Siemens Energy bags $16bn in guarantees from German government, banks and former parent company
Berlin justifies the indirect state aid by saying the electrolyser and turbine maker is important for Germany's energy transition
Siemens Energy — which manufactures electrolysers, hydrogen gas turbines and wind turbines — will be granted a total of €15bn ($16.25bn) in guarantees from the German government, banks and former parent Siemens AG.
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“The renewables industry, especially photovoltaics and wind energy, are experiencing rapid growth. But the development and expansion of energy infrastructures for electricity, gas and hydrogen are also gaining momentum,” the ministry said.
“Siemens Energy alone has orders amounting to approximately €110bn in the pipeline.
“In the industry, complex and usually multi-year projects must be secured by guarantees (down payment, performance and warranty guarantees) to clients and customers during the project process,” said the ministry.
The energy technology company repeatedly stressed that contrary to the losses at Siemens Gamesa, its Gas and Power unit is doing very well, but it also acknowledged the need for guarantees in that business area for long-term projects.
On Wednesday, Siemens Energy reported a net loss of €4.59bn ($4.99bn) for its fiscal year 2023, which ended in September, compared to a net profit of €712m a year earlier. This downturn was mainly caused by a €2.56bn loss at Siemens Gamesa in the wake of quality issues at its onshore wind unit.
Banks and former parent join in
Private banks are granting the company €12bn, while Siemens Energy will secure a further €3bn with other stakeholders, Germany’s economics and climate ministry said.
The German federal government will provide a guarantee of €7.5bn, while a banking consortium will grant another €3.5bn of the guarantee line in their own commitment.
Private banks also take over a guarantee line of €1bn without a guarantee from the federal government, which is secured by a first loss tranche from Siemens AG. That first loss tranche is given priority in the event of damage.
Siemens AG, which owns about a quarter of Siemens Energy shares, early Wednesday also said it intends to enter into an agreement to buy an 18% stake in Siemens Ltd. India from Siemens Energy for €2.1bn in cash.
This would increase Siemens' stake in the publicly listed Siemens Ltd. India from 51% to 69%, while Siemens Energy’s stake would decrease from 24% to 6%
The deal will accelerate the separation of Siemens from its former subsidiary in in India, while providing much-needed cash for Siemens Energy.
Siemens Energy will be barred from paying dividends or bonuses as long as the guarantee deal is in place, which was a prerequisite for the aid deal by the German government.