Siemens Financial Services presents “Green Financing” for infrastructure projects
Financial solutions to support implementation of efficient technologies in the energy sector
Abu Dhabi, Customized financial solutions play an increasingly important role in the implementation of efficient technologies in the energy sector. According to estimates of Siemens Financial Services (SFS), roughly EUR 2,700 bn will have to be invested in energy projects worldwide over the next 20 years. The steep increase in financing costs resulting from the global credit crisis has made customized financing solutions a key success factor in the realization of necessary investments: For example, intelligent financial solutions can help exploit the cost advantages derived from the use of green energy technologies to afford the necessary investments. At the World Future Energy Summit in Abu Dhabi, UAE, Siemens presents itself as one of the global leaders in the field of climate-friendly technologies and the only provider of solutions covering the entire value chain of energy conversion from generation to consumption. SFS experts describe key financing challenges in the current, turbulent market environment.
“In today’s changed credit and financing landscape, suitable financial solutions represent a critical factor in the successful implementation of cutting-edge technology" says Johannes Schmidt, CEO of Siemens Financial Services’ Equity & Project Finance unit. SFS estimates global infrastructure investment requirements at EUR 15,000 bn over the next 20 years, with energy projects accounting for EUR 2,700 bn. This corresponds to a six-fold increase from the current investment level. At the same time, the fact that climate change will remain one of the major global challenges means that energy distribution must be as efficient as possible. While Siemens offers the full range of relevant technologies, these need to be implemented in an affordable way. “The financing itself is not ‘green,’” notes Schmidt. “But the funded technology helps enhance process efficiency, thereby containing adverse effects on the environment.” Public awareness of the importance of environmental economics has increased markedly. An online survey of 2,750 European companies recently commissioned by SFS shows that more than 70% of respondents had invested in energy-saving technology during the past year. More than half had formulated far-reaching goals and guidelines on energy savings. While costs were found to be the single most important factor driving these moves, image considerations followed closely behind.
The global financial crisis has also left its marks on project finance. “Siemens profits from a fundamentally solid financial position and is well prepared even for an extended bad-weather period,” stresses Schmidt. “But of course the crisis affects us, too, because it affects our customers. Liquidity is getting scarce, and the pool of potential financing partners is changing fast. Funding for promising projects, however, will continue to be available" A thorough review of the economic and contractual parameters is indispensable – because liquidity is also a precious commodity for Siemens. “The combination of technological know-how, financial expertise and solid financials opens up specific opportunities,” adds Schmidt. “Siemens can look back on a long success story as a provider of profitable solutions driving technological innovations, and numerous customer references prove that SFS is doing its part as well.“
SFS is currently structuring financial solutions for over 60 energy projects with a project volume of EUR 11.2 bn to be financed. When it comes to energy projects, the Gulf region is a particularly interesting and increasingly important region. In 2007, the region accounted for 16% of the global project finance market (17% in the first half of 2008, accordingly). SFS is active in traditional project financings as well as venture capital investments in the region. For example, the company has invested in the Masdar Clean Tech Fund I, and projects such as the construction of the water desalination plant Shuaibah in Saudi Arabia with a project volume to be financed of about EUR 2.5 bn have benefited from SFS’ project financing solutions.
Siemens is a prominent actor in regional energy projects and has already introduced numerous climate-friendly technologies in infrastructure projects. The Taweelah B2 and Shuweihat S2 power plants in the UAE both use energy efficient combined cycle technologies. Meanwhile, Siemens’ Building Technologies division provides a range of efficient technologies for building management systems in public and private buildings across the region.
“Siemens has built a very strong presence and reputation in the region over the past decades. Together with Siemens Financial Services, we can offer our clients project financial solutions that complement our innovative technologies” says Joachim Kundt, CEO, Siemens LLC.
Siemens Financial Services (SFS) is an international provider of financial solutions in the business-to-business area. With about 1,900 employees and an international network of financial companies coordinated by Siemens Financial Services GmbH, Munich, we support Siemens as well as non-affiliated companies, focusing on the three sectors of energy, industry and healthcare. We finance infrastructure, equipment and working capital and act as a competent manager of financial risks within Siemens. By leveraging our financing expertise and our industrial know-how we create value for our customers and help them strengthen their competitiveness. For more information see: www.siemens.com/finance.
Siemens AG (Berlin and Munich) is a global powerhouse in electronics and electrical engineering, operating in the industry, energy and healthcare sectors. The company has around 430,000 employees (in continuing operations) working to develop and manufacture products, design and install complex systems and projects, and tailor a wide range of solutions for individual requirements. For over 160 years, Siemens has stood for technical achievements, innovation, quality, reliability and internationality. In fiscal 2008, Siemens had revenue of EUR 77.3 billion and a net income of EUR 5.9 billion (IFRS). Further information is available on the Internet at: www.siemens.com.
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