Gamesa, Siemens negotiating wind energy merger

Siemens and Gamesa are in final negotiations on a deal to merge their wind power assets.

A Siemens-Gamesa joint venture would overtake Denmark’s Vestas to become the world’s biggest wind farm manufacturer by market share, operating in the mature North American and European markets and fast-growing markets like India, Mexico and Brazil.

Siemens is dominant in the offshore wind market but relatively weak onshore and has struggled to make wind power profitable.

Gamesa is strong in emerging markets, notably Latin America, where it expanded when the Spanish government cut subsidies to clean energy producers in 2013.

A Siemens-Gamesa deal would be the latest in a string of mergers in the wind industry. Having weathered years of overcapacity and losses, it is now thriving as demand for carbon-free electricity increases.

Pooling R&D efforts and funding gives groups more options in an industry where products are developing and improving fast.

Gamesa had already partnered with France’s Areva to build offshore wind turbines through their Adwen joint venture.

A Siemens-Gamesa joint venture would give Siemens a foot in the nascent huge French offshore market but could also raise competition issues in that market segment.

Gamesa expects double-digit sales growth through 2017, when it hopes to sell 3,500-3,800 MW of capacity, up from an estimated 3,100 MW in 2015.

Last year, 12.8 gigawatts of wind capacity was installed and grid-connected in the EU, a 6 percent increase on 2014, with growth especially strong in offshore, where installed capacity doubled to 3 GW, according to the European Wind Energy Association (EWEA).

More wind power was installed than any other form of power generation in 2015 and accounted for 44 percent of total 2015 power capacity installations, EWEA said.

Market leader Vestas started the consolidation trend late in 2013, when it teamed up with Japan’s Mitsubishi Heavy Industries  to build offshore wind turbines, a capital-intensive industry with long lead times that favors companies with strong balance sheets.

German turbine maker Nordex said in October it was buying the wind power business of Spain’s Acciona for 785 million euros.