GE is getting out of the coal power business
General Electric is one of the world's largest makers of coal-fired power plants. But now it plans to say goodbye to coal.
The move marks a dramatic reversal for GE. Just five years ago, the company doubled down on coal by acquiring Alstom's power business, which makes coal-fueled turbines.
That $9.5 billion deal -- GE's biggest-ever industrial purchase -- proved to be a disaster. Coal has been crushed by the rise of natural gas and a shift toward solar, wind and renewable energy. Since then, GE has laid off thousands of power workers, slashed its dividend to a penny, fired two CEOs and sharply written down the value of its power business.
"With the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory," GE Power CEO Russell Stokes said in a statement.
The decision marks the latest unraveling of the GE empire as the company struggles to cut a mountain of debt and shrinking profits. In recent years, GE has reached deals to sell its century-old locomotive division, reverse its takeover of oil-and-gas giant Baker Hughes (BKR), sell a major healthcare unit and even dump its iconic light-bulb business.
E's exit from coal "highlights the billions of dollars of shareholder value destruction that is embodied with the failed Alstom acquisition," John Inch, senior analyst at Gordon Haskett Research Advisors, told CNN Business in an email.
Inch added that the news also suggests GE has not found any buyers for the steam power business, which in January Bloomberg News reported the company was attempting to sell.
GE had been under pressure from investors, especially socially conscious ones, to cut back on its fossil fuel investments.
But GE is not completely cutting ties with coal -- at least not yet. The company will continue to service existing coal power plants as well as build turbines for nuclear power plants.
Coal is in decline
Still, the move marks a shift away from dirtier fuels, leaving GE to focus on natural gas as well as solar and wind. GE has made a big bet on offshore wind, illustrated by the creation of Haliade-X, the world's largest and most powerful offshore wind turbine.
That makes sense because despite President Donald Trump's campaign promise to revive coal, the industry continues to lose ground, especially in the United States.
In a major milestone, the United States consumed more energy in 2019 from renewable sources than from coal for the first time since before 1885. US coal consumption has declined for six straight years to levels unseen since 1964.
Although emerging markets like India still rely on new coal power plants to fuel their rapid growth, the climate crisis and plunging solar and wind costs have renewed pressure on utilities to turn to renewables instead.
GE Steam Power is the world's largest steam and coal power franchise, with 30% of the world's steam turbine capacity, according to its website.
September 23rd, 2020 by Tina Casey cleantechnica.com
File this one under T for Then You Win. The US wind industry has taken plenty of ribbing from various politicians and pundits over the years, but meanwhile those pesky “windmills” just keep growing in size and power. In the latest development, GE has just announced that its enormous 12-megawatt Haliade-X wind turbine is getting an additional 1-megawatt makeover on its way to the gigantic Dogger Bank offshore wind farm in the North Sea, where one sweep of its mighty blades will produce enough clean kilowatts to keep a typical household running for more than two days.
It’s been quite a week for GE. Things started off with a bang on Monday, when the iconic US company with a global reach exposed the reality behind the fantasy of reviving the US coal industry. The company announced that it intends to exit the new-build coal power plant market, effectively twisting the knife into an industry that has fallen into limbo on President* Trump’s watch.
The downward drift of the US coal industry is somewhat ironic, considering that saving coal jobs was a cornerstone of Trump’s successful** 2016 campaign for the Oval Office. However, apparently he dropped the idea in favor of saving gas jobs by the time his 2019 State of the Union address rolled around.
Nevertheless, GE has been pivoting to renewables in general and offshore wind in particular. In a press release on Monday, GE reaffirmed that it is “working to make electricity more affordable, reliable, accessible, and sustainable.”
In another twist of the knife, GE Senior VP Russell Stokes explained that GE is “focused on power generation businesses that have attractive economics and a growth trajectory.”
GE plans to wind down its ongoing obligations, including contracts with existing coal power plants, so it will be some time before the company completely disentangles itself from coal power.
In the meantime, the company is determined to power itself to the top of the wind turbine hill.
While experimenting with some interesting variations like cladding for wind turbine towers, integrated energy storage, and nacelle “noses,” GE was also forging ahead with powerful new turbine technology. In 2018 the company introduced its 12-megawatt Haliade-X wind turbine, featuring monster sized, 107-meter turbine blades.
The new wind turbine blades began rolling off the assembly line in 2019 and the Haliade-X platform is still undergoing final certification from DNV-GL. It looks like GE is not letting any grass growing under its feet, because it already has a 13-megawatt version in the works.
Yesterday GE announced that it will send a total of 190 of the new wind turbines off to the first two phases of the Dogger Bank offshore wind farm, which will be the largest wind farm in the world when fully built out.
For those of you keeping score at home, Dogger Bank still needs a final sign-off from the developers SSE Renewables and Equinor, but it looks like that process will be completed before the end of the year.
Dogger Bank will be constructed in three parts and is expected to generate 6 terawatts annually from each part when completed in 2026.
The switcheroo from coal power to wind power is a big one for GE. Bigger still would be the company’s exit from the new gas power plant market.
That side of the business is still going strong, though red flags have been going up of late. Across the pond, the firm SS&A Power Development is already ratcheting down the life expectancy of new gas power plants in anticipation of competition from renewables and energy storage after 2030.
Here in the US, cheap natural (aka fossil) gas was the main force driving coal out of the power generation market after the shale gas boom took off during the Bush administration. In recent years, though, the falling cost of both renewable energy and energy storage has begun to edge both coal and gas aside.
GE has had a hand in that trend, having produced the wind turbines installed at Rhode Island’s Block Island wind farm, which is the nation’s first — and to date, only — offshore wind farm.
Those turbines weighed in at only 6 megawatts, and GE has upped the US offshore wind ante with new turbines for Ørsted’s planned Ocean Wind wind farm, off the coast of New Jersey.
Last year those 107-meter blades for the 12 megawatt Haliade-X began undergoing stress tests with an assist from the Massachusetts Clean Energy Center’s wind turbine testing facility.
GE is also sending the 12-megwatt turbines to Ørsted’s Skipjack Wind Farm off the Maryland coast. That’s an interesting bit of news because the wind farm was originally planned for 8-megawatt turbines. The switch to bigger turbines will enable Ørsted to reduce the number of turbines in the project. All else being equal, that will lead to lower construction costs.
On that score, it is also interesting to note that GE will contribute more to Dogger Banks than the 13-megawatt wind turbine. The company also announced a new partnership with the UK’s ORE Catapult wind R&D center with the aim of cutting costs, partly by reducing the amount of time needed for humans to spend at the offshore site, and increasing the use of robotics and remote operations. The new strategy is also expected to save on energy costs.
All of this translates into more clean power jobs for the US, putting the wind-rich Atlantic coast states in the catbird seat while sprinkling additional jobs in wind turbine manufacturing across the rest of the country.
Just yesterday the American Wind Energy Association ran the numbers and reported that “developing 30 gigawatts (GW) of offshore wind could deliver up to $25 billion per year in new economic activity and support up to 83,000 new, well-paying jobs by 2030” in the US.
That looks pretty good compared to the dwindling number of coal jobs in the US. Last month Forbes observed that overall coal employment has declined by about 500 jobs since Trump took office, landing at a total of 45,400 as of last July.
The COVID-19 crisis can shoulder part of the blame in 2020, but the long term decline shows no sign of stopping. Last month the Lexington Herald Leader took stock of the situation in Kentucky and noted that the state’s pre-Trump loss of coal jobs has rippled well into the Commander-in-Chief’s time in office
“Coal employment averaged 3,813 in Eastern Kentucky in the period when Trump told miners to get ready to go back to work,” the Leader reported. “In the same period this year, from April 1 through June 30, the industry employed an average of just 2,256 people in the region.”
“Statewide, coal jobs in the second quarter of 2020 averaged 3,760, down from 6,517 in the same period in 2016,” the Leader continued.
If landlocked Kentucky is to grow more wind jobs to replace coal, it is starting with one hand tied behind its back. Aside from political factors, the landlocked state is not in position to take full advantage of the offshore wind market, and it is located in a region of the US where onshore wind resources are less than optional.
Nevertheless, according to AWEA’s latest rundown, the state does have 11 manufacturers that produce components for the US wind industry.
In addition, as electric utilities decarbonize the state could see its solar jobs numbers tick up as well, so stay tuned for more in that.