Siemens Gamesa To Sell India Unit, Iberdrola Acquires Avangrid, Auren Merges with AES Brazil

Allen Hall, Philip Totaro, and Joel Saxum discuss the sale of
Siemens Gamesa's India Wind Turbine unit, Iberdrola's acquisition
of remaining Avangrid shares, and Auren Energy's merger with AES
Brazil Energy. Sign up now for Uptime Tech News, our weekly email
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www.weatherguardwind.comIntelstor - https://www.intelstor.com Allen
Hall: I'm Allen Hall, president of Weather Guard Lightning Tech,
and I'm here with the founder and CEO of IntelStor, Phil Totaro,
and the chief commercial officer of Weather Guard, Joel Saxum. And
this is your News Flash. News Flash is brought to you by our
friends at IntelStor. If you want market intelligence that
generates revenue, and who doesn't? Then book a demonstration of
Intastore at intelstor.com. Siemens Energy has put the India Wind
Turbine unit of its subsidiary, Siemens Gamesa Renewable Energy, up
for sale. The India business has an annual revenue of 700 million
and is being valued at 1. 5 billion. 1 billion for the transaction.
Siemens has appointed Investment Bank Barclays to find buyers with
Adani Renewable Energy, TPG Rise, Brookfield Energy, Transition
Funds, Macquarie, and Masdar being sounded out. Siemens Gamesa has
reported poor results over the last few years and has been working
on a turnaround, of course, aiming to break even in 2021. 2026.
Phil, how does this fit into the overall strategies for Siemens
Gamesa with this India sale? Philip Totaro: It's interesting
because they have said that they're still interested in doing
something in the Indian market and it sounds like they want to
continue servicing some of the projects in India, but the fact that
they would put You know, whatever other assets they have up for
sale, potentially inclusive of their their order book, so to speak
with sales and services is quite fascinating for companies like,
INOX and Adani Group, who it sounds like is the the leader of this
charge to potentially acquire. These assets, it would actually be a
pretty good fit for Adani because they don't necessarily need the
Siemens turban technology but they would want the manufacturing
facilities and certainly some of the services order book that, that
they could acquire through this. Joel Saxum: And would it be smart
for a competing OEM to try to scoop this up just to get a peek at
some of the. IP. Now I'm not saying the IP is going with it because
of course you're not going to sell that. But if you're going to get
the services portfolio, you've got to get every in depth piece of
schematic and all these other things with it. So my question would
be then what's all going to go with this sale, right? You're going
to have, you may have the services order book crate contracts for
service. There's a, because we all know there's a lot of G 97 G one
fourteens. There's a ton of two megawatt ish machines that are
Siemens Mesa in, right? India. So you get that, you may get some
manufacturing facilities and other things, but it's really a
confusing sale to me, but just because I don't understand. What the
value of Siemens Gamesit to me is the turbine IP, but you're not
getting any of that. You're just getting this like commercial and
services side. Am I correct or am I seeing something incorrect
here? Philip Totaro: No you're correct. The value would be
different to different companies. So let's, if we go through the
list of, the companies Allen just rattled off, you look at
Brookfield the reason that they would be interested in this is
purely for the services side of the business, where, considering
the fact that all four of those companies already are substantial
asset owners, this gives them the option and opportunity to build
up their kind of services credentials and, take on a turnkey
services business without having to build it up organically. So
that's appealing, but is it really the best fit? The reason why it
looks like Adani might be the better fit is not only is Adani the,
number one independent power producer in India, and even has It's
project sites with Siemens Turbans, so they'd be taking over, the
service on their own sites with the services contracts. The fact
that Adani would also be able to make use of the manufacturing
facilities for the wind turbines that they've got now the fact that
they could, leverage the supply chain it, it gives them, a leg up
as far as, this type of an acquisition is concerned. However, going
back to your other question, Joel, wouldn't it be good for a
competing OEM to step in? Yes, theoretically, if that meant that
they could take over a factory and retool it for their turbines, it
would cost effectively enough where they would also have scale. The
only company that would probably be capable or interested in doing
that would be either Envision Energy or Sany from China. I doubt
that Vestas would actually do it because Vestas already has some
facilities over there, so does GE including, LM has some blade
factories in India. So you're, nobody's going to spend the money to
acquire a thing just to take a look at the IP and then not fully
leverage the manufacturing facility. I think the reason why this
fits so well for a company like Adani is they would not only get
the opportunity to leverage all of that, but they would also be
able to make use of all of the IP. They would also be able to make
use of. The manufacturing footprint to grow their own business in
India and Sri Lanka. Allen Hall: You would really work, acquire the
remaining 18. 4 percent of Alvin grid shares. It doesn't own for 35
and 75 cents per share in cash. Their price represents an 11
percent premium over the closing price. On March 6th of this year,
Avans Grid's Board of Directors unanimously approved the agreement.
The transaction is expected to close in Q4 of this year, subject to
the customary closing conditions and shareholder approval. Phil,
this is a big move for Iberdrola, bringing everything in house into
the U. S., so now they're just one large company again. Phil, does
this have a benefit to them in the short term, or is this more of a
long term play? Philip Totaro: I'd say both, because what they're
doing here is, in addition to the commercial idea of Putting the
company back together. The reason why they would do this is it's
going to make it easier for them to potentially redeploy capital.
Their onshore wind fleet in the United States has an average age
above 15 years. And they're getting close to the point where unlike
a lot of other companies that have repowered their fleet after 10
years they haven't done that at Iberdrola because they have such
lucrative power purchase contracts that they're just going to
continue running those projects out till the point where those PPAs
expire after 20, presumably 20 years, then they're going to
repower. They know that they're not going to get those same level
of PPAs when they have to renegotiate them with either the utility
that they're already dealing with. Or if they have to, slide back
into the merchant market, they're not gonna get anything that
lucrative. So this is, I think this is about structuring and
positioning themselves for this repowering. Allen Hall: Auren
Energy S. A. has agreed to merge with AES Brazil Energy S. A.,
creating a platform with 8. 8 gigawatts of renewable energy output.
The AES Corporation will sell its 47. 3 percent equities interest
in AES Brazil to Auren for about 640 million dollars. Auren intends
to absorb AES Brazil and make it a wholly owned subsidiary. Now,
with all the transactions that are happening in Brazil, it seems
like there's companies going in and companies going out. What is
the move by Auren trying to accomplish here? Philip Totaro: I think
this has to do with diversification. So if you're familiar with
Auren's portfolio, they are quite strong in solar and wind. But
we've talked about before on the show, the fact that in Brazil,
you've got some challenges with the distribution companies in
Brazil wanting to, add wind at the pace in which the industry is
ready to develop it. They're still going to be active throughout
the region, but given the current state of, renewables development
in Brazil, I think it's just The time that AES has decided to pull
out and, Auren is given an opportunity to diversify their portfolio
which also contains other, kind of conventional power generation
and now a rather substantial portfolio of renewables.