FRANKFURT/MUNICH - German industrial conglomerate Siemens agreed to buy Israel's Solel Solar Systems Ltd for about $418 million to expand its business with solar thermal power plants.
In the future, we'll be able to offer the key components for the construction of parabolic trough power plants from a single source and to further enhance the efficiency of these plants, Siemens' Renewable Energy division head Rene Umlauft said in a statement on Thursday.
Siemens said it expects its acquisition of Solel, which is majority-owned by London-based investment company Ecofin Ltd., to close by the end of 2009.
The acquisition marks the latest step by an industrial giant to tap into the growing renewable energy market, which is benefiting from the big push by governments to diversify energy sources and reduce dependency on gas and oil.
Germany's Robert Bosch, the world's largest supplier of automotive parts, last year bought Ersol -- now called Bosch Solar Energy -- for more than 1 billion euros ($1.49 billion) and this year acquired solar module maker Aleo Solar.
German solar thermal company Solar Millennium and plant builder MAN Ferrostaal AG this year also joined forces to create a solar thermal power company in the United States.
BECOMING MARKET LEADER
Through its purchase of Solel, Siemens is targeting the solar thermal sector, which uses a different technology than the much bigger photovoltaic sector. We aim to be the global market leader in the solar thermal sector, Siemens Chief Executive Peter Loescher said during a conference call.
Unlike photovoltaic solar panels, which use the sunlight to create electricity, solar thermal power plants use the sun's heat to create steam that turns a turbine to generate power.
Siemens is part of the Desertec Industrial Initiative, an ambitious solar project that could theoretically supply up to 15 percent of Europe's energy needs by 2050 by building plants in the Sahara desert region.
Umlauft said that the first Desertec power plants could be built in six to eight years, though it might take longer.
Shares in Siemens were down 0.4 percent by 1230 GMT, while the German blue-chip index was 0.5 percent lower.
(Reporting by Maria Sheahan and Christoph Steitz in Frankfurt and Jens Hack in Munich; Editing by Rupert Winchester)