FRIEBURG, Germany, April 15 (Reuters) - European

governments due to move to support their solar power

manufacturers this week will be too late to stop solar panel

maker Meyer Burger packing up a German factory to send

production to the United States.

The plant in Freiberg in eastern Germany closed in mid-March

with the loss of 500 jobs, as the Swiss-listed firm joined a

growing list of European renewable energy manufacturing

factories shutting down or moving. In the past year, at least 10

have said they are in financial difficulties.

On a recent visit to the site, giant white robotic arms hung

dormant over empty wooden pallets as workers prepared the last

production line for shutdown. Talks with the German federal

government to try to secure a future for the factory ended

without success in late March, a company spokesperson told

Reuters.

Germany's economy ministry said it was aware of the "very

serious situation" of German companies and has been examining

funding options with the industry for over a year. It agreed to

give Meyer Burger an export credit guarantee for equipment

produced in Germany to be used at the U.S. factories, which will

help a site nearby but won't save the Freiberg one.

The closure, which in one sweep reduced European solar panel

production by 10%, comes despite a boom in wind and solar energy

in Europe. Additions to renewable energy capacity, including

solar panels, are running at record pace, according to data from

the International Energy Agency.

But Europe-based manufacturers that supply those panels are

being crushed by competition from China and the U.S., whose

governments give more support to their producers.

The situation poses a dilemma for European governments

keen to fight climate change: Either offer more support to

ensure local production can stay competitive, or allow the

unfettered flow of imports to keep up the pace of installations.

A meeting in Brussels between European energy ministers on

Monday will make a gesture of support for the struggling

industry.

China is expanding solar output and now accounts for 80% of

the world's solar manufacturing capacity. The cost of producing

panels there is around 12 cents per watt of energy generated,

compared with 22 cents in Europe, according to research firm

Wood Mackenzie.

U.S. subsidies announced as part of the 2022 Inflation

Reduction Act allow some renewable energy manufacturers and

project developers to claim tax credits, which are attracting

businesses from within the European Union and beyond.

Meyer Burger says its plans include a solar panel factory in

Arizona and a solar cell factory in Colorado.

"We made a bold move in the absence of any industry policy

support in Europe and shifted a solar cell expansion project

from Germany to the U.S.," its chief executive Gunter Erfurt

told Reuters in an interview.

Similarly, battery company Freyr which operates mostly in

Norway, has stopped work at a half-finished plant near the

Arctic Circle and is focusing on plans for a plant in the U.S.

state of Georgia after Washington announced the policy.

Freyr said in February it had changed its registration to

the U.S. from Luxembourg.

"We did spend quite a bit of time trying to really make sure

that we weren't committing a mistake," said Birger Steen, chief

executive of Freyr: The company first hunted for support from

Norwegian or European governments.

"We got to the point where we concluded that that form of

policy level response was not forthcoming."

Asked to comment, Norway's ministry of trade and industry

said that it had launched an industrial policy framework

targeting energy transition technologies including solar and

batteries, but did not directly address questions about

additional funding for the companies in this story.

CHARTER

At Monday's meeting, industry association Solar Power Europe

will launch a voluntary charter for governments and companies to

sign in support of solar manufacturing plants. But the charter,

which says that buyers of solar panels should include some

domestic production in what they buy, is not enforceable, Solar

Power Europe said.

Michael Bloss, EU parliament member for Greens, launched a

petition earlier this month calling for action at a European

level to rescue panel manufacturers.

Bloss says he is pushing for the European Commission to set

up a 200 million euro ($213 million) fund to buy up unused

European-made solar panels, but Europe has been unwilling to

pursue that. The European Commission declined to comment.

"We are -- in headlines and Sunday speeches -- very much in

favour of creating our own solar industry, but then in action,

nothing happens," Bloss told Reuters.

"The charter will be more like a political declaration

signed by member states, solar companies and the Commission,

it's more long term, it has no immediate effect."

In February, European policymakers adopted the Net-Zero

Industry Act, a set of measures including a target to produce

40% of the region's clean tech needs by 2030.

The previous month, the EU also approved almost $1 billion

of German state aid for a Swedish battery

producer, Northvolt, to help it set up a production plant in

Germany after Northvolt threatened to take its business to the

United States. It was the first time the bloc made use of an

exceptional measure allowing member countries to step in with

aid when there's a risk of investment leaving Europe.

But aid for ongoing operations has not been forthcoming,

amid political disagreement over how much public funds should go

to struggling businesses.

Decisions about supporting industries or firms like Meyer

Burger are down to member states, a spokesperson for the

European Commission told Reuters. Germany's economy and climate

ministry believes aid to maintain an existing company like Meyer

Burger would not be legal "if there is a lack of market

prospects from the company's perspective," a spokesperson told

Reuters.

Potential customers -- renewable energy installers that

depend heavily on cheap Chinese imports -- have also pushed back

against any new subsidies for local panels, arguing such moves

could hurt them by causing consumers to postpone orders as they

wait for the subsidies to kick in.

INTERTWINED

More than a year's worth of low-price imported panels sit in

European warehouses awaiting installation, according to

consultancy Rystad Energy and solar panel makers. Reuters could

not independently verify that estimate.

That backlog could grow as Chinese capacity continues to

expand, Rystad says: If all the plans Chinese firms have

announced go ahead, China's industry will be able to make twice

as many panels as are expected to be installed worldwide in

2024, said Marius Mordal Bakke, senior analyst at Rystad.

Dresden-based Solarwatt is carrying six to nine months of

stocks, up from around six weeks, its chief executive Detlef

Neuhaus told Reuters in March.

The company laid off around 10% of its employees last year

and says its local panel production is running at roughly

one-third of capacity.

"This industry is so important for the future, we cannot

allow that we are losing all our competence," said Neuhaus.

Analysts say it's not clear what support could actually

help, because firms like Meyer Burger produce a fraction of the

volumes made by those in China, or planned in the U.S.

"They are tiny, so they will always struggle with volume,

not just to compete with Chinese producers but also with U.S.

producers," said Eugen Perger, senior analyst at Research

Partners AG.

And local clean technology industries are so globally

intertwined it's hard for European manufacturers to imagine a

fully independent supply chain.

Norway-based NorSun, which produces solar wafers - thin

silicon film used in panels - said Chinese equipment is crucial

to both its plant in Norway and a proposed facility in the U.S.

The company has halted production at the Norway plant while it

decides whether to upgrade it.

Most of the equipment for either project would have to come

from China. "There's essentially no other option," said Carsten

Rohr, chief commercial officer at NorSun.

DEJA VU

Freiberg has been here before. Since the 1990s, companies

setting up operations in the region have benefited from federal

funding programmes to rebuild east Germany and help it close the

gap with western Germany's prosperity.

New industries sprang up, including in solar and

semiconductors. But Freiberg took a big hit in the 2010s after

China's solar industry boosted production and undercut

competitors.

In 2020, the German government removed a cap on subsidies

for solar power installations which helped lift demand. In 2021,

the EU's Green Deal signalled political support for future

demand, and Russia's full invasion of Ukraine also helped solar

deployment.

Meyer Burger, which is headquartered in Gwatt, Switzerland,

only set up production in Freiberg in 2021 as the industry

started coming back to life. It refurbished a bankrupt solar

company's plant that had stood unused for almost three years.

For a while it became one of the town's largest employers,

mayor Sven Krueger confirmed.

"This is the second time the German solar industry is at

risk. They failed once already," said apprentice Max Lange, 19,

greeting colleagues with a silent nod as they cleaned idled

machinery on the factory floor.

"If it fails again, I doubt that I will be able to pursue a

career in the European solar industry, because I don't think it

will come back," he said, wondering aloud if he might instead

find work in the U.S. solar industry.

($1 = 0.9397 euros)