Siemens CEO Joe Kaeser signed with the head of State Power Investment Corp. (SPIC), Qian Zhimin, a "strategic partnership agreement," the Munich-based industrial group said on Tuesday. The focus is on business with large gas turbines. SPIC's subsidiary China Heavy-Duty Gas Turbine Company (UGTC) wants to develop its own gas turbine for the domestic market, Siemens will provide technical support and money to do so. Until the Chinese turbine is ready for the market, the company expects to receive orders for its own gas turbines, a spokesman said. The first prototypes of Chinese production should be finalized in 2023.
Cooperation with SPIC, based on a basic agreement last summer, should go beyond gas turbines. The plans include projects for the digitization of power plants, hydrogen and power management. SPIC is one of five major utilities in China, with a capacity of 126 gigawatts (GW) covering 7.5% of the country's electricity production. In the face of air pollution, China is increasingly shifting its supply of coal to gas.
Siemens expects a long partnership
"This agreement will benefit both sides of the planned structural growth in the Chinese power generation market," Kaeser said. "The goal is a long-term partnership beyond the scope of the agreements announced today." SPIC also wants to build gas plants outside China.
China has become the largest market for large gas turbines, with a 30% stake. In the West, in view of the energy transition, gas and coal plants are becoming less popular, which is hurting the major turbine manufacturers such as Siemens, GE and Mitsubishi Heavy Industries.
A comprehensive solution for the gas turbine division, in which Siemens has already reduced 6,000 jobs, is the agreement with China, but probably not. A Chinese partner for global business would face the discontent of state regulators, at least in the US. According to experts, Siemens president Kaeser wants to find a solution until May 8, Capital Markets Day. Discussions with Japan's Mitsubishi Heavy Industries have been intensified recently, which had already fallen asleep before. "But nothing is ready," said one of the insiders. Kaeser is still exploring in various directions.
In new business, Siemens is already writing losses with its large turbines, only the lucrative service business is in the red. However, in 2017/18 (as of September 30), Power & Gas's profits fell three quarters to 377 million euros, with a 19% drop in sales to 12.4 billion euros.
(APA / Reuters)