SMA Solar, Siemens Join Foreces to Target Large Solar Projects

Germany's SMA Solar  and engineering company Siemens (SIEMENS.NS) have teamed up to equip utility-scale solar parks with technology to link them to power grids in an effort to benefit from rising global demand for photovoltaics.

Demand for solar panels has grown steadily in recent years as governments have sharpened their focus on renewable energy sources and pledged to reduce carbon emissions and exposure to conventional fossil fuel-based energy.

Global solar power demand is expected to increase by 30 percent this year to 57 gigawatts (GW) -- equivalent to the annual capacity of about 57 nuclear plants -- from about 44 GW last year, according to research firm IHS.

As part of the deal, SMA will supply solar inverters, which are needed to turn direct current into alternating current, while Siemens will provide the technology for grid connection, SMA said on Wednesday.

With Siemens' help, Germany's biggest solar company by sales aims to better compete with larger rivals such as Schneider Electric (SND.HA) and ABB in the market for large-scale inverters, worth about 1.7 billion euros ($1.92 billion).

"Through the deal, SMA has increased its attractiveness in this market segment," Chief Executive Pierre-Pascal Urbon told Reuters.

No financial details were disclosed, but SMA said the partnership would contribute to earnings from 2016.

Shares in SMA surged more than 20 percent at the top of Frankfurt's technology index in afternoon trading, hitting 21.49 euros, their highest level in more than eight months. Shares in Siemens were up 0.3 percent.

"First and foremost it's Siemens' brand name that is getting investors excited," one trader said.

Among the partnership's targets will be the United States, where large-scale solar projects are most common because of the investment tax credits on offer.

"By taking mutual advantage of our global sales and service networks, both companies will increase their market coverage in real terms," said Ralf Christian, CEO of Siemens' Energy Management arm, which caters for the utility sector.

Profit at the division reached 93 million euros in Siemens' financial second quarter, accounting for 5 percent of the group's total industrial business profit.

Siemens is also the world's biggest maker of wind turbines, according to MAKE Consulting, and last week signed an 8 billion euro deal with Egypt to supply gas and wind power plants.
 

(By Christoph Steitz, Additional reporting by Daniela Pegna)