Siemens Gamesa in $629 million sale of south European assets to SSE

Siemens Gamesa Renewable Energy has agreed to sell assets in southern Europe to Scotland-headquartered energy firm SSE for 580 million euros (around $628 million), with around 40 of the turbine maker’s employees moving to SSE as part of the deal.

In a statement released on Tuesday, SGRE said the sale included “a pipeline of onshore wind projects” in Greece, Spain, France and Italy.

The capacity of these projects — which Siemens Gamesa said were “in various stages of development” — comes to 3.9 gigawatts. There is also the potential to develop co-located solar photovoltaic projects with a capacity of up to 1 GW.

Jochen Eickholt, the CEO of Siemens Gamesa, said the announcement demonstrated his company’s “capacity to optimize its portfolio of assets and maximize value.”

SSE Renewables’ Managing Director, Stephen Wheeler, said the project portfolio would “provide a real springboard for our expansion plans in Europe across wind, solar, batteries and hydrogen.”

Commenting on the sale, Laura Hoy, equity analyst at Hargreaves Lansdown, said: “SSE’s doubling down on its renewables efforts, and today’s announcement of a €580m bet on Southern European wind projects is evidence of management’s conviction.”

“On the surface this looks like the right play — transitioning toward cleaner energy is the clear direction of travel and the group’s seen output improve steadily over the past few months.”

Nevertheless, “having more wind in the sails doesn’t guarantee smoother seas,” she added.

“Performance in SSE’s renewables division has left something to be desired so far this year, and though it seems things are improving, output is still well below targets.”

“Pouring money into a yet unproven part of the business is a risky move to be sure — but at present it seems like the only way forward if growth is eventually on the menu.”

Details of the agreement between SSE and SGRE were announced on the same day the latter released preliminary results for the second quarter, reporting revenue of around 2.2 billion euros and an operating loss of roughly 304 million euros.

The company said its performance had been “severely impacted by product and execution related issues,” going on to add that previous guidance for the 2022 financial year was “no longer valid” and “under review.”

It has been a challenging period for Siemens Gamesa. In February, it said it expected revenue for the 2022 fiscal year to shrink by between 9% and 2% year-over-year, having previously earmarked a contraction of between 7% and 2%.

The company also revised its operating profit margin, or EBIT margin before purchase price allocation and integration and restructuring costs, to between -4% and 1%,…