Siemens Energy, a major European maker of wind farms, power grids and natural gas turbines, said on Thursday it was in talks with the German government to secure financial guarantees to help it continue building large projects in the future.
The company’s board is “evaluating various measures to strengthen the balance sheet,” the company said in a news release. The statement said preliminary talks are underway with banks and the government.
News that the Munich-based company was seeking help sent investors into a panic, sending its share price down 35 percent.
Siemens Energy’s difficulties may be a warning that the financial crisis at renewable energy equipment makers could become more severe. These businesses are expected to be integral in helping economies shift toward clean energy, but many are struggling to grow fast.
The company said that “for the time being” it would not enter into new contracts for certain land-based wind turbines, and would “implement strict selectivity” for sales. Its offshore turbines are world leading.
The company said net loss and cash outflow for its upcoming 2024 financial year will be higher than expected. It has already said it will lose about 4.5 billion euros ($4.8 billion) in the fiscal year ending Sept. 30. Financial results are expected on November 15.
Siemens Energy, which was spun off from Germany’s Siemens Group in 2020, calls itself a victim of its own success. Rapidly increasing orders for equipment needed to rapidly build new power systems to replace fossil fuels have strained its finances. Even as it seeks government help, the company says it has orders worth €110 billion on its books.
As a result, the company says it no longer has the credit strength to provide the performance guarantees that are sometimes needed to assure customers that new orders for power plants or wind farms will be delivered.
“The tremendous pace of the energy transition is creating high demand for our technologies,” the company said in a separate emailed statement Thursday. “This positive development also means that we have to issue guarantees to our customers to a greater extent.”
Siemens Energy has also faced major problems at one of its subsidiaries, wind turbine maker Siemens Gamesa. The once independent unit has faced serious quality problems with equipment, including large blades. These issues have resulted in huge estimated repair costs that could last for years.
Furthermore, Siemens Gamesa, like other companies, had years ago agreed to deals on offshore wind turbines at prices that would result in losses due to high inflation.