Big Businesses Seek Out Solar as Sector Heats Up
US: June 23, 2008
NEW YORK - Big business is officially going solar.
This month, several of the world's biggest technology and manufacturing
companies -- including Intel Corp and International Business Machines Corp
-- made major moves into the burgeoning solar power business.
That could be the start of a trend as corporate giants look to capitalize on
the growing demand for cleaner energy sources.
"These announcements are a great indication of where the solar industry is
going," Rhone Resch, president of industry trade group the Solar Energy
Industries Association, said in an interview on the sidelines of the
Renewable Energy Finance Forum conference in New York this week. "This is
the beginning of both high-tech and energy companies getting into solar."
Solar power still makes up a tiny fraction of the world's energy
consumption, but the makers of panels that transform sunlight into
electricity are enjoying supercharged growth due to heightened concerns
about climate change and rising prices on fossil fuels.
In the last few years alone, solar companies including San Jose,
California-based SunPower Corp and Germany's Q-Cells AG have grown from
small technology-focused start-ups into businesses with multibillion-dollar
market capitalizations. Now, other companies want a piece of that
fast-growing market.
A few tech companies, such as chip equipment maker Applied Materials Inc and
SunPower stakeholder Cypress Semiconductor Corp, got into the solar business
earlier this decade, recognizing the similarities between their own
industries and technology-driven solar power. With their proven successes,
others are following.
"What the strategic players bring is that ability to bring large-scale
manufacturing," said Kevin Genieser, who heads Morgan Stanley's renewable
energy investment banking practice. "We're expecting to see merger and
acquisition activity ramp up in the solar space," he said at the conference.
'THE REAL DEAL'
This week, the world's largest maker of semiconductors, Intel, said it would
spin off solar technology it developed into a start-up called SpectraWatt
Inc, and IBM said it had joined forces with semiconductor process company
Tokyo Ohka Kogyo Co Ltd (TOK) to develop more efficient solar power
technologies.
Intel is leading a US$50 million investment round in SpectraWatt, which will
begin shipping its solar cells next year, while IBM and TOK plan to license
their copper-indium-gallium-selenide thin film solar technology in the next
two to three years.
Those moves came on the heels of Robert Bosch GmbH's announcement earlier
this month that it would buy German solar cell maker Ersol for 1.08 billion
euros (US$1.67 billion). Privately owned Bosch is the world's biggest
automotive supplier.
Finally, also this month Hewlett-Packard Co, the world's biggest computer
maker, said it would license its clear transistor technology to Livermore,
California-based solar power company Xtreme Energetics.
Many said the interest from corporate stalwarts lends new credibility to
solar power, proving that it is far from a fad.
"Intel, IBM and HP announcements of new solar initiatives (on the heels of
Bosch acquisition of Ersol) validate solar's long-term opportunity," Piper
Jaffray analyst Jesse Pichel said in a note to clients this week.
Even Tom Werner, chief executive of SunPower, agreed that with Intel and IBM
in the business, financiers and others can't help but see solar as "the real
deal."
Werner said IBM and Intel would certainly raise the competitive bar, but he
added that SunPower's well-established business has a significant advantage.
"For us, it just makes us sharpen our sword a little bit more," Werner said
in an interview. "The Intel thing, they are breaking ground now. We've been
shipping for several years now, so if we can't stay in front of that, shame
on us."
Resch and Pichel also said new entrants into the market, however large, were
unlikely to hurt established players given that demand for solar panels far
outpaces supply.
Still, there are some who say the big companies now coming into the solar
fold may just be too late to the party.
"Today it may be a day late and a dollar short," said CRT Capital Group
analyst Ashok Kumar. "Most of the domestic and overseas players have already
built up scale." (Additional reporting by Duncan Martell in San Francisco)
(Reporting by Nichola Groom; Editing by Steve Orlofsky)
Story by Nichola Groom
REUTERS NEWS SERVICE
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