In an exclusive article for Power Engineering International, Paul McElhinney, president of GE’s Power Services business, outlines what the Alstom deal means for global utilities and industrial operators
GE’s €9.7bn ($10.6bn) acquisition of Alstom’s Power & Grid businesses is rightly being described as a transformational moment for both companies and the broader energy industry.
By combining our power generation and grid assets, we will be in a far stronger position to help power producers meet the world’s demands for reliable and more sustainable electricity.
The deal marks the largest of its kind in GE history, with a defining investment in the energy sector and dramatically transforming the company’s industrial portfolio.
GE’s share of the world’s thermal power generation capacity will grow to 1600 GW – or about 40 per cent of the global thermal energy sector – which is enough to power more than 1.5 billion homes, driven by the world’s largest installed base of nearly 28,000 power generation assets.
The combination of our company with Alstom’s Power & Grid businesses offers crucial benefits for us to better serve utility and industrial operators worldwide. On a broader level, the deal creates the necessary scale that GE has sought to become more globally competitive in helping our customers meet the world’s energy needs, which are expected to grow steadily in the coming decades in both emerging and more developed regions.
This deal brings together two of the world’s best services teams to create GE’s Power Services business. Headquartered in Switzerland, Power Services will serve the world’s GE and Alstom power generation installed base of nearly 28,000 assets.
By blending the strongest attributes of our respective generation services technologies and expertise, the global utility and other industrial sectors will benefit from a world-class provider of total plant asset and lifecycle solutions that can support equipment from multiple leading OEM suppliers.
Power Services serves the world’s largest installed base that includes more than 7000 gas turbines, 7000 steam turbines and 10,000 generators, positioning the company to be the broadest base power supplier. The business offers the combined expertise of more than 26,000 people in more than 150 countries, giving GE the ability to rapidly respond to local needs and execute local projects in the company’s seven regions around the world.
These capabilities will prove vital in the coming years. While the world will experience fluctuating demands for energy in various regions, over the long term, the demand for power is expected to rise by 50 per cent over the next 20 years according to the International Energy Agency, placing a greater priority on utilities to keep their existing generation assets operating at their optimal performance levels.
In thermal energy for example, Alstom Power and GE have complementary services in steam and gas turbine technology. With Alstom Power’s robust steam turbine, generator and other OEM assets and capabilities, GE Power Services offers power plant operators more complete, customized ‘one-stop shop’ solutions, not just for developing new power plants but also for enhanced lifecycle support across their total plant.
Integrating Alstom Power’s robust portfolio of more than 90 OEM products with GE’s own deep domain knowledge of its own installed fleet creates more customer options and solutions, making GE Power Services one of the few energy businesses with the ability to serve power customers across total plant services—from heavy duty and aeroderivative gas turbines, steam turbines, boilers and heat recovery steam generators to a broad portfolio of digital controls and other software solutions for generation equipment.
In addition to enhancing local service capabilities around the world, the deal offers additional value to Alstom Power’s global installed base by creating opportunities for GE Power Services to incorporate the industrial internet with Alstom’s generation equipment.
GE has invested more than $1bn in software and data analytics to become “the first digital industrial company” to improve the performance and reduce the downtime of power plants using GE equipment. GE will bring the industrial internet to the Alstom fleet to help operate power plants featuring this equipment more efficiently, dynamically and profitably.
Consider the exciting challenges and opportunities ahead: GE and Alstom are combining their power generation assets at a time when – despite a current softening in demand for power in some emerging regions – global energy demand is projected to grow by 50 per cent by 2035 and the world population is expected to rise from 7.3 billion to nearly 10 billion in the next 35 years.
In combining more than 230 years of our collective experience in solving the energy industry’s biggest challenges, GE and Alstom Power are stronger and better together, with the scope needed to compete in a global, digitalized economy. The strength of this combination is built on shared commitment that is dedicated to creating a more reliable, efficient and environmentally sustainable energy future for the world.
Paul McElhinney is the president and chief executive of GE’s Power Services business, the newly-formed global services organization created by GE’s acquisition of Alstom’s Power & Grid businesses.
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