The German electronics giant announced on October 22 that it would exit both the solar thermal and photovoltaic business after its solar energy activity expectations were not met. However, it said it would continue to produce components for thermal solar and photovoltaic plants, which are manufactured outwith its Solar & Hydro division.
A spokesperson has now told pv magazine, "Against the background of weakening demand for PV components we are planning to tune our inverter business for photovoltaic systems to the changed circumstances in the market and scale down business significantly. This means specifically that in fiscal 2013 we will be marketing our SINVERT portfolio only in selected countries. Service orders for our customers will be handled as usual."
They added that longer-term statements are not possible, due to the "volatile" photovoltaics industry. Figures for future production capacities can also not be shared, they said. Currently, Siemens has an inverter production capacity of around one GW in Fürth, Germany, and approximately 300 MW in Chicago, the U.S.
This July, Siemens employees were informed about the companys plans to adjust its inverter business on the back of weakening demand. "This concerns around 240 employees in our location in Fürth, Germany. How they will be re-organized is still subject to the ongoing discussions with the employee representatives," continued the spokesperson.
In addition to inverters, Siemens manufactures automation components for photovoltaic panels, silicon and trackers. "The manufacturing of required automation components has not been affected by the PV market slowdown significantly as they only make a rather small stake in our overall automation portfolio. (Around 20 billion EUR turnover/in Siemens Industry Sector)," added the spokesperson.
The announcement by Siemens last week that it would exit the solar business has thrown up a lot of questions as to exactly which of its operations will be affected. This is made all the more complicated since they are spread across a number of different departments.
What is clear is that its Solar & Hydro division will be sold off, however, the question as to whether it will sell its 40% stake in Israel-based Arava Power Company which installs photovoltaic plants in Israel is still open, as this belongs to Siemens Financial Services division. A separate company spokesperson told pv magazine, "It’s hard to say at the moment but following the Siemens AG Solar activity divestiture decision, the investment in Arava might be revisited."
It is also unclear what will happen to the company’s solar project financing business. To date, Siemens has declined to comment.
In terms of why exactly Siemens’ decided to leave the solar industry, an energy department spokesperson said the reason was two-fold. For CSP, the shrinking market, due to the photovoltaic price decreases mean that it is now too small a market for the company to address. They cited the switch by the Blythe Solar Project from CSP to PV, as just one example. "Its a competing technology right now," they said.
"In the PV business it is a little different because we have no production we only have expertise and project pipelines, because we are working as EPC and we do not produce cells or modules," continued the spokesperson. "The EPC business is not profitable enough to be of interest to Siemens."
They explained the company usually looks to achieve an operating margin range of at least 3 to 6%, and the division was not seeing this. "The only way to get a higher volume would have been to enter the upstream market and we didnt want to do that," they concluded.