Although the exodus from coal continues, one major company has reversed course and is turning back to coal. General Electric Co. (GE), one of the largest suppliers of power plant equipment in the world is showing signs of once again being bullish about coal.
The company recently doubled its fleet of large turbines in coal plants, to more than 1,500 world-wide, through its $10 billion acquisition of Alstom SA ’s power business last year and said it can now reap decades of profits from existing coal power plants, installing upgrades that will come in response to slowly tightening emissions rules and utilities’ desire to boost output.
The Wall Street Journal reported that GE executives say they are poised to build coal plants in developing economies, such as in India and across Southeast Asia, where demand for power is growing quickly and other sources of fuel are unavailable or too costly.
“We expect a quite-stable if not increasing amount of installations in coal,” said Andreas Lusch, the chief executive of GE’s steam-power-systems business, who came over to the company in the Alstom deal.
Even as natural gas and renewable energy chip away at coal’s leading market share, global electric production fueled by coal in 2040 is likely to be 23 percent higher than in 2012, the U.S. Energy Information Administration said this spring.
Two-thirds of the growth in coal-fired power generation would come from new units going online in India and China alone, even as coal use declines in the U.S. and Europe, the EIA said.
For years, GE assured investors that coal was on its way out and that they should focus on what the company called an “Age of Gas” powered by its heavy-duty gas turbines.
GE executives now say they are simply following demand as millions of people in India and other markets gain access to dependable electricity, in some cases for the first time. “They are as hungry for energy as we were probably 40 or 50 years ago, and do not have this mind-set to say we want everything to be renewable,” Lusch said. “First they want power.”
GE Power is the conglomerate’s second-largest segment, after its jet-engine business, with $21.49 billion in revenue in 2015, or 20% of GE’s total industrial sales.
Much of GE’s projected growth from coal will come from upgrading existing coal plants, including in the U.S. and Europe, which lag behind natural gas in efficiency but are too vital to the power grid to retire—and too expensive to change out for gas turbines.
“We’re extending investment in lifespan,” said Ganesh Bell, the chief digital officer for GE’s power division. GE says a single percentage-point increase in the efficiency of a coal plant—such as those it says it can provide through improved software — can mean $20 million in added value over 10 years. GE also says its software upgrades can cut carbon-dioxide emissions by 3 percent, potentially critical improvements for countries seeking to meet new emissions targets while still running coal plants to provide much of their electricity.
Keeping Alstom’s coal-turbine factories humming over the next several years will be vital to achieving GE’s roughly $3 billion in projected cost savings, he said. The coal market doesn’t need to grow for GE to reap those benefits, he added: “The reality is, gas hasn’t grown much either.”