GE growing in wind, weathering storm in oil

General Electric has boosted its focus on green power with the launch of its GE Renewable Energy business after buying France-based Alstom’s power and grid businesses for $10.6 billion last year.

GE, which touts itself as the world’s leading digital industrial company, is growing globally in wind power while riding out the downturn in oil and gas prices. It is doing work for the first U.S. offshore wind farm.

Renewable power is fully mainstream and not just some dream of left-wing, “funky developers,” stressed Jérôme Pécresse, the new president and CEO of GE Renewable Energy, who joined from Alstom.

“It’s a big part of the energy equation in the world. More than half of the (electricity) megawatts developed every year are renewable,” he said in an interview at IHS Energy CERAWeek. “It’s important in every country in the world. It’s clearly an industry of its own.”

GE continues to build many of the nation’s wind turbines. And Pécresse has an eye on developing the United State’s first offshore wind farms, specifically along the Atlantic Coast.
Deepwater Wind LLC will launch the nation’s first commercial wind farm later this year offshore of Rhode Island’s Block Island. The small farm will only use five wind turbines to start, but they are built by GE and its new Alstom additions.

“I think it’s the precursor for bigger offshore potential in the U.S.,” Pécresse said, especially in the Northeast where energy costs are pricier. “There are places in the U.S. where offshore wind can be competitive because of good wind.”

GE also plans to provide the turbines for a pending project by Dominion that would go offshore of Virginia.

The Alstom deal also allows GE to grow its wind turbine business globally in Europe, Latin America and, eventually, in Africa, Pécresse said.

The oil bust could also create opportunities for GE to make acquisitions, said Lorenzo Simonelli, the president and CEO of GE Oil & Gas, during an interview
“During a downturn, it’s a time for disruption. It’s a time for us to go on the offense,” Simonelli said, declining to discuss potential deals.

GE is focusing on unique, new contracts with oil producers, Simonelli said, while also selling more parts and equipment to the growing petrochemical industry along the Gulf Coast.

Simonelli touted as a “game changer” its focus on blowout preventers and offshore safety. GE is the first services business to start maintaining its own blowout preventers and renting them to drillers, he said. The idea is that GE can better maintain the equipment, so there will be fewer problems and deep-water oil leaks.

GE recently announced the first such deal with Houston-based Diamond Offshore Drilling to sell back its blowout preventers to GE, which will then rent them to the driller. GE assumes the accountability for the equipment working properly.

GE has axed plenty of Texas jobs though this past year. GE eliminated at least 600 East Texas job from its Lufkin oil field services division, closing some plants. GE also recently cut about 100 East Houston jobs at a gas turbine manufacturing plant. Simonelli declined to provide further job reduction numbers.

Simonelli said job cuts are difficult, but necessary during the downturn. He said GE is working hard to keep its top talent employed. He said GE is committed to Houston and that it will remain the home base for its onshore oil and gas and downstream divisions.