Siemens AG sold its tidal-power unit to Atlantis Resources Ltd. after losing faith in an industry it said was taking too long to grow.
Turbine maker Atlantis takes ownership of the unit’s six projects, the Singapore-based company said Wednesday in an e-mailed statement, without disclosing financial terms. Siemens acquires a 10 percent stake in Atlantis as part of the deal.
Siemens was one of the first large industrial companies to enter the sea-energy industry, buying Marine Current Turbines Ltd. in February 2012. As other renewable technologies such as solar and wind have cut costs to become commercially viable, tidal and wave projects remain the most expensive sources of power at four times the cost of coal, Bloomberg estimates show.
“Siemens has had to settle for shares in Atlantis worth 2.5 million pounds ($3.8 million) at today’s price, for a business that it bought in 2010-12 for an estimated 20 million pounds,” said Angus McCrone, a senior analyst at Bloomberg New Energy Finance. “The German company may not retain its stake in Atlantis for long, unless it suddenly becomes more positive about prospects for tidal stream.”
Siemens, based in Munich, said the sale of MCT was part of “portfolio optimization,” according to an e-mailed statement. “Siemens and Atlantis have agreed to explore respective opportunities for the future,” it said.
MCT’s projects in Wales, Northern Ireland and southern England will expand Atlantis’s potential installed capacity to almost 600 megawatts, making it one of the largest marine-energy companies in the world. The manufacturer will set up a turbine plant in Scotland as part of the acquisition.
While the U.K. has said wave and tidal energy have the potential to deliver about a fifth of its current electricity needs, Siemens decided last year it would sell MCT saying the market and supply chain were taking too long to grow.
Last August, Bloomberg New Energy Finance revised its outlook for global tidal-stream power capacity in 2020, cutting its forecast by 11 percent to 148 megawatts.