The head of General Electric Co.’s power business sees more than $8 billion of sales opportunities around the globe facing possible delays as energy projects search for financing in a capital-constrained world.
The stalled resumption of the U.S. Export-Import Bank is adding to the challenge as more customers are looking for funding, GE Power CEO Steve Bolze said. Companies in the Middle East increasingly are looking at loans amid falling commodity prices, he said.
“Financing is a big deal on a lot of transactions happening in the world,” he said. “You’re in a slower growth, volatile world, so people have to get some external financing.”
Even so, GE is bullish on the power market, since the world’s need for electricity is expected to grow 50% in the next 20 years, Bolze said. The Fairfield, Connecticut-based company placed a $10 billion bet on the industry with the acquisition of Alstom SA’s energy business last year.
GE Power, which had 2015 sales of $21.5 billion, is one of the largest businesses, along with jet engines and oilfield equipment, as the company renews focus on industrial manufacturing. GE CEO Jeffrey Immelt has shed the home-appliances operations and almost $200 billion of finance assets ahead of a corporate move to Boston later this year.
The gas-turbine division is looking for acquisitions that could complement its product offerings, add digital capabilities and improve the services business, Bolze said. He pointed to the recent acquisition of NeuCo Inc., a startup using software to make coal plants cleaner, as an example of the type of deals it might pursue.
In addition to acquisitions, GE Power is looking to build out the services business by providing aftermarket work on equipment from competitors such as Siemens AG — a capability gained from Alstom. GE has signed several contracts since the deal closed in November, Paul McElhinney, CEO of power services, said.
“It’s not just on the gas side, but on the steam side, generator side,” he said. “Over time, this has the potential to become a very significant part of the power services business.”
By Richard Clough, with assistance from Naureen S. Malik.