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First wind turbines ($9bn annual sales), then airplane engines ($27bn), and, at the base of the business, power plants that burn natural gas ($35bn).
Is that a shaky base on which to rebuild? A boom in solar power has gutted the gas turbine business in recent years. Last year power division profits fell 45 percent. But just be patient, suggests Hugh Wynne, analyst with Sector & Sovereign Research.
By jettisoning GE’s healthcare, rail and water businesses as well as Baker Hughes, Flannery is dropping ballast in hopes that a more concentrated GE can grab a mighty tailwind.
Wynne projects a building boom over the next two decades that will see global power generation capacity grow from 6,000 gigawatts to 9,600 gw (1 gw can power about a million homes). But it’s not just about adding new generation to meet new demand (running about 2 percent a year); it’s also about filling a looming replacement cycle for an entire fleet of old coal and nuke plants.
“There will be an enormous need for new generation capacity,” says Wynne (formerly of Bernstein Research). As the mothballings increase, Wynne sees annual construction of power plants growing from 140 GW of capacity worldwide today to more than 260 gw in 2035. Solar, wind and batteries will claim about half that (up from 40 percent share recently), with gas turbines likely to get at least a third.
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