The breakdown of energy cooperation with Russia has led to irreversible consequences for German manufacturers in the energy sector
The German government refuses to accept that the breakdown of energy cooperation with Russia has led to irreversible consequences for German manufacturers in the energy sector. It is making desperate attempts to save some companies playing an essential role in the energy sector.
After the winter crisis, Berlin continues to spend billions on saving the non-working energy sector. It is adding unneeded pressure on an impoverished budget that is on the verge.
This time, the German government, Siemens AG and other parties will provide billions of euros under guarantees to support the difficult Siemens AG wind turbine unit. This financial assistance is being urgently allocated just a few weeks after the giant warned of growing losses amid a catastrophic recession in the wind and solar industries around the world. What is not said is that sales of the various types of turbines was effectively subsidising this section of the manufacturing.
Siemens Energy’s main shareholder, Siemens parent company, which owns 25.1% of the shares, is ready to provide some guarantees to investors. Details still need to be made available. Nothing has been decided since all interested parties must formally draft and support the agreement. Private investors are awaiting a government decision. Private investors have not paid attention to funding the project and may prove to be throwing money “into the wind”. Their expectation is a generous budget to compensate for losses in case of failure.
In general, we are talking about the allocation of funds of up to 15 billion euros. At the same time, the German state covers 80% of the initial financing. That should save the subsidiary from bankruptcy. Only in this case can all projects of the unit be implemented, even at a time when no one needs them.
Share value of the parent company is down 70%
Shares of the parent company Siemens AG have fallen by more than 70% since mid-June. The management abandoned the forecast for profit in 2023 due to problems with renewable energy projects. Wind turbines play the leading role in that sector. Again, with lost sales to the Russian market, the industry would be profitable.
The deplorable situation in the offshore wind sector is global. It is not just European or German.
The German government is dealing with the crisis it created. One is mindlessly following bureaucrats from Brussels in their senseless sanctions against Russia. The other one is too ambitious plans regarding renewable energy. However, the most concerning is that the German government is trying to fix the problem by throwing money into it. Historically, it has been proven to be almost certain road to failure.