Siemens is to pull out of solar and focus its renewable energy business on wind and hydro.

The company announced today that it is in talks with potential buyers for its solar arms, which are part of Siemens Solar & Hydro, which has 800 staff, 200 of which are in the company’s native Germany. The division is to be scrapped, although Siemens will still sell steam turbines, generators and control systems to solar companies.

In a statement Siemens said: “Due to the changed framework conditions, lower growth and strong price pressure in the solar markets, the company’s expectations for its solar energy activities have not been met.”

Michael Suess, chief executive of Siemens’ Energy, said: “The global market for concentrated solar power has shrunk from four gigawatts to slightly more than one gigawatt today. In this environment, specialized companies will be able to maximize their strengths.”

He added: “The importance of renewable energies in the global power mix will continue to grow and hydro power and wind energy will remain the major renewable contributors. Our renewable energy activities will be focused on these two areas.”

Siemens employs more than 7000 staff in its wind division and another 2000 in its related service business. The division has an order backlog of more than €10bn.

The new make-up of Siemens’ Energy Sector will comprise divisions of thermal power plants, wind power, oil & gas (solutions for the oil and gas industry and small to mid-sized thermal power plants) and power transmission.

The company stressed that existing solar contracts will be honoured while the business reorganization takes place.

Ingo-Martin Schachel, an analyst at Frankfurt’s Commerzbank, said the “decision to sell is really quite obvious”.

He told Bloomberg: ‘‘Solar is no core business and no core competency of Siemens. The growth prospects for these markets have deteriorated such that there is really no reason to remain active here.”