14MW giant shows the way for Siemens spin-off

German giant Siemens is pressing ahead with the spin-off of its power and gas operations despite the economic impacts of the Covid-19 pandemic.

Richard Heap
May 28, 2020
14MW giant shows the way for Siemens spin-off

German giant Siemens is pressing ahead with the spin-off of its power and gas operations despite the economic impacts of the Covid-19 pandemic.

What happened?

On Tuesday, Siemens set out details of its plan to move its operations in wind and other energy sources into a standalone company.

The spin-off has been a long time coming.

Siemens started talking about a spin-off for its power and gas assets in May 2019. It followed this in October when it revealed the management team and the unapologetically obvious Siemens Energy name. And this week it set out details of the plan for shareholders to vote on, which is due on 9th July.

Siemens shareholders are set to hold 55% of Siemens Energy, with Siemens AG initially owning 35.1% and the other 9.9% held by the Siemens pension trust.

However, Siemens has committed to cut its stake over 12-18 months, including with an initial public offering of new shares on 28th September, and also said it would not exercise a controlling influence over Siemens Energy. This means the new company will operate independent of its parent group.

Siemens Energy is set to start with 91,000 employees worldwide split in areas including wind turbines, through its 67% stake in Siemens Gamesa, as well as combined-cycle turbines, compressors, generators and turbines.

Joe Kaesar, president and CEO of Siemens AG, said this follows the model of standalone companies it uses in areas such as health. He called this a "major milestone" in preparing Siemens for "massive technological transformations".

Why does it matter?

We wrote about the planned spin-off in an analysis piece last May, and the reasons we identified in favour of the deal then are even stronger now. The current crisis has underlined the importance of renewables in the 2020s.

This spin-off should give Siemens Gamesa a crucial role in the broader Siemens energy operations, and open up new opportunities to pair wind turbines with other technologies.

We see the importance of Siemens Gamesa in new figures this week.

The order book of the divisions that will be part of Siemens Energy was worth €77bn in September 2019, of which €25.5bn – or 33% – was from Siemens Gamesa. The global growth of offshore wind will be vital for the new firm.

And Siemens Gamesa has made big strides over the last nine days. Last week, it revealed plans for a 14MW direct-drive offshore turbine that would be the biggest announced in the industry so far, and is set to play an important role in driving down offshore costs. On Tuesday it announced the first orders.

First, it revealed that Northland Power and Yushan Energy have committed to use the 14MW giant at their 300MW Hai Long 2 offshore wind farm in Taiwan, and were considering using it at the entire 1GW Hai Long complex.

Second, it said that Dominion Energy was set to use the 14MW platform at a 2.6GW offshore wind farm off the US east coast. Both of these deals show how important these larger turbines and emerging offshore wind markets will be for Siemens Energy. That offshore wind prowess will be crucial.

In addition, the appetite for pairing wind turbines with technologies such as energy storage and green hydrogen has been growing this year.

This was happening before the Covid-19 crisis, but the punishing impacts of the downturn on oil, gas and coal has pushed sector coupling even further up the industry’s agenda. The popularity of green hydrogen is a case in point.

It feels like a good move for Siemens Energy to seek to break down these walls in its organisation, and better harness its offshore capabilities. And yes, it may be launching into a bad economy, but its mission echoes the calls for those demanding a 'green recovery'. It should be in the right place at the right time.

The bottom line

If the shareholders approve the spin-off on 9th July then the energy industry will get a heavy-hitting new player that has renewables at its core.

NEWS IN BRIEF

EUROPE SETS OUT €750BN COVID RECOVERY PLAN

The European Commission has set out plans for a €750bn Covid-19 recovery package to support major investment in sectors including wind. The proposal will need to be ratified by members of the European Union. Read more

ENERGY INVESTMENT TO DROP $400BN IN 2020

Global investment in energy is set to fall by $400bn, or 20%, globally as a result of the Covid-19 crisis, the International Energy Agency has reported. This includes renewables investment "far below the levels that would be required to accelerate energy transitions". Read more

SIEMENS GAMESA GIANT FOR 2.6GW US SCHEME...

Siemens Gamesa is set to install the 14MW platform it unveiled last week at the 2.6GW Dominion Energy offshore wind farm off the coast of Virginia. Siemens Gamesa was named preferred supplier earlier this year. Read more

...AND PICKS UP 300MW ORDER IN TAIWAN TOO

Siemens Gamesa is to deploy its 14MW turbine for the first time at Northland Power and Yushan's 300MW Hai Long 2 project in Taiwan. The pair may also use the turbine at the rest of the 1GW Hai Long complex. Read more

US PAIR COMMIT TO PPAS AT 804MW PARK CITY

US utilities Eversource Energy and United Illuminating have committed to sign power purchase agreements at Vineyard Wind's 804MW US offshore scheme Park City Wind. The pair last week filed the executed PPAs for approval by state regulators. Read more

EUROPEAN WINS BACKING FOR 560MW PAIR

European Energy has secured environmental approval for two offshore wind projects totalling 560MW in Denmark. The company is planning to commission the Omø South and Jammerland Bay developments by 2023. Read more

PRINCIPLE WINS $22M TOKYO GAS BACKING

Principle Power has secured an investment of $22m from Japanese energy player Tokyo Gas, which is intended to strengthen Principle's position in the Asian offshore wind market. Read more

ALFANAR TO BUY SENVION'S INDIAN ARM

Saudi Arabian conglomerate Alfanar is poised to buy the Indian operations of troubled German manufacturer Senvion. Read more

OHIO REGULATORS COULD SINK LAKE ERIE PROJECT

Regulators in US state Ohio have approved a six-turbine offshore wind scheme by Lake Erie Development Corporation, but with a long list of conditions that could sink the project. This includes a ban on turning at night between March and November. Read more

PARTNERS AWARDS 226MW AUSTRALIAN O&M DEAL

Partners Group has awarded Siemens Gamesa a 30-year contract to service the 61 Senvion turbines at the 226MW Murra Warra wind farm in Australian province Victoria. Read more

German giant Siemens is pressing ahead with the spin-off of its power and gas operations despite the economic impacts of the Covid-19 pandemic.

What happened?

On Tuesday, Siemens set out details of its plan to move its operations in wind and other energy sources into a standalone company.

The spin-off has been a long time coming.

Siemens started talking about a spin-off for its power and gas assets in May 2019. It followed this in October when it revealed the management team and the unapologetically obvious Siemens Energy name. And this week it set out details of the plan for shareholders to vote on, which is due on 9th July.

Siemens shareholders are set to hold 55% of Siemens Energy, with Siemens AG initially owning 35.1% and the other 9.9% held by the Siemens pension trust.

However, Siemens has committed to cut its stake over 12-18 months, including with an initial public offering of new shares on 28th September, and also said it would not exercise a controlling influence over Siemens Energy. This means the new company will operate independent of its parent group.

Siemens Energy is set to start with 91,000 employees worldwide split in areas including wind turbines, through its 67% stake in Siemens Gamesa, as well as combined-cycle turbines, compressors, generators and turbines.

Joe Kaesar, president and CEO of Siemens AG, said this follows the model of standalone companies it uses in areas such as health. He called this a "major milestone" in preparing Siemens for "massive technological transformations".

Why does it matter?

We wrote about the planned spin-off in an analysis piece last May, and the reasons we identified in favour of the deal then are even stronger now. The current crisis has underlined the importance of renewables in the 2020s.

This spin-off should give Siemens Gamesa a crucial role in the broader Siemens energy operations, and open up new opportunities to pair wind turbines with other technologies.

We see the importance of Siemens Gamesa in new figures this week.

The order book of the divisions that will be part of Siemens Energy was worth €77bn in September 2019, of which €25.5bn – or 33% – was from Siemens Gamesa. The global growth of offshore wind will be vital for the new firm.

And Siemens Gamesa has made big strides over the last nine days. Last week, it revealed plans for a 14MW direct-drive offshore turbine that would be the biggest announced in the industry so far, and is set to play an important role in driving down offshore costs. On Tuesday it announced the first orders.

First, it revealed that Northland Power and Yushan Energy have committed to use the 14MW giant at their 300MW Hai Long 2 offshore wind farm in Taiwan, and were considering using it at the entire 1GW Hai Long complex.

Second, it said that Dominion Energy was set to use the 14MW platform at a 2.6GW offshore wind farm off the US east coast. Both of these deals show how important these larger turbines and emerging offshore wind markets will be for Siemens Energy. That offshore wind prowess will be crucial.

In addition, the appetite for pairing wind turbines with technologies such as energy storage and green hydrogen has been growing this year.

This was happening before the Covid-19 crisis, but the punishing impacts of the downturn on oil, gas and coal has pushed sector coupling even further up the industry’s agenda. The popularity of green hydrogen is a case in point.

It feels like a good move for Siemens Energy to seek to break down these walls in its organisation, and better harness its offshore capabilities. And yes, it may be launching into a bad economy, but its mission echoes the calls for those demanding a 'green recovery'. It should be in the right place at the right time.

The bottom line

If the shareholders approve the spin-off on 9th July then the energy industry will get a heavy-hitting new player that has renewables at its core.

NEWS IN BRIEF

EUROPE SETS OUT €750BN COVID RECOVERY PLAN

The European Commission has set out plans for a €750bn Covid-19 recovery package to support major investment in sectors including wind. The proposal will need to be ratified by members of the European Union. Read more

ENERGY INVESTMENT TO DROP $400BN IN 2020

Global investment in energy is set to fall by $400bn, or 20%, globally as a result of the Covid-19 crisis, the International Energy Agency has reported. This includes renewables investment "far below the levels that would be required to accelerate energy transitions". Read more

SIEMENS GAMESA GIANT FOR 2.6GW US SCHEME...

Siemens Gamesa is set to install the 14MW platform it unveiled last week at the 2.6GW Dominion Energy offshore wind farm off the coast of Virginia. Siemens Gamesa was named preferred supplier earlier this year. Read more

...AND PICKS UP 300MW ORDER IN TAIWAN TOO

Siemens Gamesa is to deploy its 14MW turbine for the first time at Northland Power and Yushan's 300MW Hai Long 2 project in Taiwan. The pair may also use the turbine at the rest of the 1GW Hai Long complex. Read more

US PAIR COMMIT TO PPAS AT 804MW PARK CITY

US utilities Eversource Energy and United Illuminating have committed to sign power purchase agreements at Vineyard Wind's 804MW US offshore scheme Park City Wind. The pair last week filed the executed PPAs for approval by state regulators. Read more

EUROPEAN WINS BACKING FOR 560MW PAIR

European Energy has secured environmental approval for two offshore wind projects totalling 560MW in Denmark. The company is planning to commission the Omø South and Jammerland Bay developments by 2023. Read more

PRINCIPLE WINS $22M TOKYO GAS BACKING

Principle Power has secured an investment of $22m from Japanese energy player Tokyo Gas, which is intended to strengthen Principle's position in the Asian offshore wind market. Read more

ALFANAR TO BUY SENVION'S INDIAN ARM

Saudi Arabian conglomerate Alfanar is poised to buy the Indian operations of troubled German manufacturer Senvion. Read more

OHIO REGULATORS COULD SINK LAKE ERIE PROJECT

Regulators in US state Ohio have approved a six-turbine offshore wind scheme by Lake Erie Development Corporation, but with a long list of conditions that could sink the project. This includes a ban on turning at night between March and November. Read more

PARTNERS AWARDS 226MW AUSTRALIAN O&M DEAL

Partners Group has awarded Siemens Gamesa a 30-year contract to service the 61 Senvion turbines at the 226MW Murra Warra wind farm in Australian province Victoria. Read more

German giant Siemens is pressing ahead with the spin-off of its power and gas operations despite the economic impacts of the Covid-19 pandemic.

What happened?

On Tuesday, Siemens set out details of its plan to move its operations in wind and other energy sources into a standalone company.

The spin-off has been a long time coming.

Siemens started talking about a spin-off for its power and gas assets in May 2019. It followed this in October when it revealed the management team and the unapologetically obvious Siemens Energy name. And this week it set out details of the plan for shareholders to vote on, which is due on 9th July.

Siemens shareholders are set to hold 55% of Siemens Energy, with Siemens AG initially owning 35.1% and the other 9.9% held by the Siemens pension trust.

However, Siemens has committed to cut its stake over 12-18 months, including with an initial public offering of new shares on 28th September, and also said it would not exercise a controlling influence over Siemens Energy. This means the new company will operate independent of its parent group.

Siemens Energy is set to start with 91,000 employees worldwide split in areas including wind turbines, through its 67% stake in Siemens Gamesa, as well as combined-cycle turbines, compressors, generators and turbines.

Joe Kaesar, president and CEO of Siemens AG, said this follows the model of standalone companies it uses in areas such as health. He called this a "major milestone" in preparing Siemens for "massive technological transformations".

Why does it matter?

We wrote about the planned spin-off in an analysis piece last May, and the reasons we identified in favour of the deal then are even stronger now. The current crisis has underlined the importance of renewables in the 2020s.

This spin-off should give Siemens Gamesa a crucial role in the broader Siemens energy operations, and open up new opportunities to pair wind turbines with other technologies.

We see the importance of Siemens Gamesa in new figures this week.

The order book of the divisions that will be part of Siemens Energy was worth €77bn in September 2019, of which €25.5bn – or 33% – was from Siemens Gamesa. The global growth of offshore wind will be vital for the new firm.

And Siemens Gamesa has made big strides over the last nine days. Last week, it revealed plans for a 14MW direct-drive offshore turbine that would be the biggest announced in the industry so far, and is set to play an important role in driving down offshore costs. On Tuesday it announced the first orders.

First, it revealed that Northland Power and Yushan Energy have committed to use the 14MW giant at their 300MW Hai Long 2 offshore wind farm in Taiwan, and were considering using it at the entire 1GW Hai Long complex.

Second, it said that Dominion Energy was set to use the 14MW platform at a 2.6GW offshore wind farm off the US east coast. Both of these deals show how important these larger turbines and emerging offshore wind markets will be for Siemens Energy. That offshore wind prowess will be crucial.

In addition, the appetite for pairing wind turbines with technologies such as energy storage and green hydrogen has been growing this year.

This was happening before the Covid-19 crisis, but the punishing impacts of the downturn on oil, gas and coal has pushed sector coupling even further up the industry’s agenda. The popularity of green hydrogen is a case in point.

It feels like a good move for Siemens Energy to seek to break down these walls in its organisation, and better harness its offshore capabilities. And yes, it may be launching into a bad economy, but its mission echoes the calls for those demanding a 'green recovery'. It should be in the right place at the right time.

The bottom line

If the shareholders approve the spin-off on 9th July then the energy industry will get a heavy-hitting new player that has renewables at its core.

NEWS IN BRIEF

EUROPE SETS OUT €750BN COVID RECOVERY PLAN

The European Commission has set out plans for a €750bn Covid-19 recovery package to support major investment in sectors including wind. The proposal will need to be ratified by members of the European Union. Read more

ENERGY INVESTMENT TO DROP $400BN IN 2020

Global investment in energy is set to fall by $400bn, or 20%, globally as a result of the Covid-19 crisis, the International Energy Agency has reported. This includes renewables investment "far below the levels that would be required to accelerate energy transitions". Read more

SIEMENS GAMESA GIANT FOR 2.6GW US SCHEME...

Siemens Gamesa is set to install the 14MW platform it unveiled last week at the 2.6GW Dominion Energy offshore wind farm off the coast of Virginia. Siemens Gamesa was named preferred supplier earlier this year. Read more

...AND PICKS UP 300MW ORDER IN TAIWAN TOO

Siemens Gamesa is to deploy its 14MW turbine for the first time at Northland Power and Yushan's 300MW Hai Long 2 project in Taiwan. The pair may also use the turbine at the rest of the 1GW Hai Long complex. Read more

US PAIR COMMIT TO PPAS AT 804MW PARK CITY

US utilities Eversource Energy and United Illuminating have committed to sign power purchase agreements at Vineyard Wind's 804MW US offshore scheme Park City Wind. The pair last week filed the executed PPAs for approval by state regulators. Read more

EUROPEAN WINS BACKING FOR 560MW PAIR

European Energy has secured environmental approval for two offshore wind projects totalling 560MW in Denmark. The company is planning to commission the Omø South and Jammerland Bay developments by 2023. Read more

PRINCIPLE WINS $22M TOKYO GAS BACKING

Principle Power has secured an investment of $22m from Japanese energy player Tokyo Gas, which is intended to strengthen Principle's position in the Asian offshore wind market. Read more

ALFANAR TO BUY SENVION'S INDIAN ARM

Saudi Arabian conglomerate Alfanar is poised to buy the Indian operations of troubled German manufacturer Senvion. Read more

OHIO REGULATORS COULD SINK LAKE ERIE PROJECT

Regulators in US state Ohio have approved a six-turbine offshore wind scheme by Lake Erie Development Corporation, but with a long list of conditions that could sink the project. This includes a ban on turning at night between March and November. Read more

PARTNERS AWARDS 226MW AUSTRALIAN O&M DEAL

Partners Group has awarded Siemens Gamesa a 30-year contract to service the 61 Senvion turbines at the 226MW Murra Warra wind farm in Australian province Victoria. Read more

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