Wind Energy Jobs Cut sharply by Largest Green Company Siemens due to US Tax Grants Expiry and European Crisis

The world’s largest green company Siemens is taking drastic measures to cut costs at its Renewable Energy unit which saw orders fall below 40%. Note the cleantech industry is facing massive competitive pressure which has already seen some of the biggest green companies like Q-Cells go bankrupt and others like Vestas searching for buyers. The advent of Chinese companies in the solar panel and wind turbine industry has seen prices crash and a massive supply glut of green equipment. Though this has benefited end users, it has been terrible on Wind power stocks  which has seen prices fall by around 90% from their peaks in 2008.

Wind Energy Problems in USA

Siemens is cutting almost 1/3^rd of the wind jobs in the USA which is probably going to see expiry of wind tax break in end 2012. New orders for wind turbines in the USA have fallen off a cliff as a result. Another  major reason for the slowdown has been Gas prices which were ruling at $8/BTU at the peak have crashed down to $2/BTU making Gas based Power much cheaper. Wind Energy is one of the cheapest forms of Renewable Energy at around 8-10c/KwH. However, it has been tough for Wind Farm developers to sign Power Purchase Agreements (PPAs) with utilities given that electricity demand has also contracted in the US. Wind Energy has hit a perfect Storm driven by a confluence of negative factors in the USA. The Disadvantages of wind energy like noise are being used by anti-green lobbies to further reduce wind power growth.

Wind Energy Problems in Germany

Siemens also has seen a sharp slowdown in its home market of Germany where offshore wind energy has been hit by numerous delays due to regulation. Other European markets like Italy and Spain are facing major macroeconomic challenges as well.

World’s Largest Green Company

Siemens is the world’s biggest Green Company reporting 28 Billion Euros from its Environmental Portfolio. This diversified Industrial German Conglomerate generates revenues from a diverse number of Green Sectors. While some of its Green Revenues may not be strictly Green as it includes revenues from high efficiency turbines and generators which are used for fossil fuel energy, nevertheless Siemens is the biggest Green Company. Siemens has a dominating presence in Renewable Energy (Leading Position in Offshore Wind), Lighting (OSRAM), Green Building Solutions, Energy Transmission and Distribution. The Company derives  30-35% of its revenues from its Environment Portfolio spread across its 3 Divisions.

ET

The renewable energy business – comprising solar, wind and hydro power – recorded a 40 percent drop in new orders in the nine months through June, which Siemens blamed on fewer large orders in Germany. Siemens said it expected pricing pressure to continue in coming quarters. Profit at the business was down by just over a third in the period.

In Germany, the expansion of offshore wind power projects has been delayed by regulatory and financial hurdles, and the solar industry there has been rattled by consolidation that has driven a number of companies out of business.

In the United States – where cheap natural gas and the looming expiry of a key U.S. wind tax credit are hurting the industry – Siemens is already cutting 615 jobs at factories producing windmills.