Siemens Energy's Gas Turbines: The Unsung Hero of the Energy Transition

The global energy transition is no longer a distant ideal—it's a seismic shift in motion. Governments and corporations worldwide are racing to decarbonize, modernize grids, and adopt hydrogen as a cornerstone of the clean energy future. Amid this upheaval, Siemens Energy (SIEM:GR) stands at the intersection of three critical growth vectors: decarbonization mandates, grid modernization, and hydrogen readiness. Its gas turbine portfolio—long a backbone of global power generation—is now a strategic asset to capitalize on a $50 billion+ addressable market, fueled by margin expansion and a record $123 billion order backlog. This is a buy-and-hold opportunity for investors seeking exposure to the energy transition's most durable winners.

Why Gas Turbines Remain Critical in the Energy Transition

Despite the rise of renewables, gas turbines are not relics of the past—they're transition enablers. They provide:
1. Grid Stability: Gas turbines can ramp up/down quickly to balance intermittent wind/solar, ensuring grid reliability.
2. Hydrogen Flexibility: Siemens' turbines are being retrofitted to burn hydrogen, turning them into zero-emission assets by 2030.
3. Decarbonization Catalysts: Their efficiency improvements (e.g., 64%+ in HL-class models) reduce emissions per kWh, making them a bridge to green hydrogen economies.

Siemens' Technology Leadership: Efficiency + Hydrogen = Unmatched Advantage

The company's gas turbine technology is a gold standard in an era where flexibility and sustainability rule:
- 64%+ Efficiency: Its HL-class turbines (e.g., SGT5-9000HL) achieve industry-leading thermal efficiency, slashing fuel costs and emissions.
- 100% Hydrogen Roadmap: By 2030, all new Siemens turbines will burn 100% hydrogen. The SGT5-4000F is already testing 15% hydrogen blends, with plans to hit 30% by 2025.
- Hybrid Solutions: Integration with batteries (e.g., cutting gas use by 25%) and waste heat recovery systems boosts plant efficiency to over 60%.

Financial Outperformance: Backlog, Margins, and Market Dominance

Siemens Energy's FY2025–FY2028 outlook is a masterclass in margin expansion and market capture:
1. Robust Order Backlog:
- €123 billion in orders (as of FY2024), with Gas Services securing €5B in a single quarter.
- Grid Technologies' backlog grew 28% in FY2024, fueled by demand for SF6-free switchgear and smart grids.

1. Margin Expansion Targets:
2. FY2025: Profit margins for Gas Services hit 11%–13% (up from 10%–12% in 2024).

3. FY2028: Aims for 10%–12% consolidated profit margins, up from 1% in 2024.

4. Addressable Markets:

5. Grid Modernization: $20B+ opportunity by 2030 as utilities upgrade aging infrastructure.
6. Hydrogen Turbines: $30B market by 2030, with Siemens leading R&D (e.g., HyCoFlex project).
7. Gas Services: $10B+ annually in maintenance/retrofit contracts as operators decarbonize fleets.

Why Now Is the Time to Invest

• Near-Term Catalysts:
• Grid Division Growth: 24%–26% revenue growth in FY2025, driven by U.S. grid upgrades and EU's Green Deal.

• Hydrogen Milestones: Vienna's SGT5-4000F plant aims for 30% hydrogen by 2025; first 100% hydrogen plant could be operational by 2027.

• Valuation:

• SIEM trades at 8.5x FY2025E EV/EBITDA, below its 10-year average of 11x.

• Upside potential: $50B+ markets and margin expansion could push shares 30%+ over 2 years.

• Risk Mitigation:

• Siemens Gamesa's losses (€1.3B in FY2025) are being addressed with a turnaround plan for break-even by 2026.
• Gas turbine demand is resilient: 2,500+ installed aeroderivative units and a global gas crunch support pricing power.

Conclusion: A Multi-Year Growth Story

The energy transition isn't about choosing between renewables and traditional power—it's about optimizing both. Siemens Energy's gas turbines are the linchpin in this strategy: efficient, hydrogen-ready, and backed by a backlog that guarantees cash flow visibility through 2028. With margins expanding, markets maturing, and innovation outpacing peers, SIEM is a buy for investors seeking a decade-long growth story.

Act now—before the energy transition leaves you behind.