By Jason Deign

The sun has stopped shining at Siemens. On October 22, the German electronics and engineering giant announced it was going to pull the plug on its solar business, citing “changed framework conditions, lower growth and strong price pressure.”

In a press statement, Siemens’ energy sector chief executive Michael Süß added: “The global market for concentrated solar power has shrunk from 4GW to slightly more than 1GW today. In this environment, specialised companies will be able to maximise their strengths.”

It is fair to say the company’s decision to throw in the towel was not taken lightly. Siemens first dipped its toe in the solar business in the 1980s, when it took part in a pilot photovoltaic (PV) project on Kythnos, an island in Greece.

In 1991 it bought a PV panel manufacturing business called Arco Solar. Rebadged Siemens Solar, the company became one of the leading PV brands of the 1990s, before being sold to the petrochemical behemoth Royal Dutch Shell at the end of the decade.

By 2009 Siemens was ready to repeat that success in the CSP market. It bought the Israeli equipment maker Solel Solar Systems for USD$418 million with an expectation of seeing the global solar thermal market grow 20% by 2020.

This time last year, Siemens told CSP Today it was hoping to install its SunField 6 collectors, already in use at Spain’s Lebrija plant, in at least three other projects across the country, besides taking part in a tender for the 120MW Ashalim plant in Israel.

“We are investigating solar field projects, as well as providing the power block, to other markets,” Eli Lipman, vice president of research and development, said at the time, forecasting interest from South Africa, India, Italy, Spain, Israel and North Africa.

It is clear that interest failed to materialise for Siemens.

Solar business

While the company is a top-10 wind turbine maker, with an order backlog of more than €10 billion and more than 7,000 dedicated employees, as of this month its solar business only employed 680 and had revenues of less than €300 million, according to Reuters.

In the run-up to the divestment notice, Siemens had been making noises about the need to tighten belts. Peter Löscher, chief executive, this month brought in cost-cutting measures after its orders fell 23% year on year and its stock lost to competitors such as General Electric.

“We will take a close look at businesses in our sector structure whose profits haven’t met our expectations for a longer time,” he said.

“We will take specific countermeasures to overcome permanent burdens on the company resulting from insufficient profits in individual businesses.”

In this context it is perhaps not surprising that the solar division was in the firing line.

Siemens Energy spokesperson Alfons Benzinger says: “The CSP market has developed clearly below our expectations, from 4GW down to 1-1.5GW per annum, mainly due to volatile changes in government regulations: retrospective changes in Spain, delays in US.

“Additionally, CSP has been under tremendous pressure from the significant price decline in PV.”

He also confirms that Siemens is in negotiations with potential buyers for the business.

Solel founder

And, indeed, barely had the divestment announcement gone out than the industry was buzzing with talk of a likely suitor for the solar division: none other than Avi Brenmiller, Solel’s founder, who bowed out as head of Siemens Solar a year ago.

Brenmiller, who currently runs an Israeli CSP-natural gas hybrid research company called Brenmiller Energy Consulting, tells CSP Today he was “not totally surprised” by the Siemens announcement.

Press reports suggest he may be able to re-acquire the business for less than he sold it for, yet “the fact that I’m considering it shows there is value there,” he says.

In fact, while Siemens’ retirement is bound to raise questions about the future of the solar industry, the irony is that other major players with more of a pedigree in CSP are not doing so badly right now.

Spanish engineering giant Abengoa, busy with the massive Solana project in the US, Shams 1 in Abu Dhabi and Khi Solar One and KaXu Solar One projects in South Africa, is tipped to take the Siemens share of the Ashalim plant, along with Shikun & Binui Holdings.

Meanwhile Acciona and Sener, two other Spanish CSP leaders, are celebrating after being selected as engineering, procurement and construction partners for the 160MW Ouarzazate CSP project in Morocco last month.

And two days after the Siemens announcement, America’s BrightSource Energy trumpeted raising $80 million in equity financing from backers including Alstom and VantagePoint Capital Partners.

These glad tidings lend support to Süß’s view that for now CSP might best be left to “specialised companies.”

As Brenmiller notes, Siemens retirement from the game is unlikely to project a rosy image for CSP, but “it’s not totally reflecting on the industry,” either.

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