German industrial group Siemens has pulled out of its solar power business to focus on hydro and wind energy.
In a statement, Siemens said that “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.”
With Siemens currently engaged in talks to sell the photovoltaic activities associated with the solar and hydro division, which employs around 800 people, its core European market has been hit by falling demand after a number of countries cut subsidies on green energy.
Renewable energy is still less profitable than fossil fuels and investment and therefore sales are largely dependent on government support.
With manufacturers focusing on growing their service arms, Siemens will continue to sell steam turbines, generators and control systems to solar companies.
Michael Suess, chief executive of Siemens’ Energy, said: “The global market for concentrated solar power has shrunk from four gigawatts to slightly more than one gigawatt today. In this environment, specialised companies will be able to maximise their strengths.”
“The importance of renewable energies in the global power mix will continue to grow and hydro power and wind energy will remain the major renewable contributors. Our renewable energy activities will be focused on these two areas,” he added.
Siemens’ hydroelectric activities include the joint venture Voith Hydro for conventional hydro plants, and it fully acquired a tidal turbine business in the spring of 2012.
With low growth and increasing competition from Asia, Siemens’ decision to disband follows a dip in solar panel prices.
Bruce Jenkyn-Jones, managing director at environmental investor Impax, told The Guardian that the market has become “very, very competitive” with only the “lowest-cost producers that survive in the middle of this downturn.”
Two German manufacturers of solar panels, QE Cells and Solar Millennium, have filed for bankruptcy in the last year.
It is another blow for the renewables industry following the disappointing results posted by General Electric (GE) for its wind unit, as orders for wind turbines plunged following a key US wind subsidy expiring at the end of this year.
GE’s chief executive, Jeff Immelt, has predicted that wind revenue at GE will drop by 40% next year.