Siemens will spin off its struggling energy division and merge it with separately listed wind turbine supplier Siemens Gamesa Renewable Energy (SGRE), creating a new multi-technology global energy powerhouse.
The German industrial giant this week announced a plan to create and then publicly list a new energy company whose product range will span oil and gas solutions, gas and steam turbines, on- and offshore wind turbines, and transmission equipment.
The new company is expected to have 80,000 employees and annual revenues of €30 billion ($33.6 billion). It will fold in SGRE, the world’s third largest supplier of wind turbines last year, trailing only European rival Vestas and China’s Goldwind, according to data from Wood Mackenzie Power & Renewables.
SGRE was created two years ago through the merger of Siemens’ wind business and Spanish wind company Gamesa, as part of the intense and ongoing consolidation being seen across the global wind supply chain.
SGRE is based and stock listed in Spain, though Siemens holds a 59 percent stake in the company. In addition to its huge onshore wind manufacturing and services business, SGRE is the dominant player in the growing offshore wind market, with nearly twice the market share of rival MHI Vestas, according to WoodMac.
The consolidation of Siemens’ various energy businesses reflects a broader convergence of the energy industry, as utilities and oil companies once thought of as being antagonistic towards green energy increasingly embrace low-cost renewables. Hybrid projects combining various generation technologies and energy storage are becoming more common.
“Combining our portfolio for conventional power generation with power supply from renewable energies will enable us to fully meet customer demand,” Siemens CEO Joe Kaeser said in a statement explaining the restructuring. “It will also allow us to provide an optimized and, when necessary, combined range of offerings from a single source.”
It was not immediately clear who would lead the new energy company. Lisa Davis, an American, is CEO of Siemens’ Gas and Power unit. Markus Tacke, a German, leads SGRE.
New investments in e-mobility and energy storage
Siemens itself will focus on two future-minded divisions it sees playing a central role in the “Fourth Industrial Revolution”: Digital Industries and Smart Infrastructure.
As such, Siemens intends to “intensify” its presence in areas like electric-mobility infrastructure, distributed energy systems, smart buildings and energy storage — while hiring 18,000 people in the two divisions over the next few years.
All told, Siemens expects the restructuring to create 20,500 new jobs by 2023 while 10,400 existing jobs are lost.
The sweeping restructuring is another repudiation of the conglomerate business model once embodied by Siemens and its rival General Electric.
Having fallen on hard times, GE has also been spinning off and divesting various divisions over the past year, although it has chosen to hold onto its Power and Renewable Energy units and make them a central pillar of its future strategy.
“Breadth, size and a ‘one size fits all’ approach will be replaced by focus, speed and adaptability,” Kaeser said.
Siemens will contribute its full stake in SGRE to the new energy company, which is expected to get its own stock listing by September 2020.
Unusually for Siemens, it will not be the majority owner of the new company, but it will remain an “anchor shareholder” — and will support it through its sales network, the licensing of the Siemens brand, and its Siemens Financial Services unit that helps customers finance purchases.