) will pay up to $470 million to hand over its loss-making solar inverter business to Italy’s FIMER SpA, the first big move by interim CEO Peter Voser and a reflection of the tough conditions in the solar industry.
Although solar power is the fastest growing source of electricity generation, equipment prices have plummeted in recent years in the face of Chinese competition and increased production. ABB will take an after-tax non-operational charge of approximately $430 million in the second quarter of 2019 to get rid of the business, with up to three quarters of the money being cash paid to FIMER.
“ABB’s solar inverter strategy probably cost it close to $1.5 billion in terms of investments, acquisitions, exit costs and ongoing losses since 2013, trying to benefit from the growth in renewables but through commoditized products,” said Andreas Willi at JP Morgan.Solar power has been boosted by governments and companies increasingly introducing clean energy targets but hardware costs have fallen more than 70% in the last decade.
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They are “inverters”, not “converters”.
'Equipment prices have plummeted in recent years in the face of Chinese competition and increased production.'
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ABB to divest solar inverter business to Fimer SpAABB Ltd. (ABBN.EB) said Tuesday that Italy's Fimer SpA will acquire ABB's solar-inverter business and its associated liabilities. The Swiss industrial group said it will take an aftertax, non-operational charge of about $430 million in the second quarter from the deal. Around 75% of the financial hit will come from payments ABB will make to Fimer, and the company expects separation charges of around $40 million starting in the second half of 2019.
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