Longi, the world's leading solar panel manufacturer, has announced plans to slash its workforce by 30% – a move that will impact tens of thousands of employees. This decision comes amidst a turbulent global economic climate that has cast a shadow over the entire solar industry.
Longi Green Technology Energy Co., headquartered in China, boasts a workforce of around 80,000 as of last year, which means that the reported redundancy could involve as many as 24,000 employees. The company has already begun implementing layoffs as part of its restructuring efforts.
However, Longi is not alone in facing challenges: recent months have witnessed a wave of layoffs and halted investment initiatives across China's solar sector, which commands over 70% of global module production.
The once-thriving photovoltaic (PV) panel industry is grappling with intense competition, plummeting prices, and a glut of supply. Solar panel prices reached historic lows in 2023, plummeting by approximately 50% over the past two years.
Potential recovery
While this drop has spurred increased demand and a record-breaking installation of 56 gigawatts of solar capacity in Europe in 2023, it has also compelled manufacturers to sell their products at prices that barely cover production costs.
Furthermore, the Inflation Reduction Act (IRA) has heavily subsidised domestic solar panel production in the United States since 2022, diverting demand away from Chinese manufacturers. Additionally, Chinese companies have faced export restrictions to the US due to allegations of forced labour practices, prompting them to pivot towards European markets.
The oversupply issue has resulted in ballooning inventories, with panels being imported at a rate faster than they can be installed. This surplus poses a significant challenge, particularly for major players whose stocks are swelling.
Despite these hurdles, there is optimism for a potential recovery in China's solar industry by year's end, with Longi expected to navigate through the turbulence successfully. Bolstered by its leading market position and a substantial cash reserve of approximately €6.7 billion as of 2022, the company remains well-positioned to weather the storm.
Credit: Belga/Eric Lalmand
Belgian firms will be watching developments with some interest as solar power is becoming one of the most popular energy sources in the country.
Belgium experienced a record year for solar panel installations in 2023, with significant increases reported in both Wallonia and Flanders according to the Energie Commune association. However, while Flanders is progressing well towards its 2030 targets, concerns are raised over Wallonia's pace.
Despite a 76% increase in new installations in Wallonia and a 60% increase in Flanders, obstacles remain, particularly in Wallonia and Brussels where installation rates dropped in 2023.
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Experts stress the need for structural increases in installations, especially in larger-scale projects, to meet the ambitious 2030 targets outlined in the National Energy and Climate Plan. Urgent measures such as incentive-based pricing and requirements for large consumers to install panels are recommended by stakeholders to drive further growth.
Without addressing these obstacles, particularly in Wallonia, Belgium risks falling short of its renewable energy goals. This threat could be compounded by any shortfall in production from market leaders in solar panel construction such as Longi.
