Thursday, June 5, 2008

Bosch Buys Solar

bosch.jpg Earlier this week, auto part manufacturer, Robert Bosch announced its bid to purchase German-based, solar cell producer, Ersol, agreeing to pay 1.1 billion euros for majority control of the company. Ersol is a company that has been on the rise recently, marking a 25% increase in sales and doubling its work force to 1,000 employees in the past year. Shares of Ersol—who has offices in Germany, China, and Southern California, and specializes in solar cells, PV modules, and silicon recycling for semiconductors—skyrocketed this week, jumping 63%, and closing at its highest levels since it began trading in on German markets in 2005. Many industry analysts are speculating that many mergers like this are soon to follow.

In a note to clients, reported by, analysts from Oppenheimer Research said, “We see this as the boldest move so far in what we see as the start of a consolidation process in the solar industry." They added: "In particular, we see companies from mature industries such as the automotive or the semiconductor industry bringing process know-how to the solar industry."

Though Bosch is mostly known for ABS brake systems and handheld power tools, this isn’t the company’s first foray into the green space. In 2004, Bosch combined with yet another German firm, Buderus, to create Bosch Thermotechnik, which makes energy-efficient water heaters and heating products.

And why is all this happening in Germany, you might ask? One reason is that the country has recently passed a series of progressive initiatives rewarding greener practices, one in particular introduced in 2004 that pays government-guaranteed premiums called "feed-in" tariffs for kilowatt/hours of power produced by photovoltaic cells.

As with many situations like Bosch-Ersol, there is always the worry that companies will become “greenwashed,” or somehow otherwise marginalized, as they are subsumed by larger entities. And this is especially evident as oil companies and other similar giants go on the prowl for the increasingly popular, alternative energy companies. However, as the Oppenheimer note hinted at, what the larger companies do offer are the infrastructures and capital backing in place to allow for production levels to increase to much larger, and much more beneficial scales.

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