Siemens Energy has announced plans to recruit over 10,000 new employees to bolster its electricity grid business.
This move is central to an ambitious six-year growth strategy as the company aims to overcome challenges plaguing its wind turbine division.
Expansion of Grid Technologies
The Grid Technologies division, already the German energy engineering giant’s largest revenue generator, will expand its workforce by two-thirds by 2030.
Tim Holt, the unit’s head, revealed to the Financial Times that €1.2 billion in capital expenditure is allocated for new factories and increased manufacturing capacity in the US, Europe, and Asia.
Surge in Demand for Grid Infrastructure
Holt cited surging electricity demand, a wave of renewable projects requiring better grid connections, and widespread aging infrastructure as drivers of this expansion. “We see this huge boom coming,” he stated in an interview.
Siemens Energy’s grid engineering division is a global powerhouse, ranking second in electricity transmission equipment manufacturing, just behind Japan’s Hitachi Energy and ahead of the US’s GE Vernova by revenue.
Accelerated Expansion Plans
The company aims to achieve most of its expansion within the next two years. Approximately 40% of the new jobs will be created in Europe, 20% in the US, 20% in India, and the remaining in other parts of Asia and Latin America.
Holt highlighted the unit’s impressive order growth, doubling from €7 billion to €15 billion between 2021 and 2023, with €12 billion already secured in the first half of this year.
In the US, where Siemens Energy plans to expand its Charlotte, North Carolina factory, Holt acknowledged research indicating the need for significant investments in the grid over the next 15 years.
European Energy Projects and Grid Infrastructure
The scale of new energy projects in Europe necessitates substantial infrastructure investment to connect them to the grid, Holt emphasized.
Siemens Energy, spun out of Siemens in 2020, has faced turbulence due to problems at its wind turbine division, Gamesa. Quality issues and a private financing crunch resulted in a €4.6 billion annual loss and a government-led rescue plan.
The outlook for further growth in the renewables sector, particularly wind, remains uncertain. Last week, the CEO of Europe’s largest renewables provider, Statkraft, announced a scaling back of plans for new projects.
Funding Constraints and Future Confidence
Holt acknowledged potential constraints from capital markets’ appetite for funding energy transition-related investments. “The market is getting tighter and tighter, and we are going to have to look at alternative ways to fund it,” he said.
Despite these challenges, Holt expressed confidence in Siemens Energy’s Grid Technologies business. The division, with €7.2 billion in revenue in 2023, has guided shareholders towards a 30% revenue increase this year. Holt envisions the division reaching “somewhere between €18-20 billion in revenue” by 2030.
Capitalizing on Order Backlog
A significant portion of this growth will come from fulfilling the current €30 billion order backlog. Holt anticipates “full order to revenue conversion” by 2030, based on the division’s new capital expenditure plans.
Despite uncertainties, Holt remains optimistic: “Everybody is a bit scared about these projections and making these large Capex commitments, and in energy, you always see booms and busts. But we are actually very confident in the projections.”