In a strategic move aimed at bolstering Germany’s green energy transition, the German government has approved an extensive financial package worth €15 billion ($16.2 billion) to support Siemens Energy, a leading wind farm manufacturer based in Munich. The initiative, comprising €7.5 billion in loan guarantees from the economy ministry, underscores the country’s commitment to ensuring the company’s continued participation in significant renewable energy projects.
Under the terms of the agreement, Siemens Energy will be prohibited from distributing dividends or higher-level bonuses, emphasizing the government’s focus on stabilizing the company’s financial health and preventing profit payouts during the recovery period. A spokesperson for Siemens Energy expressed appreciation for the government’s resolute backing, highlighting the pivotal role Siemens Energy plays in advancing the nation’s energy transition. The company currently has approximately €110 billion worth of orders in its portfolio and sought assistance to preserve and fulfil these commitments.
Siemens Energy is a cornerstone of Germany’s green energy shift, employing around 26,000 people within the country. Recently, Chancellor Olaf Scholz inaugurated Siemens Energy’s new Berlin factory, where it will collaborate with the French company Air Liquide to produce green hydrogen, a critical component of clean energy production. The financial challenges faced by Siemens Energy serve as a cautionary tale for the renewable energy equipment sector. These companies are integral to enabling economies to transition to cleaner energy sources, but many are grappling with securing the necessary investment to construct factories and hire skilled personnel to meet ambitious climate targets set by governments.
Siemens Energy is also the parent company of Siemens Gamesa, a prominent wind turbine manufacturer worldwide. Siemens Gamesa, with substantial operations in Denmark and Spain, has encountered significant issues with some of its turbines, including blade failures, resulting in substantial projected repair costs that may extend over several years. The company, like other renewable equipment manufacturers, is grappling with losses stemming from agreements on wind turbines made years ago at prices that have become unviable due to high inflation.
Recent developments in the renewable energy sector have highlighted the financial challenges faced by companies in the industry. Denmark’s Orsted, the world’s largest offshore wind developer, recently abandoned plans to construct two wind farms off the coast of New Jersey, leading to significant write-offs, potentially affecting the United States’ renewable energy ambitions.
Looking ahead, Siemens Energy is set to release its earnings report for the fiscal year ending on September 30. A substantial loss is anticipated. Although the news of the loan guarantees led to a nearly 3 percent increase in Siemens Energy’s shares in Frankfurt, they remain down by more than 40 percent since the beginning of the year, reflecting the substantial challenges facing the company.