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Investments in the energy sector often require large amounts of capital to support new and expensive technologies. Customized financial solutions can prove to be a critical step in the path to commercializing efficient technologies for the energy market.
Role of finance
Whether in renewables, conventional power or oil & gas, energy projects often require substantial amounts of money. Funds must be secured in order to move ahead with the various phases of completing such large-scale projects. From planning to purchasing and installing equipment – as well as when obtaining capital needed to train staff for the operation and maintenance of the systems installed – investors are needed to support such projects at every step of the way.
Financing is a critical component. It has been instrumental for us to find the money to build offshore wind farms.
Siemens offers investment solutions ranging from advisory services to debt and equity capital and equipment and technology finance options to help our clients in the energy and natural resource markets address tomorrow’s energy needs today. With a global network of energy finance professionals, the company provides capital and expertise that is backed by more than 160 years of Siemens’ industry innovation, financial strength and diligent risk management, bundled in Siemens Financial Services (SFS).
More than ever, organizations require financial partners that can develop strategic solutions to meet today’s evolving market needs. Siemens is positioned to adjust to a constantly shifting market environment where capital demands are unpredictable. The company supports projects across a wide variety of industries, covering the full scope of a diverse and flexible financing portfolio. When customers purchase Siemens equipment or services, they may be unaware of the diverse financing options Siemens has to offer.
SFS exercises a unique flexibility to invest debt, mezzanine or equity financing and seamlessly shift from debt to equity on the basis of fluctuating project requirements. As the needs of customers shift, SFS continues to tailor its financial solutions to more readily meet today’s market environment. It will continue to demonstrate flexibility based on the capital needs of customers.
In this phase of project development, securing adequate funding for early-stage project items is critical for power generation projects. Early-stage project developers are often thinly capitalized individuals or firms adept at site acquisition, permitting and counterparty contract negotiation. Development activities typically take 12-36 months and require early-stage capital to fund Front End Engineering and Design (“FEED”) studies (often the single largest cost during the development phase); negotiation of air, water and other permits; payments for site acquisition, land lease agreements and easements; engagement of counsel and consultants; and applications for federal, state and local financial incentives.
Siemens provides advisory and development funding to help get projects off the ground. At Financial Services, we have a significant amount of sector specialists, including technical project managers, banking experts and insurance specialists, as well as general project and risk managers. Together, they are well equipped to handle a broad range of project and risk management tasks to ensure a project will be successfully implemented.
The spectrum of Siemens debt solutions ranges from senior secured corporate loans and structured investment financing (like leases and loans) to infrastructure and project financing. In addition, its portfolio includes acquisition and growth financing, typically as syndicated loans.
SFS supports private equity and corporate clients’ needs and strategic goals through senior secured loans that are tailored to all business cycles. It has the strength to structure, underwrite and hold significant positions. SFS offers both floating and fixed rate options, and is capable of a broad range of transaction sizes. SFS also tailors junior capital financing directly for clients, offering a broad suite of integrated financial solutions – including the ability to provide secured first and second lien financing, as well as mezzanine and equity capital.
Through its equity financing, SFS enables projects that promise an appropriate return for Siemens and its coinvestors in terms of the project’s risk profile. Project risk profiles are determined by market risks and project specifics, such as construction and operating risks.
SFS typically reserves equity capital to focus on projects that directly utilize Siemens equipment and services and generally takes a minority interest in a project, investing at financial close of project construction. SFS draws on its extensive track record in equity investment to originate, structure and execute successful investments in the energy markets with an emphasis on generating superior returns in conjunction with its coinvestors.
The Superdome needed to upgrade its energy infrastructure.
Siemens to improve the stadium’s lighting, temperature systems, & energy management.
The upgrades are estimated to save more than 6.2 million kWh each year.
Shaanxi required a financing solution to source a refrigerant compressor and oil unit.
The leasing solution effectively reduced credit pressure for the producer.
Supported the producer's status as one of the largest LNG provider in Shaanxi Province.
A high energy consumer, Gestamp needed to implement energy efficiency measures to cut costs and boost its bottom line.
A three-year Managed Service Contract helped Gestamp to increase energy efficiency in Spanish plants by 15%.
Easy-to-replicate structure across the globe, Siemens has supported Gestamp’s factories in 5 other countries worldwide.
“One-stop-shop” solution from equipment to financing provided by a single supplier
Project brings jobs and clean energy technology to community
Siemens supported customer with loan to aide in project development
56 wind turbines of the six-megawatt class for the Galloper project
Siemens Financial Services to hold 25 percent of the total equity in Galloper Wind Farm Ltd.
Output of 336 megawatts to supply up to 336,000 British households
Three gas turbines for the power plant project Azura-Edo
Total installed capacity of 459 megawatts
SFS contributed $ 50 million to partially fund project’s first phase
In order to meet the challenges of a sustainable energy system, measures have to be taken all along the energy conversion chain from the use of fossil fuels to power generation and transportation as well as improvements in management and consumption.