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AEG Power Solutions, Electrotherm end solar businesses MoU on poor demand

According to reports, Amsterdam-based AEG Power Solutions and power systems maker Electrotherm have decided to terminate their agreement to combine their solar businesses in India, citing poor demand.

The two companies, which parted ways a few months ago, had said that they planned to set up 100 mw capacity in three years. Their first installation of 15mw was due to come up by December 2011 and another 30mw at beginning of this year in Gujarat and Rajasthan.

“We will prefer to remain in our own domain as there are not many projects coming up,” AEG chief executive officer Horst Kayser told ET. While Electrotherm was to provide engineering, procurement and construction services for the projects, AEG was to assist in the solar photovoltaic market as well as delivering key components, including solar inverters and monitoring equipment.

Gandhinagar-based Electrotherm, makes electric vehicles, and power and renewable energy systems. AEG, which enjoys a 13% market share of the industrial solar power market in India, has been operating here since 2006, with the country contributing 3-5% to its global revenues.

In 2010, turnover from India was about 1.5 million euros and is expected to grow up to 15 million euros in FY2011. AEG’s clients include Tata BP Solar and Emvee Solar.

Kayser said the biggest challenge in India is financial closure of solar projects as the industry is still at a nascent stage. Of the 800-900 mw planned projects, only 20-30% have reached completion, leading to cost escalation. India is targeting an installed capacity of 1GW of solar power by next year under the National Solar Mission.

In 2010, the country’s solar installed capacity stood at 37mw, which is expected to grow to about 300mw this year. AEG says it plans to focus on India as its growth market. “US and Europe are a concern.

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