Siemens Energy plans U.S. power grids push to tap into IRA boost By Reuters

By Christoph Steitz

HAMBURG (Reuters) – Siemens Energy is considering setting up production in the United States to help modernise the country’s power grid, keen for a slice of what is expected to be a multitrillion-dollar market following the Inflation Reduction Act (IRA).

The deliberations are part of a broader rethink at the German power conglomerate to expand its foothold in the United States, where it makes 15% of sales, as favourable regulation is providing a boost to renewables and hydrogen capacity that requires state-of-the-art energy networks.

It also comes at a time when the United States and Europe are drawing up competing plans to make it more lucrative for industry, ranging from utilities to steelmakers, to expand businesses despite soaring energy and raw materials costs.

“What drives the U.S. market is the long-term predictability of subsidy conditions under the IRA. Any investor can fairly quickly do the maths on the back of an envelope to figure out the benefits,” Chief Executive Christian Bruch said.

“This is much simpler and clearer than in Europe,” he told reporters following a town-hall with staff in Hamburg.

While Bruch tried to assuage fears that a bigger presence in the United States would not come at the expense of investments in Europe, he said that the company would have to think carefully where to allocate its resources going forward.

U.S. power grids are not directly benefiting from the IRA but will require around $2 trillion in investments by 2050 to make sure that energy sources eligible for support, including renewables and hydrogen, can be integrated.

“This means that one has to invest in manufacturing capacity,” Bruch said.

So far, Siemens Energy has catered for the U.S. power grid market out of Europe and Latin America, Bruch’s fellow board member Tim Holt, who is in charge of Siemens Energy’s U.S. business, said.

SUBSIDY RACE

But the group is now assessing whether to set up production of network equipment such as transformers, a key component of energy grids, locally, Holt said.

Depending on whether these would be greenfield sites or building on the group’s existing 26 locations that include hubs in Florida, North Carolina and Texas, a factory could cost a triple-digit…