Solar startups aren’t the only ones getting burned in the solar power market these days. Siemens, which up until now has actively invested in solar startups, announced on Monday it will exit the solar biz and sell its solar energy business.
The decision reflects the poor outlook for the solar market by an energy giant, which had previously raced to tackle various segments of the business — including manufacturing, equipment sales and power plant engineering and construction — in order to compete with its big nemesis, GE. But the growth of the global solar market hasn’t met expectations, Siemens said in a statement, adding that changes in government policies and slim profit margins are among the chief causes.
Siemens’ exit also likely means it will not be actively looking to invest in any more solar startups, for the time being. The company has poured money into startups by either buying an equity stake of the company or by acquiring products from them. Siemens has invested in North Carolina-based Semprius, which developed a new way of producing highly efficient solar cells, and solar energy equipment to use those cells. Siemens bought Israel-based solar thermal technology company, Solel, a few years back. Siemens also inked a supply deal with Enphase Energy, before Enphase did an IPO in March this year. Microinverters are attached to solar panels and convert the direct current produced by the solar panels to alternating current for transport through the grid.
Siemens made its decision to leave the solar market at a time when many solar manufacturers have suffered big losses and filed for bankruptcy. But those falling prices are supposed to benefit companies that buy the solar equipment for engineering and building solar power plants. On the other hand, the solar plant development business is getting crowded because it’s attracting so many newcomers, like solar manufacturers who want outlets for their products.
The global solar market has faced a glut of solar panels for nearly two years now, and the plummeting prices for them have forced many manufacturers to file for bankruptcy. One of them, organic thin film developer Konarka Technologies, just found a buyer for its German subsidiary. Belelectric, which builds solar power plants with photovoltaic panels, on Monday said it will buy the subsidiary but didn’t disclose the price. Massachusetts-based Konarka filed for bankruptcy in June this year after struggling for years to commercialize its low-efficiency solar film technology.
Nearly 200 more in North America, Europe and Asia will likely disappear in the next few years, according to GTM Research. Nearly half of them will not be around – either because they went out of business or will be bought – in places of high production costs, such as the U.S. GE has scaled back its solar market ambition, too, and decided earlier this year to nix a plan to build a 400 MW solar panel factory.
Even countries with lower manufacturing costs aren’t immune. Just last week, SunPower said it would idle several solar cell and panel production lines in Philippines and let go about 900 employees worldwide. During that same week, Boston-based Satcon Technology, an inverter maker, filed for bankruptcy.
Other solar technologies aren’t faring so hot either. After inking gigawatts of contracts to sell electricity to utilities, particularly in California, solar thermal power plant developers aren’t winning many new contracts in the U.S. these days. Solar thermal technology uses mirrors to concentrate sunlight to generate steam and run turbine-generators. Before the Monday announcement, Siemens was in the business of building solar power plants using photovoltaic panels (with solar cells inside) and also solar thermal technology.
The German company said it will focus its renewable energy business on wind and hydropower instead. Siemens will continue to sell the equipment that makes up a solar power plant, though, such as steam turbines and machines to control a power plant or grid operations, but those products have always come from other business groups, not the solar and hydro division.