Siemens Energy (ENR1n.DE) is considering setting up manufacturing in the U.S. to modernize the electricity system and take advantage of the Inflation Reduction Act (IRA)’s multitrillion-dollar market.
The German power conglomerate is rethinking its strategy to develop in the U.S., where it makes 15% of sales since the favorable policy is boosting renewables and hydrogen capacity, which require advanced energy networks.
It also comes as the U.S. and Europe compete to make it more profitable for utilities and steelmakers to expand despite rising energy and raw material costs.
The U.S. market is driven by IRA subsidy predictability. Chief Executive Christian Bruch said any investor might rapidly calculate the benefits on the back of an envelope.
“This is much simpler and clearer than in Europe,” he told reporters during a Hamburg employee town hall.
Bruch tried to allay concerns that a larger U.S. presence might hurt European investments, but he acknowledged that the corporation would have to balance its resources in the future carefully.
The IRA does not immediately benefit U.S. power systems, but it will need $2 trillion in investments by 2050 to combine renewables and hydrogen.
“This requires manufacturing capacity,” Bruch said.
Tim Holt, Siemens Energy’s U.S. business leader and fellow board member, said Siemens Energy had served the U.S. power grid market from Europe and Latin America.
Holt said the group is considering local production of electricity grid components, including transformers.
A triple-digit million-euro factory might be built on greenfield sites or the group’s 26 properties, including hubs in Florida, North Carolina, and Texas.
“Customers would be willing to enter into firm off-take agreements even now if we were to build plants in the United States,” Holt said.
Following local government tenders, the group wants to reactivate two idled onshore wind turbine component plants and develop two new offshore wind turbine production locations in the U.S.
Bruch said the IRA made building local offshore wind turbine manufacturing “substantially less” than in Europe and improved the hydrogen value chain, where Siemens Energy is active.
Bruch said U.S. customers had booked electrolyzer capacity at the group’s Berlin plant, which is increasing capacity alongside Air Liquide (AIRP.PA).
The Hydrogen Production Tax Credit, a significant IRA component, gives a 10-year federal tax credit of up to $3 per kilogram for clean hydrogen produced after 2022 from plants that commence construction before 2033.
Bruch said the hydrogen credit was like a $160 subsidy on each barrel of oil. While the U.S. market would be served from Berlin, for now, stacks may be assembled locally if the organization wins significant projects.
“U.S. hydrogen commercial projects are flying for the first time.”
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