Solar thermal power company Solel Solar Systems has found an exit. Less than a year after Solel raised a gigantic $105 million investment from London-based firm Ecofin to help finance a plant in California’s Mojave Desert, Siemens has announced today that it is buying the Israeli company from Ecofin (and another unnamed major shareholder) for $418 million.
In a time when the merger and acquisition market for cleantech startups is about as dry as the Mojave, today’s deal is a head turner. And with Siemens angling to expand its role in solar thermal, the raft of startups now leading this space — companies like BrightSource, eSolar, Ausra and SkyFuel — could find themselves with a tough, deep-pocketed new competitor.
Being big has advantages in the solar thermal market, as Fred Morse, a senior U.S. adviser for the solar arm of Spanish renewable energy giant Abengoa, told us in an interview last year. Decades of project financing experience and an R&D budget on the scale of of tens of millions of dollars can give companies like Abengoa — and Siemens — an edge in the race to build massive solar systems that can require investment of hundreds of millions to billions of dollars.
Headquartered in Beit Shemesh, Israel, with a subsidiary on the U.S. West Coast, Solel has built a work force of more than 500 people over the last 14 years and snagged a deal back in 2007 to sell power generated at its Mojave project to California utility PG&E. The company has been on the hunt for a buyer for the last six months as part of an effort to gain a higher profile internationally and raise funds for more big-budget projects.
According to Siemens’ release this morning, Solel posted a revenue of nearly $90 million for the first half of this year, thanks to a solar receiver supply business (a key component for parabolic trough projects like the one pictured above) and its work engineering, planning and building solar fields. “In the future,” Siemens Renewable Energy Division CEO Rene Umlauft said in the release, “we’ll be able to offer the key components for the construction of parabolic trough power plants from a single source,” (Siemens already supplies steam turbines for solar thermal plants), and also boost solar thermal plant efficiency.
Siemens expects the market for solar thermal power plants to see “annual double-digit growth rates and attain a volume of over €20 billion ($29.9 billion)” by 2020. As early as June, Siemens was reported to have entered talks with Solel for an acquisition deal, and Germany’s Handelsblatt newspaper (h/t Dow Jones) reports this morning that Siemens beat out French bidders Alstom and Areva by upping its initial offer of $250 million — interest that bodes well for solar thermal startups.
For more background on Solel, check out our Q&A with CEO Avi Brenmiller.