How General Electric Gambled on Fossil Fuel Power, and Lost
February 22nd, 2018Disclosure: I sell solar power systems in New Zealand.
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Via: Reuters:
Rather than rising, GE Power’s profit fell 45 percent last year, forcing GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression. Its shares have plunged more than 50 percent since the March forecast. Former CEO Jeff Immelt was replaced in August.
John Flannery, GE’s new chief executive, blamed the forecast, along with poor management and other factors, for the power business meltdown. In January, he warned the pain would continue this year “and potentially be worse than expected.”
What GE has not emphasized is that wind and solar now cost substantially less than gas and other conventional energy sources – and have for years, according to a widely respected energy cost report Lazard has published since 2008.
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But according to more than a dozen former executives, rivals and energy experts interviewed by Reuters, GE’s reading of the market left the company deeply vulnerable to the sudden drop in demand for conventional power plants, as sales of wind and solar surged.
“There are just fewer gas turbines being bought,” one former GE executive said. “The market is not flat, it’s down.”
