Two Years GE and Renewable Energy Seemed Synonymous; Now, Not So Much

Updates

December 31, 2015: GE buys Metem, a very, very small buy, $200 million; technology to make natural gas turbines run smoother; provide greater value for its Alstom (European) purchase

• Metem's expertise is in making turbines run more efficiently.
• GE was Metem's largest customer; GE is eager to hog capabilities (and technologies) for itself and Alstom.
• The acquisition, likely less than $200 million, is an example of GE working aggressively to optimize the value of the Alstom acquisition.

December 12, 2015: GE looking to buy Hallburton's drilling assets as well as some of Baker Hughes' completions operations. 

September 29, 2014: GE to supply gas turbines for Exelon power plants in Texas.

September 20, 2014: a continuation of the theme -- GE turning away from renewable energy to oil and gas.

February 26, 2014: the age of natural gas is here -- GE's Immelt. 

February 14, 2011: a second look at GE diversifying into oil. 
 

Original Post

Two years ago GE would have announced a research center on renewables to be built in Silicon Valley or across the street from the new Apple factory in North Carolina.

But there is no question that Jeff Immelt is no Jack Welch. GE's returns under Jeff Immelt have paled compared to those under Jack Welch. I think Jack Welch would have been disappointed with what GE has done under Immelt. Folks remember that Welch fired the bottom ten percent of his performers every year. Check out GE's share price performance since 2000 when Jeff Immelt took over at GE. You can't blame it on the economy; compare it to Apple over the same time period. Apple had the same economy with which to work.

Jeff Immelt, it appears has finally seen the light. Renewable energy, solar and wind, are at the bottom of the barrel in returns. At least compared to the oil and gas industry.

Back in 2011, I posted a note that GE was turning away from renewables and moving into oil and gas. From the Monday, February 14, 2011, post:

It has been interesting to watch General Electric over the past few years try to make a go of it with regard to wind energy. General Electric had a huge interest in wind energy and wind turbines.

But it looks like even General Electric has finally seen the light (no pun intended). Read the Financial Times story; read the direct quotes, and read between the lines.

Then, last November, from the blog:

General Electric Co reached a deal to sell equipment to Clean Energy Fuels Corp, which is building out a series of liquefied natural gas fueling stations for U.S. truckers.

GE -- the largest U.S. conglomerate -- sees liquefied natural gas equipment as becoming a $1 billion market over the next five years, said Mike Hosford, general manager of unconventional resources for GE Oil & Gas.

Now, GE announces an oil and gas research center in the heart of Harold Hamm country. The Fairfield Sun Times is reporting:

General Electric has announced that it will build a new Global Research Center in Oklahoma dedicated to driving innovation and technological advancements in the oil and gas sector and bringing products to market faster. The new facility, which is GE Research's first sector-specific Center, represents a $110 million investment by the company and will result in the creation of 125 high-tech engineering jobs initially, in disciplines ranging from mechanical and electrical to systems and software engineering. These researchers will join GE's global network of 50,000 world-class scientists and engineers who are working to solve some of the world's toughest challenges.

GE Oil & Gas is the company's fastest-growing business, with revenues of more than $15 billion and earnings and new orders having each grown 16 percent in 2012. GE has grown its oil and gas portfolio to win in today's dynamic landscape, bringing to bear industry-leading technologies and services in turbomachinery, subsea drilling, pressure control, remote monitoring and diagnostics.

It's an incredible story. Read the entire article at the link.

A few day ago, I mentioned that Germany turning away from wind energy represents about seven nails in a 12-nail coffin. GE buying the oil service company Lufkin for a $24 dollar premium was worth another two nails. Now the research center.  Folks can deny it all they want, but except for well-defined niches, wind and solar are dead. And investors who argue that this is inaccurate, sell your GE shares and buy shares in First Solar and Vestas Wind Systems. As noted, the latter may do very, very well ... in well-defined niches.