Siemens Energy: Germany to bail out key green transition player for €7.5bn

The struggling energy transition giant Siemens Energy has successfully petitioned the German government for a guarantee worth €7.5 billion, with parent company Siemens pitching in as well.

In August, trouble at Siemens Energy began rearing its head. The company acknowledged significant losses at its wind turbine maker, but said it could absorb the losses. Some weeks down the line, media reports revealed that the company had approached the German government for assistance.

“Siemens Energy is known to have a problem,” explained Robert Habeck, minister of economy and climate action, on Tuesday (14 November). The company, which he described as “in good health” had been laid low by the take-over of the Spanish firm Gamesa and its flawed turbine blades, Habeck adds. 

Banks disagreed with the assessment of the company as “in good health” and refused to lend the €15 billion it sought to take up.

After weeks of negotiations, Berlin will back the loans itself. The €11 billion of loans are backed by a €7.5 billion state guarantee, with a bank consortium covering the remaining guarantees of €3.5 billion. 

Mother company Siemens, who holds 25% of the shares, is providing guarantees worth €1 billion, but is first in line to make a loss through taking up a “first loss tranche”.

Another €3 billion will be secured from “other stakeholders”, the government says. These could be other EU countries where Siemens Energy employs significant numbers, like Spain or Denmark.

While the company is dependent on state support, it will be barred from giving out dividends and bonuses to top management.

Central player of the green transition

The German government described the company as “one of the world’s leading energy technology companies” which is “highly relevant to the entire value chain for the provision of energy systems” in a statement to explain its decision.

While flawed turbine blades have brought the company low, the company remains a key player in securing Europe’s foothold in global wind turbine markets. “Siemens Energy alone has orders totalling approximately €110 billion in the pipeline,” the government said.

The fact that the company very publicly opened a gigafactory for electrolysers in Central Berlin the week prior may have helped. They are an “important employer in future-proof industries with around 26,000 employees in Germany,” the government added.

Siemens Energy just so happens to be in a position of technology leadership in one more crucial sector, too: they are among the few global players capable of producing climate-friendly circuit breakers, known as “high-voltage” switchgear that will be key to decarbonising Europe’s grid infrastructure.

[Edited by Nathalie Weatherald]

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