Germany is backing loans to Siemens Energy for green projects under a $16 billion rescue package
The news
The German government has agreed to extend loan guarantees for Siemens Energy, a major wind farm manufacturer based in Munich, as part of a 15 billion euro (or $16.2 billion) financial package aimed at reviving the ailing company. help continue to participate in large renewable energy projects. energy projects.
Germany’s Economics Ministry said on Tuesday it would provide €7.5 billion in loan guarantees, with private banks and other stakeholders also participating in the deal. Under the agreement, Siemens Energy is not allowed to pay dividends or bonuses of a higher level, the ministry said.
“We are pleased with the German government’s clear support for Siemens Energy and its commitment to the rapid implementation of projects to make the energy transition a success,” said a company spokesperson. The company has said it has €110 billion worth of orders on its books and it needs help to support them.
Why it matters: a crucial player in the green transition.
Siemens Energy is a key player in the German energy transition and employs approximately 26,000 people in the country. Last week, German Chancellor Olaf Scholz opened Siemens Energy’s new factory in Berlin, where it will produce green hydrogen together with the French company Air Liquide.
The company’s troubles have served as a warning that the financial problems weighing on renewable energy equipment makers could become more serious. These companies are critical to helping economies transition to cleaner energy, but many are struggling to find the investment funds needed to build the factories and hire the skilled workers needed to meet governments’ ambitious climate goals. to fetch.
Siemens Energy is the parent company of Siemens Gamesa, one of the world’s leading manufacturers of wind turbines. This subsidiary, which has major operations in Denmark and Spain, has run into major problems with some of the turbines it supplies, including defects in the huge blades. These problems have led to enormous expected repair costs that could last for years.
Like other producers of renewable equipment, Siemens Gamesa made agreements years ago on wind turbines at prices that will lead to losses due to high inflation.
Earlier this month, Denmark’s Orsted scrapped plans to build two wind farms off the coast of New Jersey, forcing the country to write off as much as $5.6 billion. The withdrawal of the world’s largest offshore wind developer could be a major setback for the United States’ renewable energy ambitions.
What happens next: Siemens Energy opens its books.
On Wednesday, Siemens Energy will announce results for the fiscal year ended September 30. A major loss is expected.
The company’s shares in Frankfurt rose almost 3 percent on news of the loan guarantees, although they are down more than 40 percent since the start of the year.