Siemens Energy faces criticism over dismal results at its Spanish wind turbine maker

Siemens Energy shareholders voiced their dissatisfaction with the performance of its subsidiary Siemens Gamesa at the company's annual general meeting. Siemens Energy took full control of the company in 2022. Siemens Gamesa is now threatening Siemens Energy's survival.

Siemens Energy's management faced dissatisfied shareholders at the annual general meeting, as they sought answers about the subsidiary Siemens Gamesa's spiralling losses.

Despite the expansion of renewable energy in recent years, the wind industry has come under immense pressure. The reasons include supply chain problems, sharply rising costs under contracts with fixed prices, lengthy approval procedures and lagging grid expansion.

However, the Siemens Energy subsidiary is also grappling with problems of its own making. In addition to quality defects in its onshore turbines, the expansion of offshore wind farms is also falling behind schedule. Late last summer, Siemens Gamesa completely halted sales of two of its current onshore wind turbine models due to costly quality defects.

Siemens Gamesa, which was formed by the merger of Siemens' wind power division and the Spanish company Gamesa in 2017 and was fully acquired by Siemens Energy in 2022, is not the only manufacturer facing similar problems. Wind turbine manufacturers' push to develop ever larger and more powerful turbines and bring innovations to the US and Europe is leading to an increasing number of failures at these facilities.

Despite strong growth in its traditional grid and power plant divisions, Siemens Energy reported a loss of 4.6 billion euros in the 2022/23 financial year due to billions of euros in provisions for Siemens Gamesa. A total of 1.6 billion euros was set aside just to address problems with the turbines, and these provisions will now be used over the coming years.

Siemens Gamesa reported a loss of 434 million euros on revenue of two billion euros in the first quarter of its financial year, which began in October. The company confirmed that it expects a loss of two billion euros in its wind energy business for the full financial year.

The extent of the problems only became clear last year

Shareholders called the acquisition "massively overpriced" and said they were shocked that management had praised Gamesa "with great conviction and enthusiasm", Die Welt reports. Siemens Energy CEO Christian Bruch said the company had conducted due diligence before acquiring Gamesa, but the extent of the problems only became apparent in mid-2023. Bruch also rejected suggestions that Siemens Energy should divest its wind energy business.

"We will resolve these problems in the wind business," Bruch said. He added, however, that it would probably take several years to address them.

Onshore and offshore wind power are "a central element" of the energy transition and of our company, which is committed to climate protection, the company's management added. Last November, Bruch presented an action plan to put the wind business back on track. The plan includes cutting costs by 400 million euros by the 2026 financial year.

Late last year, Siemens Energy secured guarantees worth around 12 billion euros from the German government and several banks so it could continue operating.