Germany plans to provide financial support to rescue Siemens' wind turbine division facing difficulties

11 Nov, 2023

Germany plans to provide financial support to rescue Siemens' wind turbine division facing difficulties

As per Reuters, the German government, Siemens AG, and other involved entities aim to extend multi-billion-euro guarantees to support Siemens AG's struggling wind turbine division amidst a recent warning of mounting losses in the wind and solar industries.

Sources familiar with the discussions indicate that Siemens Energy's principal stakeholder, Siemens AG, holding 25.1% shares, is prepared to offer assurances. However, specific details remain scarce, pending formal agreement among all stakeholders.

Reports highlight Siemens Energy's difficulties in obtaining bank guarantees, leading them to seek a framework guarantee from the government and Siemens, aiming for up to 15 billion euros in assurances.

Under the proposed plan, the German state would shoulder 80% liability for an initial 10 billion euros, with banks accountable for the remaining 20%, according to WirtschaftsWoche.

A Siemens AG spokesperson emphasized ongoing, constructive negotiations to find the best resolution for all involved parties.

Siemens Energy has faced substantial share decline since mid-June, witnessing a more than 70% crash due to abandoned profit forecasts, particularly after identifying significant issues in its wind turbine unit.

This financial crisis isn't isolated, extending to Ørsted, the top offshore wind farm developer, withdrawing from significant US projects due to escalating costs. The turmoil in wind energy has also impacted the solar sector, with plummeting stocks amidst decreasing demand.

Simultaneously, Bloomberg reports the UK government's preparations for increased subsidies in offshore wind farms to realign their clean-power strategy. However, this adjustment might lead to higher electricity costs for consumers, amidst the ongoing energy challenges.

The mounting challenges in the renewable energy sector across the Western world underscore a broader struggle in the energy transition. The industry's tribulations echo concerns about the sustainability of 'green' energy initiatives, raising questions about the need for further financial support.