* Expectations for solar were not met
* Renewable business to focus on wind, hydro
* Sale is part of new savings programme
* Solel ex-CEO says considering buying back business
By Maria Sheahan
FRANKFURT, Oct 22 German engineering group
Siemens is pulling the plug on its loss-making solar
energy business and is already talking to potential buyers as it
tries to close the profitability gap with its peers.
Demand for solar power has been hurt by top consumer Europe
cutting back subsidies for green energy and the euro zone debt
crisis crippling the finances of sunny countries such as Greece
"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 said on Monday.
Siemens said this month it would review underperforming
businesses as part of its new savings plan, to catch up with the
profits of peers such as Swiss group ABB or U.S.-based
The businesses up for sale are solar thermal power plant
maker Solel, whose former chief said he was considering buying
back the business, and the photovoltaics unit.
They have a total 680 employees and annual revenues of less
than 300 million euros ($391 million), tiny compared with
Siemens' annual group sales of 73.5 billion euros.
But an exit from solar energy, which will leave Siemens with
only wind and hydro power in the renewable energy sector, is
still a blow to Chief Executive Peter Loescher, who had hoped
Siemens would prove just as successful in solar as it has been
in wind power.
Siemens has already sold its stake in Italian solar thermal
firm Archimede back to majority owner Angelatoni Industries, and
analysts have said the company could seek to divest or
restructure further businesses, such as its underperforming
Infrastructure & Cities division.
Falling prices for solar panels, competition from China and
declining subsidies have caused a shake-up in the solar industry
that has caused some companies to collapse or exit the sector.
Others have jumped at the opportunity to buy assets at low
prices, like South Korea's Hanwha, which bought
insolvent German solar company Q-Cells this year.
At Siemens, the sale of the solar businesses puts an end to
decades of investment in the sector. It was part of a pilot
photovoltaic project on the Greek island of Kythnos in the early
1980s, and in the 1990s it built up one of the world's biggest
makers of solar panels, which it later sold to Shell.
In 2009, it paid $418 million for Solel, anticipating almost
20 percent market growth by 2020, but later suffered impairment
losses as the business failed to generate profits.
Avi Brenmiller, former CEO of Solel, said he was considering
buying back the business as he focuses on developing solar
hybrids with fossil fuels.
Solar "is a sector that has great importance to energy
independence and to the environment in general, as well as
providing an economic solution suitable for many countries,"
Brenmiller told Reuters on Monday.
Siemens did not comment on who could buy its solar units.
The company has not yet said how much money it aims to save with
its new savings programme and is expected to provide further
details when it publishes its full-year results on Nov. 8.