?
Gunter Erfurt (1:02:09)
So maybe again, it's not been my initiative, but an initiative of the entire solar industry and is also supported by the commission. I think it's been in particular two companies fighting against it. And as we know, also the downstream sector now has huge problems in Germany and in Europe.
So I would say looking back, a bit of differentiation there and market segmentation would have worked better also for this part of the industry, that is my strong belief. I think it comes with a lot of opportunism in Europe, also because as I said it's nice to buy a module at 8 cents, at least short term, and for the time being nobody knows if that continues forever and ever. Bu the unfortunate development at the time was that when you look at how the largest European solar association, which is the German Bundesverband Solarwirtschaft, BSW, has supported it with the majority votes of its members versus two companies that did about less than 500 megawatt in the European and the German market, out of 14 gigawatt in the last year, there's so much to say about large EPCs and residential installers. So it's been an absolute minority of companies in the market that voted so aggressively against it. But obviously they have successfully raised their concerns and voices.
What's also very disappointing for me is that the companies mentioned, and not EKD by the way, but the others, have verbally communicated to the industry, to us, to others, that they are supporting it. That they support the "resilience bonus" and then within weeks they changed their mind towards the other side and pushed against it very aggressively.
So, you know, an industry that's divided and that is fighting over "let's better do trade instead of manufacturing" in an industry country like Germany – that's something very awkward in my opinion. And as I said, I think we have missed a huge chance.
Am I hopeful that something is remaining? Of course I am. And I think I might be one of the biggest supporters of regrowth and reshoring of a domestic industry, but the prerequisites nowadays and conditions are not really good for this.
Torsten Brammer (1:05:08)
We need to come to an end. We raised one topic in the beginning, setting up operations in the US. I just want to close that loop. Again, at EUPVSEC, was Markus Beck from the Department of Energy. He mentioned one aspect that he wants to solve in the next 12 months, which is it so difficult to get private financing in the US? And then of course, we have the aspect of IP. So apparently First Solar holds IP for TOPCon solar cell manufacturers. And then we have the shortage of land and factories apparently. So out of that mix, how would you comment on that?
Gunter Erfurt (1:06:01)
I think this financing aspect is something that is not only an issue in the US, but also elsewhere as our solar sector is so much in trouble right now. Companies which appear to have challenges, they have in every industry a harder time finding financing. The entire appetite in investing in cleantech is currently is not the best, and that applies to also other cleantech sectors and other regions. So it's not only happening in the US. But I think it's a cycle. It's going to come back.
And then as we've discussed also the one of the caveats of the IRA is that there's so much investment going on that some CapEx is inflated too expensive. That's probably also a cycle that's going to change. There are options in the US under the Department of Energy, that Markus is actually a part of, to provide funding sucg as government credit guaranteed loans. As we know, it also takes longer when dealing with the government. It's a way longer due diligence process. So there are a few things that pretty much work against what's actually required in terms of speed. Things take longer. The sentiment is not the best for the entire industry and other clean tech industries. But as I said, it's a cycle. Let's see how that develops.
On the IP side, I cannot really comment on what's the content that First Solar is fighting. What I can say though in terms of IP is something that has always astonished me a lot, is how naive our industry is in dealing with third parties IP. There are a few examples that still struck me when I first read them how much IP is being obviously violated without any impact so far. So I'm still expecting these debates to grow and to create some challenges. By the way, that's another great argument for heterojunction comparing TOPCon. There's also IP that was acquired by some Chinese companies from LG that can also be dangerous for some TOPCon makers. So we will see.
But at the end of the day, litigation takes a long time. It's creating disturbance in the market. So in an ideal scenario, and maybe that's closing remark from my side, we simply go back to managing this industry less aggressively and more fairly without stealing other people's IP, without too much state subsidies. Also in China, doing fair gauges to allow real competition to grow. Currently it's not real competition, it's a state-aided competition and monopoly that has been created in China. And I think it would be great for the world to leverage all the great scientists work, wherever it comes from, and then put it into manufacturing, grow jobs, grow industries, energies of variety, and contribute to the wealth of the people.
Torsten Brammer (1:09:43)
Indeed, fantastic final lines. Gunher, it's been a pleasure. Thanks for taking the time and sharing your journey and outlining what could be ahead of us. What's the potential of solar? I expect we will see you in a new solar role soon. At least, I hope so. Thanks a lot for the time. Bye Gunter.
Gunter Erfurt (1:10:07)
Thank you, Torsten, for the opportunity.
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