Siemens AG
(SI) has targeted orders worth more than 6 billion Euros for intelligent power networks (Smart Grids) over the next five fiscal years. The company is already a leading international supplier of Smart Grids and continues to strengthen this position.

Intelligent power grids, or smart grids, are based on the conventional power grids which transport electricity from large power plants to individual households. However, digital technology allows individual households or businesses to manage their electricity more efficiently, allowing them to receive, or deliver back to the grid, electricity from other sources like wind or solar power facilities, or even from batteries in electric cars.

According to studies, more than a billion tons of carbon dioxide (CO2) emissions could be abated with intelligent power networks by 2020. Smart Grids are essential for integrating renewable power sources into power networks and for ensuring stable power supplies from solar and wind energy.

Overall, the Smart Grid market has three primary components: Smart Metering (intelligent billing), Grid Intelligence (the grid infrastructure and its controls) and Utility IT (intelligent data management). Siemens is active in all three areas and is already the global market leader for grid intelligence.

Smart Grids have enormous growth potential worldwide. They are, for example, a prerequisite for reaching the EU’s 20-20-20 climate goals aimed at reducing CO2 emissions by 20% and increasing the share of renewable energies in the European grid by 20% by 2020. In addition, Smart Grids are included in many of the economic stimulus programs throughout the world.

The US government plans to invest around 3 billion Euros here in the coming years. Siemens expects to receive orders worth around 15 billion Euros from these programs by 2012. Out of these, 40% or roughly 6 billion Euros is likely to be for green technologies from the Siemens Environmental Portfolio.

A slew of companies across the globe are pushing to secure their share in this projected growth market, ranging from blue chips like Siemens, General Electric Co. (GE) and Cisco Systems Inc. (CSCO) to various start-ups offering related components and services.

Energy-efficient and flexible power grids are a key cornerstone for the launch of electric cars on a broader scale, as they can be designed to meet specific needs for the supply, demand and storage of electricity.

Volkswagen AG, Europe’s largest automaker by sales, said in July that it would launch an electric version of its upcoming New Small Family car in 2013. Other auto makers, including Nissan Motor Co. Ltd and General Motors Co., are also pressing ahead with developing fully electric cars for the mass market. 

Energy-efficient, resource-conserving Smart Grids are part of the Siemens Environmental Portfolio, which generated a quarter of its total sales in fiscal 2008.

Siemens is a German industrial conglomerate with interests in information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, lighting and many other areas. With a focus on electronics and electrical engineering, the company is a major multinational with over 430,000 employees in more than 190 countries.

We currently have a Neutral recommendation on Siemens.

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