Under the latest agreement, GE Vernova, which includes GE Digital, Renewable Energy and GE Power businesses, will deliver approximately 693 megawatts (MW) of wind turbines at 16 different sites in the Aragon region. The company has committed to install a total of 110 wind turbine units in six phases. [1] In the first phase, which is already underway, 33 wind turbine units will be built in five wind farms.
The company also supplies wind power to India
This is not an isolated deal. General Electric has recently secured a number of agreements that may help it secure growth and stability in the future. In November 2023[2], it entered into an agreement with O2 Power Private Limited to supply, install and commission a total of 36 units of "traction" offshore wind turbines. These are to be installed at a 97 MW wind power project to supply clean renewable energy in the Indian state of Maharashtra.
The company also operates in China
In August this year, General Eletric received two orders for the supply of four gas turbines from Royal Golden Eagle Group subsidiaries East Asia Power (Yangjiang) Co., Ltd. and Beijing Energy International Holding Co., Ltd. GE Vernova's Gas Power division will thus supply reliable electricity and heat to the city of Yangjiang in China's Guangdong region to support the megapolis' transition from coal to gas-fired power to reduce emissions. When commissioned in early 2025, the four units are expected to contribute up to 480 megawatts (MW) of electricity.
Financial indicators
For the third quarter of 2023, the company's renewable energy revenues were $4.151 billion, up 15% from the third quarter of 2022, according to the company. Energy revenues were $3.974 billion, up 13% from the same period in the prior year. At the same time, GE's renewables division is slowly getting into the green, posting a loss of $5.6 billion from 2019 to Q3 2023. It owes this to its onshore wind division, which was able to maintain profitability in the third quarter.* This positive result can be attributed to the company's successful push primarily outside of its home base - the U.S., specifically in Spain, China and India.
On the other hand, according to Bloomberg, GE expects its offshore wind operations to post annual losses of approximately $1 billion between 2023 and 2024.[3] The reason for the negative outlook is that the industry is struggling with rising costs. This was reported by Bloomberg.
The long-term outlook for the stock is positive
Over the past year, General Electric stock is up 78%, while the industry as a whole has not fared well in comparison over the same period, and was still in negative numbers in the second half of December. If we look at the five-year performance of General Electric stock, we find that its value is up 98 percent*.
General Electric (GE) stock price performance over the past 5 years. (Source: Tradingview.com)*
Strong headwinds for the wind energy sector
As outlined above, the wind power industry is facing challenges on a global level. Inflation, high interest rates, supply chain chaos, as well as ongoing quality issues are hurting the profits of companies operating in the sector. According to Bloomberg, this has been reflected in the share prices of wind power developers such as Orsted and turbine makers including Siemens Energy AG. In late October, Denmark's Orsted pulled out of two large wind farms it planned to build off the coast of New Jersey in the U.S. It cited problems with supply chains, higher interest rates and insufficient tax breaks as reasons. This is negative news for the entire US wind industry, whose ambition is to reach 30 gigawatts of offshore wind capacity installed by 2030, while it currently has almost zero.
Olivia Lacen, principal analyst at Wonderinterest Trading Ltd.
* Past performance is no guarantee of future results
[1,2,3 ] forward-looking statements are based on assumptions and current expectations, which may be inaccurate or based on the current economic environment, which may change. Such statements are not guarantees of future results.
