GE sees opportunity in instability

27 April 2015

Firm’s CEO of distributed power talks about supply and generation challenges in region

  • GE distributed power units used in areas of instability to get electricity capacity online fast
  • Egyptian order for 1,197MW of distributed power capacity will be online by summer of 2015
  • Distributed power also used while centralised power plants are under construction and as baseload capacity

US-based GE’s distributed power business finds promising markets in areas of volatility and uncertainty in the Middle East, despite the risks.

It sees high potential in areas including Yemen, Libya and southern Iraq.

“Instability creates greater need for temporary power because any infrastructure building can be a tool for peace-making, and energy is such a big part of that infrastructure,” says Lorraine Bolsinger, CEO of GE Power & Water’s distributed power business. “It often follows that where there are going to be elections, or there’s social unrest, or a need to try and infuse some stability into a system that may otherwise be on the brink, we do see opportunities. We would do projects in Yemen or Libya now; it’s a matter of if we can get our people in, as our number one issue is their safety and security. Other entities are able to go in safely so we contract with them.”

Once a government decides to go ahead with temporary power, GE specialises in having units generating in as little as 10 days, and putting electricity on the grid to power essential services.

In Egypt, the distributed power division agreed to supply 25 trailer-mounted units with a capacity of 25-30MW and 14 larger units with a capacity of 45MW each, with a total capacity of 1,197MW. It was part of a 2.6GW GE deal in late 2014.

“In the very short period of time between signing the contracts and the end of the year, probably a week and a half, we shipped all the units,” says Bolsinger. “We had clear targets from the client about them coming online by the summer to avoid power cuts, and we are making extremely good progress and will meet that target.”

The plants will remain in place indefinitely, and may be converted to combined-cycle in the future. Peak demand in Egypt grew by 6 per cent in 2014 and is forecast to continue expanding at this rate until 2022.

To meet this demand, the Electricity & Energy Ministry is planning to develop 54GW of new power capacity by 2022, at a rate of about 6.5GW a year.

GE sees the Middle East as a key market for distributed power, with close to 500 machines operating in the region. This is not least because of the speed at which electricity demand is growing and the new capacity required to meet this demand.

Their biggest markets are Saudi Arabia, the UAE, and Egypt, but they operate in the vast majority of Middle Eastern countries.

Distributed power, which can have efficiency levels above 55 per cent, can also be used while larger centralised power plants are under construction, but tend to keep running as long-term baseload.

“When a country has the desire, and a plan, to build a centralised power plant, which will be 60 per cent efficient, [on commissioning], you won’t need our units anymore,” says Bolsinger. “The beauty is you can move to the next frontier and mobilise to a rural area where you wouldn’t have had the opportunity to have power, assuming there’s fuel.”

Feedstock is a major issue in the power industry, but lower oil prices may not have the expected effect.

“We are not aware of any power generation project that has been curtailed, stopped or delayed due to oil prices,” says Bolsinger. “Oil has had no major impact and we are just seeing the usual delays.”

In fact, in oil importing countries, more projects may go ahead as lower fuel prices bring generation plans into the range of feasibility.

The same cannot be said for GE’s oil and gas work, which makes up about 40 per cent of the business.

“Our oil work has already slowed; for example, gas turbines used in pipeline applications and gas reciprocating engines used almost exclusively for oil rigs,” says Bolsinger. “Capital expenditure worldwide is down 25 or 30 per cent, although the decline in the Middle East is smaller than in North America.”

Despite the drop in crude prices, gas shortages are beginning to affect oil-rich GCC countries, and duel fuel engines provide flexibility and an insurance policy, despite being about 10 per cent less efficient.

But Bolsinger sees lack of gas supplies for generation as a political problem above all else.

“The frustrating factor all over the world is having gas but not being able to get contracts or PPAs [power purchase agreements],” she says. “Every country wants to ensure through their parliamentary or regulatory process that they are doing the right thing, and they are quite worried about being scrutinised.

“I think I can speak on behalf of GE to say we are frustrated with the amount of time it takes when they have gas and they need power. We want to put those two together as quickly as we can, but we understand they have to go through their learning process.”

The Middle East is by no means the worst region in this regard, and countries vary in the amount of experience they have. But unfortunately, the slow planning and tendering processes for centralised power that leads to shortages also affects contracting of distributed power.

Shortages of gas are also leading to exploitation of other resources such as renewable energy.

“Renewables are absolutely an opportunity; it’s not a case of one or the other but both,” says Bolsinger. “Where in the US we did a lot of renewables, we now need turbines, whether it’s for grid firming or peaking to compensate for the intermittency of renewables.”

GE is also looking to expand its use of unconventional gas, after supplying equipment for the Al-Qusais landfill in Dubai, which generates 1MW from the gas produced there.

“In the UAE, they have a shortage of conventional gas, but there is unconventional, and we are the largest users of biogas and synthetic gases,” says Bolsinger. “There are big opportunities across the region, and we are looking in Jordan, and at dairy applications.”

Jordan currently has two biogas facilities: the Russeifah landfill, which is currently being revamped; and the Al-Samra wastewater treatment plant, which is being expanded by French firm Degremont and is due for completion in mid-2015.

Agricultural applications of gas turbines are tried and tested in North America and Europe, but have yet to be commercialised in the Middle East. According to GE, the dung of about 10,000 cows or 15 million laying hens is required to power a 1MW turbine.

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