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Boeing, Siemens Energize Via Energy Deal

ST. LOUIS ( TheStreet) -- Two small units of Boeing (BA - Get Report) and Siemens (SI) said Monday they formed an alliance to seek Defense Department contracts to provide efficient energy management at military installations.

Boeing Energy, a start-up energy smart grid development and management venture created late in 2009, is an entrepreneurial effort within Boeing's Defense, Space and Security, which accounted for about half -- $31.9 billion -- of Boeing's total 2010 revenues.

The joint project "is the top priority for what we're working on at Boeing Energy," said Tim Noonan, vice president of Boeing Energy, during a conference call with reporters. "We see the Department of Defense as having a solid pain point here. We think we can drive it to other commercial markets."

Judy Marks, who heads Siemens U.S. Federal Business unit, said Siemens, known for energy management systems, has been discussing an alliance with Boeing for about a year. "We needed a partner that had the ability to understand even more [than us] how the government operated [and] how to integrate on a large scale [and] has an enterprise approach to cyber-security. We wanted a partner who lived in that domain within DOD."

The two executives declined to discuss financial arrangements except to say that the defense department spends about $20 billion annually on fuel and electricity. They will mount an effort to secure department contracts. "This is a nascent market," Marks said. "We are seeing a lot of contracts coming to the forefront."

The Defense Department accounts for about 1% of all U.S. energy consumption, she noted.

Asked if Boeing and Siemens are late to the game, Noonan said, "This market is undergoing tremendous transformation. We think it is open for quite a while. We have taken a measured approach to assure our approach is differentiated [and] we have something that makes a difference."

-- Written by Ted Reed in Charlotte, N.C. .

>To contact the writer of this article, click here: Ted Reed

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