Siemens CEO Loescher Says Co. Eyeing Green Energy Tech

Global demand for more renewable sources of energy and more efficient products will drive future growth for the German industrial conglomerate Siemens AG , its CEO said Tuesday.

"Green is a major push," Peter Loescher told The Associated Press in an interview at his Munich office.

According to Siemens' own projections, governments of the world's 20 largest economies plan to spend about $430 billion (euro306 billion) in the next several years to improve infrastructure such as power grids and transportation networks to become more efficient and environmentally friendly.

"A big drive is to be a big green infrastructure and environmental company," Loescher said. "The infrastructure projects being announced by governments are exactly the direction the company is going."

For example, Loescher called the Obama administration's plans to build U.S. infrastructure "visionary," and also mentioned China's plans to expand its rail network and Germany's hopes to improve its electrical grid.

Loescher said the trend should increase revenue from the company's portfolio of environmental products from euro19 billion ($27 billion) at end of last fiscal year to euro25 billion in 2011. Siemens' fiscal year begins in October.

"By far, we have the biggest, broadest and deepest environmental portfolio in the world," he said.

Siemens competes in the renewable energy technology sector with projects including solar, biomass and wind power, which is the biggest contributor to Siemens' renewable energy revenues.

Last month, Siemens announced it would build a new production facility for wind turbines in Hutchinson, Kansas to meet new demand in North America, and the company recently received an order for 100 high-speed trains from China.

Loescher also hoped a new global environmental treaty to be discussed in Copenhagen in December would lead to another round of environmental innovation and spending by governments around the world.

He said the company expects to add jobs due to gains in the environmental area and that Siemens could see "acquisitions, partnerships and strategic alliances," in areas like in solar technologies, though he wasn't more specific.

Loescher said the company was spending euro1 billion on research and development in its environmental division, but declined to elaborate further.

"If the next big wave is solar, then we'd push it," Loescher said. "It depends on how it's being taken up by the marketplace."

He was quick to add that he doesn't expect other energy sources to exit the market anytime soon. Siemens, he said, would still remain a player in the nuclear, gas and coal sectors.

"What we're banking on is a broad energy mix, being a full-range energy products and solutions provider," he said.

Martin Prozesky, an analyst at Bernstein Research in London, says wind turbine manufacturers have seen a big gain in share prices lately thanks to rising oil prices.

The price of oil has risen and global crude demand will probably continue to grow as emerging markets' demand increases in future.

Wind turbine "orders in the first quarter were lower than in the fourth quarter 2008, but growth rates were generally higher as comparable year-on-year orders in the industry were stronger than in preceding two. Siemens performed best on strong offshore order bookings," Prozesky said, comparing Siemens with General Electric Co. and the Danish company, Vestas Wind Systems AS.

The Siemens chief said technological changes create new market opportunities.

"A few years ago, nobody talked about electrical cars. Now you can test drive one, and they will be commonplace in urban areas in approximately five to 10 years," Loescher said. "There will be future incremental growth opportunities like in the area for smart grids for Siemens as a result."

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