The newly-spun off Siemens Energy aims to be the “go to institution for combating climate change” with the scale to lead on- and offshore wind markets, said its CEO-designate who added that “the jury’s out” on the role of large-scale gas in the new company.
The pure-play energy business will have the focus needed to succeed in onshore wind – where India is tipped as the biggest future market – and in the face of new competition offshore, said Michael Sen, who is line to lead Siemens Energy towards a stock exchange listing next year.
The new company will wrap up the current Siemens Gas & Power operating unit, Siemens’ power transmission operation, and will also own the 59% of wind turbine OEM Siemens Gamesa Renewable Energy (SGRE) currently held by the German industrial giant itself.
Sen told the BNEF Summit in London: “In today’s world ... industries need focus, they need to be pure play in their own distinct sector.”
He said Siemens Energy will have the scale needed to succeed in terms of innovation, resources and geographical reach in key renewables markets such as the wind power sector.
“Today we see onshore for example the biggest market is going to be India, so we have a strong footprint there, where in other markets it may go down a little bit,” Sen said. Geographical reach and “innovation power” will also help it face down growing competition offshore, where Siemens Gamesa is currently market leader, from the likes of GE and MHI Vestas, he claimed.
The Siemens executive – who was famously quoted predicting ‘Darwinian’ consolidation in the wind industry – said this week’s acquisition of parts of the stricken turbine OEM Senvion gave Siemens Gamesa the chance to acquire some “very attractive assets”, including service contracts “behind which there is a customer”.
Sen told the event the issues facing Senvion were part of a consolidation occurring as wind power moves from being “almost garage manufacturing” not long go to a major industrialised sector.
Questioned about the role of gas in the Siemens Energy portfolio, Sen admitted: “That’s the most relevant strategic question. To some extent the jury’s out, not so much [on] distributed energy, smaller gas and steam turbines ... the question is more about large gas turbines.”
Like other players in the large gas sector such as GE of the US, Siemens has been hit by plunging demand as the global power sector looks to decarbonise its operations.
However, Sen said the world’s energy system “is not going to change overnight” and claimed gas “has some resilience as a bridging technology” to renewables.
He added that Siemens Energy would explore ‘clean gas’ options such as hydrogen and synthetic fuels.
Sen claimed the newly-formed business would “help shape the energy transition. I would make the proposition that we can be the go-to institution for combating climate change”.