CEO: Siemens learned from grid pain

The SylWin Alpha platform goes into place

The SylWin Alpha platform goes into place

Siemens CEO Joe Kaeser said the company has learned costly lessons from its problems building offshore wind grid-links in the German North Sea, and now expects suppliers and other stakeholders to share more of the responsibilities and risks in such projects.

The German group booked €128m ($171m) of charges in its most recent third quarter, the latest in a string of one-off hits its Power Transmission unit has taken over delays to the gird-link work for network operator TenneT.

Kaeser said there is “no quick fix” to the operational issues facing the Power Transmission business, but a new management team is making progress and the four North Sea projects under execution have at least reached a less risky phase.

Overall, the four – BorWin2, HelWin1, HelWin2 and SylWin1 – are about 80% commissioned, Kaeser told financial analysts.

He added that the most nerve-wracking stage – shipping the giant converter platforms to the project sites – has now been done.

“We were dependent on the weather, and since we couldn't ship them as we wanted there was a lot of cost associated with the transport. That obviously has gone.”

Kaeser said although Siemens could not completely rule out further issues – and hence charges – it is “reasonably comfortable” with the remaining risks facing the four North Sea projects as they move to commissioning over the next few quarters.

The Siemens CEO said the “very costly” lessons of the first four grid links had been learned, with a “new procedure in the company on how to go about complex order intake and approvals thereof”.

That procedure was applied to BorWin3, the fifth North Sea grid link, for which Siemens won the contract as part of a consortium in April.

Kaeser said that project will be more lucrative for Siemens and, crucially, "the platform is not our responsibility anymore. There is someone else accountable for that, so a massively reduced risk”.

The oil and gas service provider Petrofac is taking responsibility for the BorWin3 platform.

Kaeser said: "We found partners that are fully responsible for their areas of responsibility."

He added that he expected BorWin3, which is due for commissioning in 2019, to be a "meaningful" success in technical and financial terms.

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