ZPEnergy.com - GE to acquire big solar-power equipment maker

COURT APPROVES SALE OF ASTROPOWER ASSETS
By Barnaby J. Feder
New York Times

General Electric will acquire the major assets of the largest American-owned maker of solar equipment, a move the solar-power industry sees as a major vote of confidence in the business.

A federal bankruptcy court judge in Delaware approved GE's plan Friday to buy the bulk of AstroPower for $15 million in cash and an estimated $3.5 million in debt, along with other liabilities to be settled when the deal closes at the end of the month. It would be the most decisive step yet by GE into the so-far unprofitable business of generating electricity from sunlight, a field in which GE researchers have dabbled for nearly half a century.

Previously, GE confined its growing interest in this field, known as photovoltaics, to modest increases in research spending and the quiet acquisition 18 months ago, for an undisclosed sum, of Railway Technology, which makes a line of solar-powered railroad switches.

GE declined Friday to discuss its plans for AstroPower. By GE standards, the acquisition is a modest bet. The cost will be but a half-day's earnings for the company, which had net income last year of $15 billion on revenue of more than $134 billion. But if the investment looks minuscule from a Wall Street perspective, it is still enough to excite many people involved with solar energy.

``It shows we are a mainstream industry, or moving that way,'' said Bob Kenedi, general manager of the solar-systems division of Sharp Electronics, an American subsidiary of Sharp of Japan. Sharp has emerged as the clear market leader in solar-power equipment, with a sixfold increase in production since 1999, and opened its first American assembly plant last year in Memphis.

Worldwide, annual revenue from solar-power equipment and installation, which reached $4.7 billion last year, will climb to $30.8 billion in 2013, according to a recent forecast from Clean Edge, a market research firm in San Francisco.

Solar energy is profitable in numerous niche markets. But it is still regarded as too expensive to be widely adopted for powering homes and businesses now supplied by utilities. That has left even deep-pocketed manufacturers like Sharp, Sanyo Electric, Kyocera and the solar subsidiaries of BP and Shell dependent on governments and power companies to subsidize sales.

None of the major players claims to be profitable, and some former participants in the industry remain dismissive about the potential of solar power. ``Even if it grows at 20 percent annually, it will contribute less than 1.5 percent to global energy needs by 2020,'' said Tom Cirigliano, a spokesman for Exxon Mobil.

But analysts and solar manufacturers figure GE is responding to signs that rising prices for hydrocarbon-based fuels and improvements in solar products and manufacturing technology have laid the foundation for large-scale producers to finally start making steady profits -- even as major supporters like the Japanese government and California reduce subsidies to consumers.

http://www.mercurynews.com/mld/mercurynews/business/8178129.htm