Siemens to shut down loss-making solar business

Global engineering and electronics giant Siemens AG will shut down its solar power unit after failing to find a buyer for the loss-making business, German business newspaper Handelsblatt reported yesterday, citing sources.

It has been reported that the German company could not find an investor for the business although it had held negotiations with a number of potential buyers.

After losing over $1billion since 2011, Siemens will close its last solar plant in Israel, leading to around 280 job losses. According to the newspaper, the closure is expected to cost approximately €50 million.

Last October, Siemens had said that it would sell its solar thermal energy unit and photovoltaic business and was looking for prospective investors. Instead, the company said it will focus on its other renewable energy activities such as wind and hydro power. (Siemens to exit solar thermal, photovoltaics business)

''Due to the changed framework conditions, lower growth and strong price pressure in the solar markets, the company's expectations for its solar energy activities have not been met,'' Siemens chief executive Peter Löscher had said.

''Investments in this area, not just for us but for others, were not worthwhile,'' he had also commented.

At that time, the company had said that it would continue to operate the units until the sale to fulfill its existing contractual obligations.

Munich-based Siemens' portfolio in the solar power plant business ranges from individual components such as solar receivers to complete solar thermal power plants and large-scale photovoltaic systems in the megawatt power range.

Siemens had acquired Israeli solar firm Solel Solar Systems in 2009 for $418 million, in order to replicate its successful wind power business. (See: Siemens acquires Solel Solar Systems for about $418 million)

It also increased its stake in Italian solar thermal company Archimede Solar Energy Srl to 45 per cent in 2010, but later returned the stake to majority shareholder Angelantoni Industrie SpA when the company decided to dispose of the solar business.

Seimen's endeavours in renewables could not succeed due to slumping prices for solar products as a result of global economic slow down and stiff completion from other players. Moreover, the perception that the solar

unit is an Israeli company, could have also affected its North African market, being one of the biggest for the industry.

According to some estimates, Siemens' losses mounted to at least €784 million in the past two years.

Although Siemens was not available for any comments on the closure plan, Handelsblatt said a company spokesman confirmed to the paper that the unit will be shut down soon.

In October 2012, the Munich-based company said that will sell its solar power and photovoltaics business and instead focus on its other renewable energy activities like wind and hydro power. 

Although it was in talks with several potential buyers, negotiations got nowhere due to the downturn in the global solar industry where many photovoltaic companies have recently filed for bankruptcy.

"There was no sign of a transaction which would have taken into account the interests of clients, staff, investors and the company itself in an adequate way," Siemens said in a statement.

The global market for concentrated solar power has shrunk from four gigawatts to slightly over one gigawatt today.