FRANKFURT Europe's embattled solar power industry has been dealt a fresh blow, with cut-price competition from China driving Germany's SolarWorld (SWVKk.DE) into insolvency and wiping out quarterly profits at SMA Solar (S92G.DE).
Shares in SolarWorld, which employs around 3,000 people and was once Europe's largest solar panel maker, plunged about 80 percent on Thursday after the group said it would file for insolvency.
"This is a bitter step for SolarWorld, the management board and staff and also for the solar industry in Germany," said Chief Executive Frank Asbeck, known as the "Sun King" in the German solar industry's heyday.
SMA Solar, the world's largest maker of solar inverters which help feed solar power into electricity networks, also reported a 90 percent drop in first-quarter operating profit, citing "high price pressure in all markets and segments".
Through lavish government subsidies, Europe - most notably Germany - was instrumental in building a global solar industry.
But dwindling government support and the rise of cheap Chinese competitors such as JinkoSolar (JKS.N), Trina Solar TSL.S and Canadian Solar (CSIQ.O) has ravaged the European sector, with the likes of Q-Cells, Conergy and Solon already fallen by the wayside years ago.
Survivors had hoped cost cutting would help them fight back. But China, the world's largest market for solar products, has now curbed support to its domestic industry, leading local firms to flood other regions with products and hitting prices further.
"This is mainly being caused by the aggressive pricing policy of Chinese competitors, who are attempting to quickly tap foreign markets and to compensate for their shortcomings in sales and service infrastructures," SMA Solar said.
In response to the decline in prices, SMA Solar said in March it would expand its energy-management business, hoping the market would have higher entry barriers for Chinese competitors than its core business of making inverters.
In a sign of pressure on the broader renewables industry, German wind turbine maker Nordex (NDXG.DE) also said on Thursday its order intake in the first quarter plunged by nearly 40 percent, due to growing competition in Europe.
The group's shares fell about 6 percent to the bottom of Frankfurt's technology index .TECDAX. SMA shares, which have nearly halved over the past 12 months, were down 2 percent, compared with a flat technology index .TECDAX.
(Editing by Georgina Prodhan and Mark Potter)