Siemens, Gamesa to Combine Wind Business to Form New Major Market Player

Spanish wind giant Gamesa will absorb Siemens’ wind power business, including wind services, creating a new combined company—one of the world’s biggest wind turbine manufacturers—that will have its global headquarters in Spain.

The companies on June 17 signed binding agreements to merge and form the new company. Siemens will hold a 59% stake and consolidate the merged company and existing Gamesa shareholders will hold 41%. The transaction is expected to be closed in the first quarter of 2017.

The companies said today that the combined company’s global headquarters will remain in Spain, along with its headquarters for onshore operations. Headquarters for its offshore division will be in Germany and Denmark.

It will begin operations with a 69-GW installed base worldwide, an order backlog of €20 billion ($22.6 billion), and revenue of €9.3 billion ($10.49 billion).

According to Wind Europe (formerly the European Wind Energy Association), wind energy has overtaken hydro as the third-largest source of power generation in the European Union with a 15.6% share of total power capacity in 2015. The International Energy Agency, meanwhile, estimates that in 2015, the increase in wind generation was equal to almost half of global electricity growth.

Competitiveness in the global wind market also kicked up last year, however. Chinese firm Xinjiang Goldwind Science & Technology Co. installed the most wind power capacity (7.8 GW) in 2015, according to Bloomberg New Energy Finance, knocking down GE, which fell to third place with 5.9 GW. Second place went to Denmark’s Vestas Wind Systems with 7.3 GW. Gamesa and Siemens tied in fourth place, both putting up 3.1 GW of onshore wind in 2015.

The merger would have secured the two companies a third place slot.

Siemens’ and Gamesa’s wind businesses are “highly complementary with regard to markets, products, and technology,” Gamesa said in a June 17 statement. “Siemens’ wind power business has a strong foothold in North America and Northern Europe, and Gamesa is well positioned in fast-growing emerging markets, such as India and Latin America, and in Southern Europe. Further, the transaction will result in a product offering covering all wind classes and addressing all key market segments to better serve customers’ needs.”

Gamesa also announced that it has entered into contractual agreements with AREVA that will see the French firm waive existing restrictions in its Adwen offshore joint venture with Gamesa. The 50-50 joint venture that has a mission to achieve 20% of Europe’s offshore wind market share by 2020, has 2.8 GW under construction. In 2015, the company claimed a market share of 18.2% of Europe’s grid-connected capacity.

“As part of these agreements, Gamesa—in alignment with Siemens—grants Areva a put option for Areva’s 50 percent stake and a call option for Gamesa’s 50 percent stake in Adwen,” Gamesa said on June 17. “Both options expire in three months. Alternatively, Areva can in this time divest 100 percent of Adwen to a third party via a drag-along right for Gamesa’s stake.”

Spanish utility Iberdrola, a 20% owner of Gamesa, has also reportedly entered into a shareholders’ agreement with Siemens to hold around 8% in the combined company after the transaction closes.

For Siemens, the combination of the companies’ wind businesses “follows a clear and compelling industrial logic in an attractive growth industry, in which scale is a key to making renewable energy more cost-effective,” said Siemens President and CEO Joe Kaeser.

Siemens also said that teaming up with Gamesa will allow it to offer a “much broader range of products, services and solutions to meet customer requirements.”

 

Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)