Solar Industry Consolidation Continues
It’s almost as it were on cue—unfortunately. This week German giant Siemens said it was getting out of the solar industry. Now the Norwegian Renewable Energy Corp. (REC) said it would be a good candidate for a takeover. Both stories follow a report last week which forecasted that more than 180 companies in the solar business could be purchased or go out of business by 2015.
The report by GTM Research suggested that the majority of companies that would go out of business or consolidate would be in more expensive manufacturing places like Europe and the U.S. Most manufacturing would be in places where labor is cheap, like in China, which already is dominating the solar manufacturing sector. It appears the predictions are already coming to fruition since two of the first new companies since the report came out are from Europe.
On Monday Siemens the company said it would seek to sell off its concentrating solar power company, Solel Solar and its photovoltaic manufacturing unit, which it purchased in 2009 as Archimede Solar Energy. It also is ending its participation in the Desertec plan to build giant solar farms in the Sahara to power Europe.
The company made the decision, “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,” it said in a statement announcing its plans. The company is making the changes as it attempts to raise its earnings to higher levels.
Following its quarterly earnings report on October 26 REC CEO Ole Enger said the silicon photovoltaic manufacturer could be purchased. “We won’t be surprised if there are more mergers in the time ahead,” Bloomberg Businessweek reported he said. “When results are like now, you must always be open for solutions that can give better results.”
REC’s silicon wafering unit already has declared bankruptcy, and during the most recent period it reported net income equivalent to $71 million. The results were, as expected, below estimates.
REC’s CEO also noted that it is one of the few remaining PV manufacturers in Europe. “Most others are bankrupt or have been shut down,” he said. As such REC will remain a likely candidate for a takeover.
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