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GE Pulls the Plug on a Shrinking Business: Building Coal Power Plants -- Barrons.com GE Pulls the Plug on a Shrinking Business: Building Coal Power Plants -- Barrons.com Dow Jones By Al Root General Electric said it won't build coal-fired power plants any longer, a sign that the power market is moving away from fossil-fuel generation and an indication that GE continues to transform itself under new CEO Larry Culp. The steam portion of GE's (ticker: GE) power division makes and services plants that burn coal to generate electricity. It is a shrinking business. In 2015, industrywide orders for coal-based steam power generation totaled 93 megawatts, or 93 million watts, an amount equivalent to roughly 0.5% of current coal-fired generating capacity in the U.S.. That was down to 37 megawatts in 2017 and fell to 17 megawatts in 2019. The decline amounts to more than 80% between 2015 and 2019. GE's decision seems to indicate a recovery to old highs isn't in the cards. "With the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory," said GE Power Portfolio CEO Russell Stokes in the company's news release. "As we pursue this exit from the new build coal power market, we will continue to support our customers, helping them to keep their existing plants running in a cost-effective and efficient way." GE still services more than 1,000 coal-fired power plants and will continue to do so. What is more, steam turbines, the core of any coal-fired power plant, are also used in nuclear electricity generation. A detailed breakdown of GE's coal, nuclear, and service sales isn't available. The entire power segment generated $18.3 billion in sales in 2019. Steam accounted for roughly $5 billion to $6 billion of that total. Natural gas-based generation, nuclear power, and grid infrastructure accounted for the rest. GE's renewable-energy division generated about $15.2 billion in sales in the same year. Comparisons based on publicly available information are difficult because there has been a lot of restructuring in the power unit as Culp shakes up the conglomerate. Grid infrastructure, for instance, was recently added to the renewable portfolio. Gas and steam power management were also split. GE shares are down in Monday trading, but it appear not to have anything to do with the power announcement. The entire market is lower. The Dow Jones Industrial Average and S&P 500 are off 2.3% and 1.8%, respectively. GE shares are down 7% in early Monday trading. That's a steeper drop than the market, but GE stock rose 15.6% this past week. Overall, GE stock is off about 38% year to date. GE's largest and most valuable unit, commercial aviation, has been hit hard by the pandemic. Far fewer people are flying, hurting demand for GE's aviation-related products. |
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