Ferrostaal, the German industrial contractor owned by the Abu Dhabi Government, aims to double its revenues from its solar power business within four years.
Ferrostaal tie to lift solar profits
Ferrostaal, the German industrial contractor owned by the Abu Dhabi Government, aims to double its revenues from its solar power business within four years by building plants in the UAE and other sun-drenched countries, the chief executive says. The company, which is 70 per cent-owned by the International Petroleum Investment Company (IPIC), announced a partnership with eSolar, a California-based firm that builds mirrors and towers to capture the heat of the sun and generate electricity. It is Ferrostaal's third tie-up with a solar maker, allowing it to market a wide array of solar technologies in an effort to become a dominant solar contractor worldwide.
The firm, as an asset of IPIC, is separate from Masdar, the clean energy firm owned by Mubadala Development that has led Abu Dhabi's investment in solar energy. When IPIC acquired its stake in Ferrostaal last year from MAN, the German lorry maker, it emphasised its capability to engineer and construct petrochemical plants and other industrial facilities. But IPIC was also "very interested" in the renewable energy business, said Matthias Mitscherlich, the chief executive of Ferrostaal.
"We intend to double our annual turnover in the solar business" by 2014 or 2015, he said yesterday. "We will strongly participate in renewable energies that are a growth market." The firm's solar revenues of ?340 million (Dh1.69 billion) last year came from work as the general contractor for a 50-megawatt solar thermal plant in Spain called Andasol 3, said Hubert Kogel, a spokesman. The Ferrostaal group, which includes its larger industrial contracting business, has not yet disclosed annual earnings, but took in ?1.64bn in total revenues in 2008.
The company was looking with particular interest at markets in the UAE, Qatar, Oman and South Africa but had not yet finalised any deals, he said. Ernst Franz, the director of power industries for solar energy, had said earlier that Ferrostaal was working on a solar project in the UAE, but could not offer details. "It's in the UAE, not Abu Dhabi, not Dubai," he said. But the larger market for solar power would not take off in the UAE and many other countries in the region unless they develop subsidies or some other form of policy to support the technology's higher costs versus fossil fuels, he said.
"There are a lot of project ideas on the market," he said. "The problem right now is you have areas that have subsidised prices for natural gas. They have to put subsidised prices as well for solar energy." Ferrostaal specialises in solar thermal plants, which use mirrors or lenses to heat water to produce steam, which is then used to turn a conventional generator to produce electricity. The key challenge is to figure out ways to reduce the cost and boost the efficiency of the mirrors and heating system, and Ferrostaal has moved to acquire a number of options.
eSolar, which operates a 5mw plant in California, heats water in a tower at the centre of an array of mirrors that focus the rays of the sun. Each solar array includes one tower for every 2.5mw of power capacity. Ferrostaal has a partnership with Millennium Solar, which uses mirrored troughs to heat water or oil in a central tube. The technology is the best developed solar thermal option and is the one in use at Andasol 3. Ferrostaal is also testing the effectiveness of a third technology in partnership with the German government that would use flat mirrors and simpler materials to reduce costs.
* Additional reporting by Ivan Gale firstname.lastname@example.org