Challenges Facing the Solar Industry: Consumer Interest in Photovoltaics Declines

The solar industry is currently grappling with a significant downturn, marked by a wave of insolvencies and a notable decline in consumer interest in photovoltaic (PV) systems. According to industry experts, this trend reflects a broader correction phase following a previous boom.

Data from the Federal Network Agency reveals that in 2024, there was a 15% decrease in the number of registered residential solar installations, with smaller rooftop systems experiencing an even steeper decline of approximately one-third. This downturn raises questions regarding the future of solar energy adoption among consumers.

From 2020 onward, the solar sector had witnessed remarkable growth, particularly during the pandemic and in the wake of the Ukraine crisis. The fear of blackouts and soaring energy prices prompted many homeowners to invest in solar installations. Furthermore, the reduction in discretionary spending during the pandemic led individuals to allocate funds toward solar energy systems rather than travel and dining out.

During the boom period, price increases of up to 40% for solar installations did not deter consumers. Many were willing to invest in battery storage systems, with costs reaching up to EUR5,000 for a five-kilowatt-hour unit. Total installation costs for small PV systems with storage could reach as high as EUR18,000.

However, as the energy crisis has eased, the urgency for self-sufficient energy solutions has diminished, leading to a decrease in demand for PV systems. The market has become increasingly competitive, with an oversupply of products, making it difficult for many companies to adapt to the shifting landscape. This has culminated in a notable number of bankruptcies within the sector.

Smaller firms such as Envoltec, Enersol, Wegatech, and Solarmax have filed for insolvency, reflecting the ongoing challenges. Even established players, like the solar distributor Eigensonne, have been adversely affected by this market correction. According to reports, the number of bankruptcies in the solar sector reached its highest level since 2010 in the third quarter of 2024.

In response to the declining demand, a government-backed funding program aimed at supporting solar installations has faced criticism. Although Federal Minister of Digital and Transport Volker Wissing announced a funding package of EUR500 million, only EUR300 million has been disbursed, and after just one day, the program was halted, with future funding suspended for 2024.

Despite these setbacks, some incentives remain in place for consumers. The VAT on PV system purchases will continue to be waived throughout 2025, and operators can still feed unlimited power back into the grid, receiving a current feed-in tariff of 8.03 cents per kilowatt-hour. However, these rates are set to decrease by 1% every six months. Various states, including Bavaria, North Rhine-Westphalia, and Baden-Württemberg, offer specific funding programs to encourage solar adoption.