Electronics and electrical engineering company Siemens AG recently disclosed its plans to invest $264 million (£160 million) to develop facilities for offshore wind turbines on U.K.’s east coast. Siemens’ infrastructure development project will be supported by its local partner and port operator Associated British Ports, which is owned by a group of investors including The Goldman Sachs Group, Inc. (GS - Free Report) . On its part, Associated British Ports will contribute $247.5 million (£150 million) for the project.
The strategic decision is based on the perception that the U.K. leads the market for offshore wind energy and is sufficiently large to attract other major companies for additional investments. The sector is further enjoying government subsidies and makes it profitable for Siemens to establish its own local wind farm, rather than servicing offshore projects from remote locations like Denmark.
Siemens selected the Hull area on the east coast of England to set up the wind farms as it is close to other large offshore projects coming up in the country in the near future. The new plant is expected to commence production of turbine rotor blades in 2016. The manufacturing plant and the associated service center are likely to employ about 1,000 people, thereby benefiting the local economy through job creation.
The energy produced at these wind farms is primarily expected to serve the British market. Siemens sees a three-fold increase in the country’s wind-generating capacity to 14 gigawatts by 2020.
Siemens’ Energy business segment comprises Power Generation (PG), Power Transmission & Distribution (PTD) divisions, Fossil Power Generation, Renewable Energy and Solutions for the Oil and Gas Industry. The PG division offers services and products such as the planning and construction of power plants, the manufacture and installation of components and systems, power plant upgrades, energy management systems, and fuel cells. It also supplies turbines, compressors and complete solutions for industrial plants, particularly in the oil and gas industry.
The PTD Division is a manufacturer, systems integrator and provider of solutions and services for the power utilities and industry customers, enabling utilities to transport and distribute electricity.
Siemens presently has a Zacks Rank #2 (Buy). Other players in the industry worth reckoning include Garmin Ltd. (GRMN - Free Report) and Universal Electronics Inc. (UEIC - Free Report) , both carrying a Zacks Rank #2 (Buy).