Siemens Pulls Plug on Solar Business

on Oct 23, 2012
Listen

German engineering group Siemens (FRA:SIE) said that it plans to pull out of the solar business, after an ambitious effort to bolster the company’s solar energy profile fizzled amid sinking prices, cutbacks in government subsidies, lower consumer confidence and cheap Chinese competition, The Times reported on 23 October 2012.

**Sun Sets on Siemens’s Solar Ambitions**
Siemens had been in the vanguard of the solar revolution for more than 25 years, building up not just a bank of solar technology, but also a solar power business which employs over 680 people around Europe and provides annual revenue of about €300 million (£244 million). Yet despite Siemens’s effort and investment in the sector, revenue from its solar power operations accounted just for a tiny fraction of the company’s €73.5 billion (£59.5 billion) in total revenue last fiscal year.

According to Siemens’s energy division chief executive Michael Suss, expectations in regards to profitability have not been met “due to the changed framework conditions, lower growth and strong price pressure in the solar markets”. Suss stressed that in recent years, “the global market for concentrated solar power has shrunk from four gigawatts to slightly more than one gigawatt today.” In such a tough environment, only “specialised companies will be able to maximise their strengths,” he said in a statement announcing Siemens’s decision to abandon its solar power operations.

The move is a blow to the ambitions of Siemens’ chief executive Peter Loscher, who aimed to make the group one of the leaders in the industry, involved in both the solar thermal end of the market, in which equipment and machinery is powered by the sun’s heat, and photovoltaic panels, which use the sun’s light.
!m[German Engineering Group Bows Out of Solar Power and Turns towards Wind and Hydro](/uploads/story/626/thumbs/pic1_inline.png)In 2009, Siemens acquired the Israeli Solel Solar Systems and purchased a stake in Italian solar thermal specialist Archimede Solar Energy. But after last year the German engineering group booked €231 million (£288 million) in charges related to these operations, Siemens sold its stake in Archimede back to majority owner Angelatoni Industries and is now in talks with undisclosed potential buyers to sell its Siemens-Solel plant. The company did not comment on who could purchase its solar units, but promised employees it would not sell the plants to a buyer who does not intend on continuing its solar power production.

**Focus on Wind and Hydro Power**
Despite the plan to divest the company of its solar business, Siemens said it would continue to make and sell traditional technologies for solar-power plants, such as steam turbines, generators, grid technology and control systems. But while Siemens had previously placed its bet largely on solar power production, now the company is set to concentrate on its wind and hydro power operations. The group’s energy sector CEO, Suss, said: “The importance of renewable energies in the global power mix will continue to grow, and hydropower and wind energy will remain the major renewable contributors. Our renewable energy activities will be focused on these two areas.”

Ad

Invest in commodities like Gold, Wheat, Lithium, Oil & more in minutes with our highest-rated broker, eToro.

10/10

eToro offers real assets only, no CFD products. eToro USA LLC and eToro USA Securities Inc.; Investing involves risk, including loss of principal; Not a recommendation.

Visit site

Featured Broker

Looking to invest?

Invest globally in stocks, options, futures, currencies, bonds and funds from a single unified platform, with our highest-rated broker.

Ad
Commodity Energy Energy & Power Manufacturing Stock Market Tech