Siemens Energy gets state-backed 15-bn-euro rescue package

AFP , Tuesday 14 Nov 2023

Siemens Energy will get a 15-billion-euro ($16-billion), state-backed rescue package, Berlin said Tuesday, as it battles a crisis in its wind power unit.

Siemens Energy
The larger Siemens conglomerate is also helping to bolster Siemens Energy as part of the rescue. Photo courtesy Bloomberg


The group has faced long-running problems in its Gamesa subsidiary related to technical issues with onshore wind turbines, which are costing huge sums to fix and have led to massive losses.

It revealed last month that it was in talks with government officials about receiving financial "guarantees", required to help the company finance major new contracts.

Announcing the agreement, the economy ministry said the government would grant Siemens Energy 7.5 billion euros worth of guarantees.

They are part of a 15-billion-euro package agreed with other stakeholders, including private banks, it said.

Explaining the move, the ministry said Siemens Energy was an important player in the "provision of energy systems", and a major employer in "future-proof industries".

As the green energy transition gathers pace, "the renewables sector, in particular photovoltaics and wind energy, are experiencing rapid growth," it said.

Strong growth in orders, combined with the problems at Gamesa, meant Siemens Energy was having "difficulties in obtaining the required guarantees in full on the financial market," the ministry said.

The company's shares rose around two percent in Frankfurt after the deal was announced.

Revenue warning

Media reports have indicated Siemens Energy has abundant reserves of cash but guarantees are needed for years-long projects such as the construction of power grids.

The larger Siemens conglomerate is also helping to bolster Siemens Energy as part of the rescue.

Siemens Energy was spun out of Siemens in 2020, and the larger company remains a major shareholder.

In August, Siemens Energy reported a net loss of 2.9 billion euros in its fiscal third quarter, weighed down by a 1.6-billion euro hit to repair issues with wind turbines.

Last month, the company revealed Gamesa was not currently concluding new contracts for some onshore projects and being selective with offshore projects, while warning revenues for the fiscal year 2024 are set to be lower than expected.

The long-running woes at Gamesa prompted Siemens Energy to take full control of the Spain-based subsidiary last year, but a hoped-for turnaround has yet to materialise.

The specific issues plaguing Gamesa come at a challenging time for the wind power sector in general in Europe.

Despite growing demand for clean energy, the sector has been battered by higher prices for materials, persistent supply chain disruptions and strong competition from China.

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