x Abu Dhabi, UAESunday 21 January 2018

Qatar set to buy stake in Germany's SolarWorld

Qatar is poised to invest into Germany's Solarworld, a loss-making company that could provide valuable technology and sales infrastructure.

Qatar is poised to invest into Germany's Solarworld, a loss-making company that could provide valuable technology and sales infrastructure.

Qatar Solar Technologies (QSTec), a subsidiary of the Qatar Foundation, could reportedly spend close to US$50 million on a 30 per cent stake in the ailing producer of photovoltaic (PV) panels. It is also said to be ready to buy a €200m (Dh983.9m) convertible bond issued by Solarworld.

The company has suffered from the rapid decline in prices for solar panels, regarded as the consequence of expanding Chinese production. Solarworld's losses a mounted as prices dropped by three quarters between 2009 and 2012.

The German company holds a 29 per cent stake in QSTec, which aims to become an integrated solar player.

The joint venture is constructing a plant for the manufacture of polysilicon, the material used in PV panels, in Qatar. A move for a stake in Solarworld would complement existing operations.

"It would be a quick way for Qatar Solar Technologies to acquire an unprofitable downstream PV manufacturing division with a well-known brand and established sales channels," said Jenny Chase, a solar analyst at Bloomberg New Energy Finance.

Solarworld led successful lobbying efforts for tariffs on Chinese panels coming into the European Union. China has been accused of subsidising its producers, allowing them to swamp the market with cheap product.

German manufacturers have been unable to keep afloat as prices plummeted. Analysts doubt that the import tariff on Chinese solar will revive their fortunes.

"The global market is extremely oversupplied, and there is no reason why the anti-dumping tariffs should benefit European manufacturers," said Ms Chase.

Nevertheless, an investment in Solarworld could give QSTec access to valuable PV technology as the domestic and regional market expands.

Qatar has set itself a target of generating 1.8 gigawatts from solar arrays by 2014, with the aim of generating 20 per cent of the country's electricity from alternative energy.

Saudi Arabia wants to produce 41GW of electricity by 2032, and Abu Dhabi plans to generate 7 per cent of its power from alternative sources by 2020.

QSTec is not the first Gulf investor to eye German solar assets. Last year the UAE's Microsol bought Solon, a PV producer. Masdar also owns a German producer, now called Masdar PV.

After period of slimming, the global PV market may become more profitable for the surviving players.

"The solar market underwent a boom, and then victimised itself with its own rapid success," said Jon-Frederick Campos, an analyst at IHS. "But once the dust settles, the industry will come out stronger in its operations, financials and technology. The rest of the year may very well determine which companies will retain significant market share and solidify their place as the industry leaders."

For now, the industry remains in the doldrums.

Investment this year is predicted by IHS to reach the lowest levels since 2006. The German company Siemens this week announced it was closing its solar division at a loss of at least €784m, after failing to find a buyer.