SIEMENS

Companies that want to implement major infrastructure projects such as power plants, airports, or hospitals need steady nerves — not to mention solid financing and completely reliable partners. For example, the planning process for a T-Power combined-cycle (gas and steam) power plant in Belgium began back in 2005 with the establishment of a new project company jointly owned by Siemens Financial Services (SFS), the Belgian firm TessenderloChemie, and a project development company. A consortium of ten banks handled the remainder of the financing, and the new joint venture received the first private power generation license ever issued by the Belgian government

But in spite of its strong backing, the project encountered headwinds. “Just as construction was getting started the global financial crisis broke out,” recalls Hans-Joachim Schulz from the SFS Project & Structured Finance Energy unit. Nevertheless, construction proceeded without delay and none of the project or financing partners jumped ship. The reason, as Schulz explains, was that “we were in the right place at the right time because Belgium’s government wanted to increase competition in the power-generation sector.” Just as important was the fact that Siemens had entered the €440 million project with 33 percent of the equity capital. “We’ve been working on development projects for over 20 years with international partners and have gained a reputation as being absolutely reliable,” says Schulz.

The 430-megawatt combined-cycle plant entered service on schedule in July 2011. With an efficiency level of over 58 percent, it is one of Europe’s most modern and efficient facilities. Siemens Energy was responsible for construction and supplied the main components, including a gas turbine, a steam turbine, and a generator. Tessenderlo uses about half of the electricity generated for energy-intensive manufacturing processes in its neighboring plant; the rest is fed into the power grid.

“The T-Power plant offers a perfect example of how Siemens Financial Services handles large-scale infrastructure projects that involve joint ventures,” says Schulz. SFS always works with reliable local partners to ensure that conditions and requirements such as approval procedures and the participation of neighboring communities are taken into account in the planning process.

This is also the case with the Lincs offshore wind farm now under construction off the eastern coast of the UK. Siemens is serving as a financing partner in this project as well — in addition to supplying wind turbines and grid connection technologies. “In projects of this scope, we work with our partners for years,” says Schulz. Siemens is often connected to a project over the long term through service and maintenance contracts.

Modernizing and Saving. Siemens is also committed to the long haul when it comes to financing energy system modernization projects. Office buildings, hospitals, schools, and universities frequently suffer from investment logjams when it comes to state-of-the-art building systems. With this in mind, in 1996 the city of Berlin established a partnership with Siemens to upgrade the energy efficiency of around 200 public buildings. Instead of depending on new funding, the project was financed through the use of energy performance contracting. Here, Siemens identified the savings potential associated with energy and building operation costs and implemented modernization measures. The city of Berlin pays for the upgrades in installments with its contractually guaranteed savings. As a result of these steps, many buildings have been equipped with new heating systems, ventilation and air conditioning units, and centralized building management systems.

And Berlin is no exception. In similar projects, Siemens has upgraded 4,500 buildings worldwide. As a result, operators have saved more than €1 billion and CO₂ emissions have been cut by 9.7 million tons.

In addition, SFS takes care of managing insurable risks — among others, those associated with new technologies that insurance companies are willing to underwrite only to a limited extent. For example, SFS has engineered an insurance concept for the world’s most powerful gas turbine in a combined-cycle power plant in Irsching, Germany, which was developed and built by Siemens. Says Head of Gas Turbine Product Management Willibald Fischer: “Insurance for such a project is vital. In addition to normal risks, such as failure to meet deadlines and construction accidents, innovative technology also has to be insured. It was the early involvement of SFS that made insurance coverage for our project possible.”

Siemens also helps partner companies finance machinery. For example, SFS’s acquisition of the Vladivostok-based financial company DeltaLeasing gave it a nationwide network with 15 offices. One of those offices is located in Samara, Russia’s third-largest industrial center. Here, ServiceMontageIntegratsiya (SMI), whose headquarters is located in Kazan, has leased new machines and units for metal processing from Siemens Finance Russia worth €1.36 million.

“Companies in Russia are increasingly demanding good service from experienced financial partners,” says Oleg Rakitsky, Head of SFS’ Commercial Finance unit in Russia. That’s one reason why in 2011 one of the most modern hospitals in Moscow, the Perinatal Medical Centre, awarded Siemens a contract to upgrade not only its computer and magnetic resonance tomography hardware but also its imaging software. While Siemens Healthcare is handling the medical technology, SFS Russia is taking care of the financing.

Whether it’s a major infrastructure project such as a power plant or an airport, or the modernization of industrial facilities and hospitals, Siemens Financial Services and its financing concepts are helping to drive developments not only in established markets, but in emerging ones. For example, SFS has established a financial services company in India that will help private companies and public investors finance projects by various Siemens sectors.