Dubai: The world’s largest power generation company is searching for a new growth spark. Even a second wind to get its momentum back on track.

The $26.8 billion (Dh98.4 billion) GE Power — and the rest of the industry for heavy-duty power generation equipment — is caught in a perfect storm of change. On the one side, there has been a sizeable dip in global demand for its gas- and coal-fired turbines, while on the other, demand and governmental support for all sorts of renewable energy forms is creating its own demand dynamic.

It is in this charged space that Russell Stokes, President and CEO of GE Power, needs to strike a fine balance. “We are definitely trying to make sure we have an appreciation of where renewables is going,” said Stokes, while on a stopover in Dubai. “I actually think it can be complementary to the way our core business operates. And we basically go across all the major possible fuel types — we play in gas, coal, and there is stuff we do in renewables and nuclear.

“Keep in mind that renewable costs have come down. It has also come down with the support of subsidies and those things have allowed significant levels of investment [in renewables].

“We are seeing the correction in the market (for traditional power generation) over how fast renewables are coming online.” (GE has a separate entity handling all of its interests in renewables.)

GE Power — which is the single biggest contributor to the overall GE top-line — has been making some serious adjustments in the new environment. First off, in July last, the division itself went through some consolidation, by combining the company’s legacy power business with “energy connections”. And earlier this month, GE Power announced sweeping job cuts that would total 12,000 (representing about 18 per cent of the division’s workforce). The changes could bring an estimated $1 billion in cost savings next year.

Stokes is targeting territories outside of the US and Europe to get in the right sort of numbers. GE Power had a hand in the Mohammad Bin Rashid Al Maktoum Solar Park, where the 800MW Phase III is powered by its LV5 1,500-volt inverters. (It was signed at a “then record price of $2.99c/kWh. The Dubai facility is also the largest single-site solar park in the world.)

Real opportunity

“The Middle East is where we can definitely continue to gain additional value and help customers,” said Stokes. “There are markets in Asia, like Indonesia, where we see real opportunity. China is another where we are paying a lot of attention as they transition from coal to more of gas and renewables.”

Even with all the clamour for renewables, GE will retain its backing for gas and steam turbines. “As we navigate through this [the organisational changes] over the next couple of years, we will see gas and even coal step in to support base load generation,” said Stokes.

“Gas and coal will step in and help stabilise the grid in support of renewables such as wind, power and solar coming online. The corrections that we are seeing is primarily in the mature markets. In the US and Europe. There are opportunities in other parts of the globe.”

Other region-specific factors will also be at work. This region with its energy-intensive aluminium, steel and petrochemical industries will need “conventional” — that is, gas and coal — power generation sources to ensure continuous and large-scale supply.

Apart from new installations, GE Power also has a lot of installed capacity to fall back upon — over 1,500GW of installed assets. That translates into income generation for services and upgrades where and when needed.

Factbox: No escaping taking some tough decisions

It was early this month that GE Power announced layoffs that would impact 12,000 employees and representing 18 per cent of its workforce.

“I take it very seriously when at any time I have to talk about moving or removing anybody in our organisation,” said Russell Stokes, who took over as President and CEO at the division in July. “At the end of the day, my job is to make tough decisions. And how do we maintain competitiveness in a market that is going a pretty dynamic transition for a number of different reasons.”

According to Stokes, the challenges in the market for power generation equipment was there right from 2014-15. Plus, there was its 2015 deal, of $10 billion (Dh36.7 billion), to acquire the French equipment maker Alstom. “Put together and the impact of renewables, we had to do what was necessary to remain competitive. We had to make a correction.”