Plunging prices for solar panels, overcapacity, and a recent, substantial slash of government subsidies for solar power in Germany have prompted a rash of major solar firms to declare bankruptcy. Solar Millennium AG’s U.S. subsidiaries—including Solar Trust of America—filed for Chapter 11 insolvency proceedings in a concerted action on Monday, while giant solar cell–maker Q-Cells filed for insolvency in a German court.

Photovoltaic (PV) module manufacturer

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Solon SE , and Solar Millennium AG had both filed for insolvency in December. Solon SE said in a statement that the decision was reached after negotiations with financing banks and guarantors failed to reach an “amicable solution.” Then in March, PV project developer Solarhybrid filed for insolvency in a local German court, citing illiquidity issues.

Solarhybrid had put 2 GW of solar plants in the pipeline in the U.S. and 201 MW in Israel after acquiring a majority of bankrupt Solar Millennium’s projects. The company had said it would lose €4 million on projects if Germany’s solar subsidies were slashed, as had been proposed in late February.

Q-Cell, a company with about 2,300 workers at production facilities in Germany and Malaysia, is the latest victim. Q-Cells’ filing with the Dessau-Rosslau court on Tuesday occurred days after a Frankfurt Higher Regional Court required wood processing firm Pfleiderer to seek unanimous agreement from creditors to a debt restructuring.

“Following an intensive review of alternative concepts for the implementation of the financial restructuring, the Executive Board has reached the conclusion that a going concern of the company cannot be restored on a sufficiently secure legal basis,” it said in a statement on Wednesday. “This was not given any more following the final Ruling of the Frankfurt Higher Regional Court in the Pfleiderer case on March 27, 2012.”

Meanwhile, Solar Millennium subsidiary Solar Trust of America, which holds the development rights for the 1,000-MW Blythe Solar Power Project in the Southern California desert—the world’s largest solar power project—on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany.

The Blythe project had last April won $2.1 billion in conditional loan guarantees from the U.S. Department of Energy, but last August, when Solar Trust decided to switch the project from a solar thermal one to a PV one, it walked away from that DOE offer. Solar Trust said it ran short of liquidity after Solar Millennium AG, which holds a 70% stake, sought court protection in December. A transaction to sell the subsidiary to Solar Hybrid collapsed when Solar Hybrid also filed for bankruptcy in March.

The shake-out follows the German government’s decision to accelerate the next round of cuts in state-mandated PV subsidies by 20% to 30%—effectively slashing rates by half compared with 2009—after it deemed 2011 a record-breaking year in the country’s expansion of solar power.

Incentives will fall to 19.5 cents per kWh for small plants up to 10 kW, to 16.5 cents for plants up to 1,000 kW, and to 13.5 cents for plants of up to 10 MW. After that there will be further monthly cuts of 0.15 cents per kWh. German retail power prices are 21 to 24 cents/kWh.

Germany’s adding of a record 7,500 MW of solar capacity in 2011 brought its total to 25,000 MW, which is nearly as much as the rest of the world combined. Berlin has said it wants to add only between 2,500 and 3,500 MW of new capacity each year.

"Our proposal on assistance for photovoltaics aims to effectively limit the quantity of new capacity and the costs. At the same time, we are providing a stable policy environment for the PV industry, so that it can continue to survive on the world market in future,” said Federal Environment Minister Norbert Röttgen in a statement announcing the cuts in February.

“With regard to the sharp rise in new capacity seen in the last two years, the renewed adjustment of assistance primarily aims to keep the renewable energies surcharge stable for the electricity consumer and to maintain public acceptance of photovoltaics and renewable energy in general. The aim is for photovoltaics to achieve market maturity in a few years so that the technology can be used without any subsidies at all.”

“Improving the level of energy efficiency is a fundamental pillar of our Energy Concept. We have already achieved a great deal in recent years,” said Federal Economics Minister Philipp Rösler, who had designed the reduction with Röttgen. “For years, Germany’s economy has been recording impressive growth, yet its energy consumption has been declining.”

Sources: POWERnews, BMU, Solar Millennium, Solar Hybrid, SOLON, Q-Cell