In 2017 GE Executives Projected Bright Future For Fossil Energy; In 2018, Shares Off 50%
Showing data from financial firm Lazard and other sources, their presentation said natural gas, coal and even some nuclear power plants were the lowest-cost producers of electricity on the planet, cheaper than wind or solar. “Gas is the most economical energy source today,” one slide read. In the days following the conference, GE’s shares rose 2 percent. But GE’s forecast turned out to be a mirage.
Rather than rising, GE Power’s profit fell 45 percent last year, forcing GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression. Its shares have plunged more than 50 percent since the March forecast. Former CEO Jeff Immelt was replaced in August.
John Flannery, GE’s new chief executive, blamed the forecast, along with poor management and other factors, for the power business meltdown. In January, he warned the pain would continue this year “and potentially be worse than expected.”
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GE doubled down on fossil fuel in 2015 with the $10.3 billion purchase of French group Alstom’s power business. The deal expanded GE’s exposure to gas, coal and nuclear power just as solar costs fell below those of gas-powered plants, according to Lazard. The Alstom deal added 65,000 employees to GE’s payroll and dozens of factories and service centers around the globe at a time when GE was trying to cut costs. Orders for GE’s newest, large gas-fired turbines have fallen 35 percent in the two years since the deal closed, and industry estimates show demand for conventional plants is unlikely to hit 2017 levels again for at least a decade.
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https://www.reuters.com/article/us-ge-power/how-general-electric-gambled-on-fossil-fuel-power-and-lost-idUSKCN1G60I3
