GE Expands Power Operations with $500M Order from Exelon
General Electric Company (GE) inked a $500 million deal with Chicago-based Exelon Corporation (EXC), to supply power-generating equipment to the power company. The industrial giant is also investing in a Japanese solar project as it seeks to expand its core industrial operations.
The order includes four of General Electric’s highest efficiency gas turbines, which will be used in the expansion of two of Exelon’s power plants near Houston and Dallas. The order for its latest gas turbines, the first in the U.S., will provide a boost to the conglomerate’s domestic gas turbines business, which has lagged promising markets like Japan, France and Russia.
In addition to the four 7HA gas turbines, General Electric will also supply two steam turbines and six generators. The equipment is expected to ship in 2016, with the plants due to be operational in 2017.
Exelon will use the equipment to build two combined-cycle gas turbine units in Texas, with each of them adding 1,000 megawatts of capacity to their respective sites.
The "combined cycle" process will use the excess heat from the gas turbines to power steam turbines, thus extracting more energy from each unit of fuel. Per General Electric, its new turbines will generate $8 million in fuel savings annually per turbine, compared with the older equipment, thus notably reducing the cost of electricity.
The Exelon deal will enable General Electric to capitalize on the expanding Texas energy grid, and abet its efforts to expand its footprint in the lucrative power sector.
Earlier this year, General Electric agreed to acquire the energy assets of Alstom SA, the world leader in steam turbines, in a $13.5 billion deal. The conglomerate plans to capitalize on Alstom’s state-of-the-art steam turbine technology to improve the efficiency of its new combined-cycle power generation units, like those included in the Exelon order.
General Electric presently sports a Zacks Rank #2 (Buy). Other stocks in the diversified operations industry that look promising and are worth a look include Carlisle Companies Incorporated (CSL) and ITT Corporation (ITT), both holding the same rank as General Electric.
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