General Electric Co. is nearing a deal with Caithness Energy with a potential value of more than $1 billion to supply equipment for multiple power plants in the United States.
GE would provide as many as six of its new H-class gas turbines, along with steam turbines and other equipment, the companies announced Wednesday. The pact, covering plants to be developed in 2017 and 2018, is expected to become final by the end of this month.
A deal would be a boon for GE as CEO Jeffrey Immelt reorients it around industries such as energy, aviation and oil. The Boston-based company shed most of its finance and consumer operations while bulking up equipment manufacturing through agreements including the $10 billion acquisition of Alstom SA’s power division.
The so-called HA turbine, a Winnebago-sized unit that is the company’s most efficient, is crucial to GE Power as global population growth drives demand for electricity. GE committed $2 billion to develop the product and help maintain its position as the world’s leading supplier of gas turbines. The manufacturer accounted for about 39% of the world market in 2016, followed by competitors Siemens AG and Mitsubishi Hitachi Power Systems Ltd., according to data from McCoy Power Reports.
GE has received orders for 58 HA turbines, not including the six under consideration in the Caithness deal.
Under the agreement being discussed, GE would provide equipment generating as much as 3 gigawatts of electricity, or enough to power about 2.5 million U.S. homes. Orders for the turbines and associated service agreements are expected to be recorded by GE in the next 24 months.
Caithness is poised to become the top customer for the HA turbine, following a 2015 agreement to buy two units for a Pennsylvania plant. That facility, known as Caithness Moxie Freedom, is under development and will go online next year.
Separately, GE signed a pair of agreements with Gas Natural Fenosa valued at $130 million to service equipment in Mexico, including gas turbines manufactured by Siemens and Mitsubishi Hitachi. GE gained the ability to maintain and repair competitors’ products through the Alstom acquisition.
Leaders of GE’s power and renewable-energy businesses are meeting with investors Wednesday in New York to detail the operations.
By Richard Clough