A lot can happens in a decade, especially in the world of tech. What was new and innovative can find itself obsolete, leap-frogged by better options. That can have a devastating impact on balance sheets and stock market capitalizations. No company better illusttrates than General Electric (GE).
A mere 20 years ago – back in 2000, GE had a massive market value of more than $600 billion. It was king of the mountain… the most valuable business in the world.
Fast forward to 2021 and GE’s market capitalization has plummeted to just $94 billion – the result of multiple corporate misadventures compounded by a slowing – some would argue, a death of – innovation.
Putting it in to ‘mom and pop’ perspective, a retiree who put $10k into GE shares in 2000 now has stock worth less than $1,600.
But Phoenix (or should that be Goliath?) has a plan to regain the glory days. GE is betting big on the future of offshore wind power. And why not? It’s hard to imagine a business with more turbine experience anywhere in the world.
Capital investment in offshore wind is worth $26B…
That’s three times what it was 10 years ago, according to the New York Times. In recent year, energy giants like BP and Shell have made huge investments in both wind and solar innovation as a hedge against the decline of oil. That decline has accelerated in the past 15 months due to the global impact of COVID-19 and consumption recovery is looking dubious.
GE made its first move into the wind power industry in 2002 when it bought the land-based wind business from everyone’s favorite corporate punching bag, Enron.
In 2015, it upped the ante with a huge commitment into offshore wind when it bought the power business of French conglomerate Alstom for $17B.
With the right credentials and close to 20 years of operating experience in the wind power industry, GE is now getting seriously serious!
Haliade-X project is beyond massive..
According to the NYT, GE’s wind turbine:
- Stands around 80% the height of the Empire State Building
- Has a turning diameter of 2+ football fields
- Can power a home for two days with just one rotation of its blades
- Is ⅓ more powerful than any current offshore wind turbine; and
- Can generate around 30x more energy than the first offshore wind project installed in Denmark in 1991.
Size really does matter…
As any sailor knows, there is nothing harder on machinery than salt air. It will eventually corrode anything.
But size makes a real difference to longevity. Large wind turbines can combat the harsh marine environments better and for longer than smaller turbines. And they generate more electricity, which means fewer turbines need to be installed and maintained. More power (revenue) at lower cost is the end result.
Haliade-X has already secured GE an estimated $13B in contracts from Denmark to Massachusetts.
Offshore wind generation only accounts for about 5% of total wind power output currently. But it does overcome many of the objections and challenges faced by land-based wind farms. That leaves lots of room for growth!
Who knows, that retiree may still see a solid return on that investment!