Why Siemens has had a hard time selling its solar tech

Solar has been a tough business for both well-funded startups or corporate giants with long histories in the energy business. Siemens proves that case now that it’s failed to find a buyer for its solar technology, which has been losing its appeal in some parts of the world.

The German company couldn’t get rid of the concentrating solar thermal business it bought from an Israeli firm, Solel, for $418 million in 2009, Bloomberg reported┬áMonday. Siemens’ solar business has been bleeding money — at least $1 billion since 2011. It’s planning a layoff ┬áthat will affect about 280 people.

The company first announced its plan to ditch the solar business last October, when it conceded that mounting losses and lackluster market demand weren’t going to disappear soon enough. Siemens’ exit also means the company won’t likely invest in solar startups like it used to.

Siemens has done well with its wind energy equipment business and is among a group of engineering giants, such as GE (s GE) and ABB, that have bet big on renewable energy. GE was planning to build a 400MW solar panel factory in Colorado before nixing the plan in 2012.

BrightSource Energy storage 2Solar technology companies worldwide have struggled mightily, and dozens of them have gone out of business or gotten scooped up cheaply. The solar market has experienced an oversupply of solar panels for nearly three years. That has not only depressed prices but also sparked trade disputes in which Chinese solar panel makers have been selling their products at below fair market prices in the United States and Europe.

The market for concentrating solar thermal technology isn’t faring much better, either. That kind of technology, which was what Siemens bought from Solel, uses giant curved mirrors to concentrate sunlight onto a heat-transferring fluid to generate steam. The steam then goes to drive a turbine generator to produce electricity. This type of technology is suitable for large solar power plants and works best in regions with intense sunlight and few cloudy days. The plummeting prices of solar panels in recent years has made it difficult for solar thermal technology to compete for utility contracts.

Most of the power purchase agreements awarded by California’s three big utilities, for example, use solar panels instead. BrightSource Energy, a concentrating solar thermal startup in Oakland, announced a change in their business plan earlier this month when it said it would no longer focus on being a power plant developer. Instead, it will supply its technology and engineering expertise and seek more business deals internationally.