Siemens Shuts Solel 4 Years After Buying It

Germany parent company bought the Solar energy equipment maker for $418 million, but has since written off the entire investment.

Solar energy equipment maker Solel Thermal Systems is shutting down following a decision last week by Siemens, the company’s German parent, to close the plant in Beit Shemesh after failing to find a buyer.

About 150 employees are expected to receive pink slips over the next few days. Another 200 workers have been laid off over the past two years.

Siemens bought Solel only four years ago for $418 million, but has since written off the entire investment. Last November, Siemens announced it was closing down its global solar energy operations, having reported 850 million euros in cumulative losses on its investments in this field.

Siemens’ decision to exit the industry comes amid the collapse of the global thermal solar industry due to its relatively high costs.

Prices for a rival technology, photovoltaic panels, have fallen 80% in the last several years while the cost of generating electricity using the technology has fallen by half since 2009 to 15 cents a kilowatt. Meanwhile, production costs for thermal solar energy have remained between 25 cents and 30 cents per kilowatt.

Siemens was in talks with several multinational companies to sell the plant, which is believed to have cost tens of millions of dollars a year to keep operating. One of these was Abengoa of Spain, but talks broke down several weeks ago due to an insufficient number of projects in the pipeline for Solel.

It is believed that the two sides were talking about the Spanish company’s taking on Solel’s debt without any cash consideration.

Meanwhile, Abengoa has replaced Siemens in a consortium vying for an international tender to build a solar thermal energy power plant at Ashalim in the Negev. It isn’t yet clear whether its backing out of the Solel deal will affect its participation in the tender.

The 50 remaining workers at the Solel plant will complete three projects involving the company in Spain and provide maintenance for other solar systems established by the company abroad.

Siemens is also putting up for sale its 37% stake in the photovoltaic energy company Arava Power, which holds the second largest market share in the industry in Israel.
 

AP