Siemens Energy: Fundamentals Sound, Valuation Controversial
Operations at Siemens Energy are running smoothly. The order books are full, totaling EUR 154 billion. The book-to-bill ratio, which indicates the number of new orders relative to revenue, stands at 1.72. The Executive Board has raised its targets for 2026. Revenue is expected to grow by 14–16%, with a margin of 10–12%. The company estimates the global gas turbine market at a sustained level of 110-120 gigawatts (GW) per year, driven by electrification and the AI boom. Given limited production capacity, customers are paying premiums for faster delivery. Production of large turbines is expected to rise to 50 units in fiscal year 2027, while production of medium-sized models is set to increase from 50 to 80 units.
Siemens Energy is becoming the backbone of grid stability through its grid technology business. The latest order for the 2 GW North Sea Connector 2 converter platform from 50Hertz underscores this role. Transformers and converters from Nuremberg, along with sulphur hexafluoride-free switchgear from Berlin, enable the efficient transmission of offshore wind power to the mainland. 95% of value added remains in Germany. At the same time, the Group is expanding its capacity for large transformers by 50% by 2030. The acquisition of the Camlin Group also strengthens the digital portfolio for grid monitoring and predictive maintenance.
The wind power subsidiary Gamesa remains the source of uncertainty. Although management is aiming for break-even for the full year, cash flow is not expected to turn positive until 2028, and some offshore orders have been postponed to next year. Analysts are deeply divided. Price targets range from EUR 130 to 260. While Barclays sees a cyclical peak in the gas turbine business, other firms are betting on structural growth. Geopolitical risks, such as the closure of the Strait of Hormuz, are adding to the pressure. The quarterly results due on August 5 will show which camp is correct. The stock is currently trading at around EUR 149.42.
RE Royalties: Utilizes Innovative Financing Solutions
The energy transition is one of the greatest investment challenges of our time. RE Royalties has tackled this issue with an unconventional approach: the royalty model. The Canadian company applies a proven principle from various industries to renewable energy. Instead of traditional loans or equity investments, it provides capital and receives a share of the project proceeds in return. This structure is well-received by developers because it avoids dilution and offers flexible terms. Since 2016, the company has invested over CAD 80 million in approximately 135 projects, ranging from solar and wind to battery storage.
The North American market for clean energy financing reached approximately USD 120 billion in 2025. RE Royalties deliberately focuses on the often-neglected group of mid-sized project developers with investments ranging from USD 10 million to USD 30 million. These agile partners can act quickly—a decisive competitive advantage. The company’s operational speed has already paid off, for example, in an investment that was finalized within three weeks over the Christmas holidays, enabling a project developer to save their project. Since RE Royalties was founded, its unleveraged internal rate of return has been over 19%. Over the past five years, the company has achieved average annual revenue growth of 60%.
The recent announcement of a strategic review in collaboration with PricewaterhouseCoopers demonstrates that RE Royalties intends to actively shape its growth. With current letters of intent totaling over CAD 20 million and a pipeline of approximately CAD 200 million in potential investments, the company is well-positioned. The recent partnership with Solaris Energy, in which RE Royalties is investing up to USD 9 million in two solar portfolios, is exciting. The high level of insider ownership at 24% underscores management’s confidence in its own business model. For investors, this presents an opportunity to gain broad exposure to the growing renewable energy market without the usual hurdles associated with private equity funds. The share is currently trading at around CAD 0.375.
Nordex: Record Orders and Stable Prices
The Nordex Group can look back on a strong first half of 2026. With 4.9 GW in new orders, the volume is just under 10% above the previous year’s figure. The second quarter was particularly impressive, with around 3.1 GW and growth of over 32%, driven by the core markets of Germany, the US, and Turkey. The average selling price per megawatt stabilized at EUR 0.95 million, indicating a healthy project mix. The recurring service contracts, which are included in nearly all major orders, ensure predictable revenue over many years. CEO José Luis Blanco recently highlighted the importance of the US market, where approximately 800 MW of capacity was ordered in the second quarter alone.
The latest project wins read like a who’s who of the wind industry. In the US, Nordex secured two major orders totaling over 800 MW in June, including 55 N163/5.X turbines for an anonymous project. In Germany, the UKA framework agreement for 100 turbines (N175/N163) totaling 700 MW caused quite a stir. This was complemented by individual projects with ENOVA and BMR totaling 197 MW, as well as the Twistenberg wind farm for Continental, which will cover two-thirds of the plant’s electricity needs. All contracts include long-term maintenance agreements lasting up to 20 years, which strengthens customer loyalty. The installations will take place in 2027 and 2028, ensuring long-term utilization of production capacity.
Management is targeting an EBITDA margin of 8–11% for 2026, and as high as 10–12% in the medium term. Analysts are divided. While some firms see upside potential, others urge caution. The operational foundation is solid, with full order books, growing service revenues, and a global production network spanning 5 countries. Investors should nevertheless not lose sight of supply chain risks and potential delays in major projects. Even solid fundamentals can be overshadowed by market sentiment in the short term. The stock is currently trading at around EUR 40.16.
The urgency of grid expansion and power generation makes three players the winners of the power shortage. Siemens Energy, as the backbone of grid stability, benefits from brimming order books, even though its wind subsidiary Gamesa continues to pose significant risks. RE Royalties, with its innovative royalty model, fills a lucrative financing gap for mid-sized project developers while generating sustainable returns. Nordex impresses with record orders and stable prices, which impressively underscores the sustained demand for its wind turbines. Those who position themselves now will secure advantages before the acute shortage finally sends valuations soaring.
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