GE pins hopes on Haliade-X after $666m loss

What a difference a year makes. Last year, GE Renewable Energy was enjoying its status as a bright point in an otherwise difficult set of annual results for parent group General Electric.

Richard Heap
January 31, 2020
GE pins hopes on Haliade-X after $666m loss

What a difference a year makes.

Last year, GE Renewable Energy was enjoying its status as a bright point in an otherwise difficult set of annual results for parent group General Electric. The talk then was that GE may spin out its renewables arm into a standalone firm, although we argued at the time that this wouldn’t make sense.

This followed news that GE Renewable Energy made a $287m profit in 2018 on revenues of $9.5bn. This was a fall compared to the $583m profit in 2017, which came on revenues of $9.2bn, but the arm was still a GE success story.

This year’s annual results, published earlier this week, are rather different.

GE Renewable Energy reported a loss of $666m in 2019, even though revenues rose 7% year-on-year to $15.3bn. It’s worth noting that a direct comparison is not totally fair, as the division has integrated GE’s grid, solar and storage tech since the 2018 results. This grew the arm from 23,000 to 40,000 employees.

But the firm highlighted specific challenges for its onshore wind division too.

In the final three months of 2019, GE Renewable Energy secured orders for 1,553 turbines and repowering kits, which it said was a record. Two-thirds of these are in the US.

Despite this, it also reported a loss of $197m for its onshore wind segment in the same period as a result of challenges including execution issues related to the grid; price headwinds; tariffs; and higher investment in R&D.

Specifically, it is investing heavily in the 12MW Haliade-X turbine platform, which is the bigger brother of the 6MW Haliade that it acquired when it bought the power and grid business of French company Alstom in 2015.

So does that mean that GE Renewable Energy’s financial performance is now being weighed down by the technology that it invested in as part of that deal? Well yes, in a sense, but we can't lay the blame for that on the Haliade-X.

Investing in the Haliade-X is undoubtedly a short-term challenge.

GE chairman Larry Culp said as much in a call to analysts where he explained that offshore wind is a drag on the firm's earnings and cashflow. But he added that the Haliade-X was also an “exciting technology” to bring to the market in 2021 that would boost GE’s results. And it already has some big orders.

Ørsted has named the Haliade-X as its preferred turbine for the 1.1GW Ocean Wind and 120MW Skipjack Wind projects in the US; and SSE and Equinor have picked the platform for their 3.6GW trio of wind farms in the Dogger Bank zone off the UK’s east coast. These bode well for GE Renewable Energy, even when you take into account the cost pressures in offshore wind.

The company is also subject to the challenges in US onshore wind as a result of Trump’s trade wars, but the one-year extension of the production tax credit should give it a further boost as more companies start building their projects.

The more pressing challenge for GE Renewable Energy is turning around the hydro and grid divisions that it also picked up from Alstom.

The company saw its fourth-quarter orders drop 11% year-on-year to $4.7bn because it couldn’t repeat the large deals it picked up in these markets in late 2018. These will slow the wider turnaround of GE.

Culp acknowledged that turning around the financial performance of the renewables division would take time, but there isn’t any sign the company is losing confidence in wind. For that turnaround, the Haliade-X will be key.

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GE RENEWABLE ENERGY REPORTS $666M LOSS

GE Renewable Energy has reported a $666m loss in the 12 months ending on 31st December 2019, which is down from a $292m profit in 2018. This loss came despite a 7% rise in revenue year-on-year to $15.3bn. Read more

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What a difference a year makes.

Last year, GE Renewable Energy was enjoying its status as a bright point in an otherwise difficult set of annual results for parent group General Electric. The talk then was that GE may spin out its renewables arm into a standalone firm, although we argued at the time that this wouldn’t make sense.

This followed news that GE Renewable Energy made a $287m profit in 2018 on revenues of $9.5bn. This was a fall compared to the $583m profit in 2017, which came on revenues of $9.2bn, but the arm was still a GE success story.

This year’s annual results, published earlier this week, are rather different.

GE Renewable Energy reported a loss of $666m in 2019, even though revenues rose 7% year-on-year to $15.3bn. It’s worth noting that a direct comparison is not totally fair, as the division has integrated GE’s grid, solar and storage tech since the 2018 results. This grew the arm from 23,000 to 40,000 employees.

But the firm highlighted specific challenges for its onshore wind division too.

In the final three months of 2019, GE Renewable Energy secured orders for 1,553 turbines and repowering kits, which it said was a record. Two-thirds of these are in the US.

Despite this, it also reported a loss of $197m for its onshore wind segment in the same period as a result of challenges including execution issues related to the grid; price headwinds; tariffs; and higher investment in R&D.

Specifically, it is investing heavily in the 12MW Haliade-X turbine platform, which is the bigger brother of the 6MW Haliade that it acquired when it bought the power and grid business of French company Alstom in 2015.

So does that mean that GE Renewable Energy’s financial performance is now being weighed down by the technology that it invested in as part of that deal? Well yes, in a sense, but we can't lay the blame for that on the Haliade-X.

Investing in the Haliade-X is undoubtedly a short-term challenge.

GE chairman Larry Culp said as much in a call to analysts where he explained that offshore wind is a drag on the firm's earnings and cashflow. But he added that the Haliade-X was also an “exciting technology” to bring to the market in 2021 that would boost GE’s results. And it already has some big orders.

Ørsted has named the Haliade-X as its preferred turbine for the 1.1GW Ocean Wind and 120MW Skipjack Wind projects in the US; and SSE and Equinor have picked the platform for their 3.6GW trio of wind farms in the Dogger Bank zone off the UK’s east coast. These bode well for GE Renewable Energy, even when you take into account the cost pressures in offshore wind.

The company is also subject to the challenges in US onshore wind as a result of Trump’s trade wars, but the one-year extension of the production tax credit should give it a further boost as more companies start building their projects.

The more pressing challenge for GE Renewable Energy is turning around the hydro and grid divisions that it also picked up from Alstom.

The company saw its fourth-quarter orders drop 11% year-on-year to $4.7bn because it couldn’t repeat the large deals it picked up in these markets in late 2018. These will slow the wider turnaround of GE.

Culp acknowledged that turning around the financial performance of the renewables division would take time, but there isn’t any sign the company is losing confidence in wind. For that turnaround, the Haliade-X will be key.

NEWS IN BRIEF

SIEMENS GAMESA CUTS PROFIT FORECAST AGAIN

Siemens Gamesa has seen its share price fall 10% after cutting its full-year profit target for the second time in three months. It is now targeting an EBIT margin of 4.5%-6%, down from previous guidance of 5.5%-7%. Read more

GE RENEWABLE ENERGY REPORTS $666M LOSS

GE Renewable Energy has reported a $666m loss in the 12 months ending on 31st December 2019, which is down from a $292m profit in 2018. This loss came despite a 7% rise in revenue year-on-year to $15.3bn. Read more

MIDIS INVESTS IN £1.1BN GREEN SECURITISATION

Macquarie Infrastructure Debt Investment Solutions, working with BAE Systems Pension Funds Investment Management, has invested in a synthetic securitisation of NatWest's £1.1bn portfolio of project finance loans in the UK's sustainable energy market. Read more

EDF AND SITAC COMMISSION 105MW IN INDIA

EDF Renewables and its Indian partner SITAC Group have commissioned the 105MW Verdant wind farm in Gujarat. Read more

ØRSTED TARGETS CARBON NEUTRALITY BY 2025

Ørsted plans to be carbon neutral by 2025, and achieve carbon neutrality in its footprint - including its supply chain and energy trading - by 2040. Read more

ACEK EXPLORES €1.8BN SALE OF ELAWAN

Spanish industrial group ACEK is looking to put wind company Elawan Energy up for sale in a deal worth around €1.8bn. Read more

EU EYES OFFSHORE IN GREEN NEW DEAL

The European Union is looking to include a package of measures to stimulate offshore wind as part of its Green New Deal package. Read more

What a difference a year makes.

Last year, GE Renewable Energy was enjoying its status as a bright point in an otherwise difficult set of annual results for parent group General Electric. The talk then was that GE may spin out its renewables arm into a standalone firm, although we argued at the time that this wouldn’t make sense.

This followed news that GE Renewable Energy made a $287m profit in 2018 on revenues of $9.5bn. This was a fall compared to the $583m profit in 2017, which came on revenues of $9.2bn, but the arm was still a GE success story.

This year’s annual results, published earlier this week, are rather different.

GE Renewable Energy reported a loss of $666m in 2019, even though revenues rose 7% year-on-year to $15.3bn. It’s worth noting that a direct comparison is not totally fair, as the division has integrated GE’s grid, solar and storage tech since the 2018 results. This grew the arm from 23,000 to 40,000 employees.

But the firm highlighted specific challenges for its onshore wind division too.

In the final three months of 2019, GE Renewable Energy secured orders for 1,553 turbines and repowering kits, which it said was a record. Two-thirds of these are in the US.

Despite this, it also reported a loss of $197m for its onshore wind segment in the same period as a result of challenges including execution issues related to the grid; price headwinds; tariffs; and higher investment in R&D.

Specifically, it is investing heavily in the 12MW Haliade-X turbine platform, which is the bigger brother of the 6MW Haliade that it acquired when it bought the power and grid business of French company Alstom in 2015.

So does that mean that GE Renewable Energy’s financial performance is now being weighed down by the technology that it invested in as part of that deal? Well yes, in a sense, but we can't lay the blame for that on the Haliade-X.

Investing in the Haliade-X is undoubtedly a short-term challenge.

GE chairman Larry Culp said as much in a call to analysts where he explained that offshore wind is a drag on the firm's earnings and cashflow. But he added that the Haliade-X was also an “exciting technology” to bring to the market in 2021 that would boost GE’s results. And it already has some big orders.

Ørsted has named the Haliade-X as its preferred turbine for the 1.1GW Ocean Wind and 120MW Skipjack Wind projects in the US; and SSE and Equinor have picked the platform for their 3.6GW trio of wind farms in the Dogger Bank zone off the UK’s east coast. These bode well for GE Renewable Energy, even when you take into account the cost pressures in offshore wind.

The company is also subject to the challenges in US onshore wind as a result of Trump’s trade wars, but the one-year extension of the production tax credit should give it a further boost as more companies start building their projects.

The more pressing challenge for GE Renewable Energy is turning around the hydro and grid divisions that it also picked up from Alstom.

The company saw its fourth-quarter orders drop 11% year-on-year to $4.7bn because it couldn’t repeat the large deals it picked up in these markets in late 2018. These will slow the wider turnaround of GE.

Culp acknowledged that turning around the financial performance of the renewables division would take time, but there isn’t any sign the company is losing confidence in wind. For that turnaround, the Haliade-X will be key.

NEWS IN BRIEF

SIEMENS GAMESA CUTS PROFIT FORECAST AGAIN

Siemens Gamesa has seen its share price fall 10% after cutting its full-year profit target for the second time in three months. It is now targeting an EBIT margin of 4.5%-6%, down from previous guidance of 5.5%-7%. Read more

GE RENEWABLE ENERGY REPORTS $666M LOSS

GE Renewable Energy has reported a $666m loss in the 12 months ending on 31st December 2019, which is down from a $292m profit in 2018. This loss came despite a 7% rise in revenue year-on-year to $15.3bn. Read more

MIDIS INVESTS IN £1.1BN GREEN SECURITISATION

Macquarie Infrastructure Debt Investment Solutions, working with BAE Systems Pension Funds Investment Management, has invested in a synthetic securitisation of NatWest's £1.1bn portfolio of project finance loans in the UK's sustainable energy market. Read more

EDF AND SITAC COMMISSION 105MW IN INDIA

EDF Renewables and its Indian partner SITAC Group have commissioned the 105MW Verdant wind farm in Gujarat. Read more

ØRSTED TARGETS CARBON NEUTRALITY BY 2025

Ørsted plans to be carbon neutral by 2025, and achieve carbon neutrality in its footprint - including its supply chain and energy trading - by 2040. Read more

ACEK EXPLORES €1.8BN SALE OF ELAWAN

Spanish industrial group ACEK is looking to put wind company Elawan Energy up for sale in a deal worth around €1.8bn. Read more

EU EYES OFFSHORE IN GREEN NEW DEAL

The European Union is looking to include a package of measures to stimulate offshore wind as part of its Green New Deal package. Read more

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