German Firms Install Solar Panels to Cut Electricity Costs

Germany’s small and medium-sized companies are increasingly turning to solar power to cover their electricity consumption as energy prices in Europe’s biggest economy haven’t dropped much despite the fall in natural gas prices compared to the peak energy crisis.

“As electricity prices in Germany show no signs of decreasing as previously anticipated, companies are increasingly recognising the economic viability of installing solar panels,” Marie-Theres Husken, an energy expert for the BVMW association for small- and medium-sized businesses, told Reuters.

BDEW, the association of utilities, said in its overview for 2023 that high prices and weak industry led to a record low primary energy consumption in Germany. For the first time ever, more than 50% of electricity generation came from renewable energy, thanks to record growth in photovoltaics (PV) installations.

Germany installed a record-high power capacity from solar and wind in 2023, but only solar additions met government targets, while wind power installations fell short of goals.

Now more German small and medium-sized enterprises (SMEs) are likely to turn to solar power, according to various surveys and analyses cited by Reuters.  

By installing solar panels and generating their own electricity, companies would not be paying the high grid fees and taxes, which have slowed the decline in electricity prices for small firms.

The high energy costs have been a key reason for weak manufacturing and industrial activity in Germany over the past two years.

Germany’s industry is unlikely to fully recover from the energy price shock and return to the competitiveness from before the Russian invasion of Ukraine, the chief executive of Germany’s top utility, RWE, told the Financial Times in April.

“The German industry has a disadvantage,” RWE’s chief executive officer Markus Krebber told FT, noting that Germany is now seeing structurally higher energy prices as it depends on LNG imports.

Despite reducing significantly its dependence on Russian gas, Europe remains exposed to natural gas supply and price shocks as it lacks any buffers in the system, Krebber told FT at the end of last year.

By Tsvetana Paraskova

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