U.S. conglomerate General Electric (GE, Financial) has released its earnings recently which did satisfy the apprehensive lot of investors and analysts across the globe. The company has been focusing on the growth of its industry segment and it was made apparent in the earnings call by CEO Jeff Immelt, who considers this segment to contribute to more than two third of its total revenue. Good news is that GE is going places in this segment and just recently it has bagged the largest order in its history in the power and water sector from China. Let’s discuss the order which has put the industry segment once again in the limelight for GE.
The environment in China seems highly favourable
Presently the Chinese government has been incorporating a lot of new regulations for controlling the pollution level in the country. Thus, it has initiated an effort to produce power from wind turbines and in 2013 the country increased the power generation from wind turbines by 16 gigawatts (GW). In fact, China has plans to increase the total power production from wind turbines to 150 GWs by end of 2017.
As per the Global Wind Energy Council, the country has the long term target of generating 15% of the total power in the country through the use of wind turbines. And the pact of GE with Huaneng Corp. might mark just the beginning of a new chapter in China.
The deal has been struck
On January 26, this order got confirmed – GE just grabbed a massive order for wind turbines which marks a new record for GE having garnered the largest order from China till date. Huaneng has placed an order for 55 units of GE’s “2.75-120 Brilliant Wind Turbines," which will be installed at the Huaneng Dali Longquan wind project. This project is geared to produce around 151 megawatts of power. And GE’s power and water segment would be providing the Chinese counterpart with maintenance services for two long terms upon signing the contract.
Speaking during a press release on the same, Huaneng Renewables President Lin Gang stated, “We [Huaneng] chose GE based on its proven reliability in other parts of the world …” GE also believes that China has huge potential for wind energy and it seems that the U.S. major is excited to help Huaneng, one of its esteemed clients, expand its renewable energy presence. It is notable that GE intends to invest in high-quality renewable technology projects in China for the long term.
This order is a boost for GE in the Chinese market where it has been struggling to create a niche over the recent years, in the face of intense competition from increasingly prolific domestic OEMs.
Final word
GE has mentioned in the recent earnings call that, although the environment remains volatile in 2015, it is poised to see further growth this fiscal year. And the first deal struck at the beginning of the year in the power and water segment seems to be only a new beginning in China and in Asian countries. According to figures released by Bloomberg News Energy Finance, China is the world’s largest wind market for the past six years at a stretch and, in 2014, installed almost four times of wind energy that got installed in the U.S. Thus, GE has a promising future in China going ahead and investors are happy with the positive signal for GE in China.
