The leading German producer of wind power systems, Siemens Energy, has been in deep trouble particularly caused by technical breakdowns at its subsidiary Siemens Gamesa, in which the trigger effects require adjustments of modern generation giant turbines in the range of estimates up to €5 billion.
The crisis of the wind power subsidiary has repercussions for the entire Siemens group. After all, Siemens Energy requires large financial resources for its ongoing business operations. The energy industry is considered capital-intensive. Recently, the rising interest rate environment is said to have made it increasingly difficult for Siemens Energy to obtain external financing.
The situation is now so serious that Siemens Energy is seeking government assistance. According to Siemens Energy, “preliminary talks” are currently underway with banks and the government “to secure access to a growing volume of guarantees.” Media speak of up to €15 billion in state guarantees, the enormous figure related to the fact that Siemens Energy is the ostensible centerpiece of Berlin’s wind power strategy, which counts on high volumes of wind power electricity for over-ambitious plans for “green hydrogen” production.
The stock market reacted nervously to the announcement, and the Siemens Energy share price fell by 40% at times. Capital market expert Christian W. Röhl is pessimistic. He does not believe that its shares will recover quickly. He considers Siemens Energy to be “a bottomless pit;” the company “overstretched itself” with the acquisition of Spanish wind turbine manufacturer Gamesa, he says. The banks would no longer want to bear the risk alone that the sick “wind division infects the entire group,” says Röhl.
Bundestag Deputy Gitta Connemann, of the opposition Christian Democrats, who is chairwoman of the Union of Small and Medium-Sized Businesses and the Economy, also considers the political dimension of the Siemens Energy crash: “Green economic miracle? Wrong. Germany’s key company for the energy turnaround is sending an SOS.”
