GE streamlines focus on renewables, gas turbines and power services
- GE on Tuesday announced the results of a strategic review, unveiling a plan to narrow its focus into three core areas: renewables, power and aviation.
- Its renewables business will focus primarily on wind energy, on and offshore, along with hydroelectricity. The power business will include its gas turbine business, power services and other segments.
- GE said it intends to sell its interest in Baker Hughes oil services and announced the $3.25 billion sale of its distributed power business to Advent International.
The future of the gas turbine sector has been up in the air, with renewables and energy storage beginning to threaten peakers. The price proposition for building new gas plants is particularly important as 500 GW of capacity in the United States may need replacing by 2030. Despite the falling turbine demand, GE told investors that "gas remains key to [the] long-term energy mix."
However, the company's presentation also notes it is "planning for near-term market declines," and "right-sizing" its manufacturing footprint. GE currently has an installed base of 7,000 turbines that have led to a "stable contractual services business."
The company appears to be looking for the sweet spot in the gas turbine business, viewing its customer base as an asset, but preparing changes in the electric sector. That is also evident in GE's sale of its Distributed Power unit, which focuses "power generation and gas compression at or near the point of use," including smaller industrial gas engines generating 200 kW to 10 MW.
The company also stressed the importance of its gas business in a blog post Monday, in association with the World Gas Conference. "Gas isn’t going away. ... hospitals, schools and businesses the world over will be illuminated today and for decades to come by a variety of fuel types—central among them is gas."
But despite that, the company is sticking with its renewables business.
The bulk of GE's renewables revenues come from its onshore wind business right now, but the offshore industry remains nascent — particularly in the United States. GE said it is investing in offshore wind and has announced the Haliade-X 12 MW turbine, which it claims is the most powerful offshore turbine in the world. Other developers and manufacturers are similarly poised for a surge in offshore wind as Eastern states make progress on goals and targets to include offshore wind in their renewable portfolios.
The renewables business claimed 2017 revenues of $9 billion, with $7.7 billion from onshore wind.
The power business also includes GE's power services business, which claims the largest share of the group's revenues. GE says its technology "has equipped 90% of power transmission utilities worldwide," and power services contributes $13.2 billion to the larger business' $35 billion in revenues. The gas power business contributes $9.2 billion.
Ultimately, GE said it wants to "make its corporate structure leaner and substantially reduce debt." The company's board of directors unanimously approved the plan.
Correction: A previous version of this article misidentified the amount of power capacity that may need replacing in the U.S. by 2030. That amount is 500 GW.
Follow Robert Walton on Twitter