GE Vernova's Future: Capitalizing on Power Technology Demand

Current trends in power technology demand

Current trends in power technology demand are characterized by the convergence of power and technology, driving productivity and electric demand growth. Companies are investing in clean generation, enhancing energy grids, and responding to increased demand from sectors like data centers, indicating a proactive approach to future energy needs.

"Thank you. As technology As technology disrupts every industry across our economy, power and technology have converged and are now codependent on each other, driving productivity and electric demand growth across all sectors." --- (NEE, event transcript, 2024/06/11)

"In July 2024, we reached a constructive comprehensive settlement with certain parties on the rate plan which, if approved by the FPSC, will allow us to continue making important investments to reduce outages, shorten response times, meet future energy demands, increase clean, solar generation and explore innovative technologies to generate cost savings for our customers." --- (DUK, sec filing, 2024/Q2)

"We have a long-term and transparent growth plan, making investments in clean generation new to and enhanced energy grids and economic development programs to support our communities vitality.In 2020, our continuous improvement programs have saved $400 million in recurring O&M expense, while improving operating outcomes and reducing enterprise risk." --- (XEL, earning call, 2024/Q2)

"We continue to work with data center customers to meet their increased demand, while ensuring contracts and new initiatives are fair and beneficial for all of our customers.In the fall, we will provide an update on what this large load opportunity means for our capital spend, including generation and transmission investment, and on our plan to responsibly finance this growth initiative." --- (AEP, earning call, 2024/Q2)

"We are leveraging this combination of enterprise-wide scale, decades of experience and investment in technology to better position both businesses to capitalize on what we believe will be years of demand to drive long-term value for customers and shareholders. Today, electricity represents just 20% of overall U.S. energy" --- (NEE, earning call, 2024/Q1)

Competitive landscape in power technology

The competitive landscape in power technology is characterized by significant investments in innovation and sustainability. GE Vernova is focusing on breakthrough energy transition technologies with a $1 billion annual R&D commitment, while Emerson emphasizes its expertise and readiness to capture upcoming investments globally.

"Approximately 9% of Emerson sales are in power. And while we have a strong portfolio across our technology stack, I want to highlight the software and control layer, which is relevant across the power landscape from generation to transmission and distribution." --- (EMR, earning call, 2024/Q2)

"To capitalize on this opportunity, the company is focused on executing with sustainability, innovation, and lean at its core and is building on its history of innovation by investing approximately $1 billion annually in research and development to drive breakthrough energy transition technologies." --- (GE, press release, 2024/04/02)

"Emerson's leading products and application expertise across the power landscape make us well positioned to capture the coming investments both in the U.S. and globally." --- (EMR, earning call, 2024/Q2)

"This means delivering unmatched time on wing and faster turnaround times for our customers.With our deep domain expertise and engineering talent, commitment to innovation and capacity to invest, we are poised to deliver breakthrough technologies in both commercial and defense." --- (GE, earning call, 2024/Q2)

"And the second then is to actually use the analytics power to drive productivity, efficiency, higher levels of safety and efficiency with analytic packages inclusive of much of what AspenTech can bring to the table to optimize facilities and production." --- (EMR, earning call, 2024/Q1)

Customer needs and sustainability in power technology

Customer demand for sustainable power technology is driving companies to invest in efficient solutions. Enphase Energy emphasizes the importance of sustainable energy for a greener future, while First Solar highlights commitments to clean generation. Sempra Energy and Tesla focus on reliability and competitiveness, addressing customer needs in the evolving energy landscape.

"Furthermore, we are proposing significant technology and infrastructure investments that will help enable, the automated reconfiguration of our system when extreme storms hit, quickly restoring service to customers on undamaged segments by intelligently rerouting power." --- (SRE, earning call, 2024/Q1)

"This allows us to provide more efficient and effective sustainable energy solutions to our customers, which is essential for the energy transition towards a greener future." --- (ENPH, press release, 2024/07/01)

"We believe that this potential hyperscale related demand, coupled with their publicly stated commitments to address their energy needs through clean generation, along with our strong track record of partnering with developers to provide solutions for these off-takers, places First Solar in a strong position to have an important role in powering the industry of the future.As demonstrated by our recently signed, 620-megawatt module supply agreement subject to additional conditions precedent with a new U.S. customer that will be supplying power to a hyperscaler." --- (FSLR, earning call, 2024/Q2)

"So we're in close contact with our customers and making sure that we're remaining competitive in where they're needing to be competitive to, to secure contracts to sell power and energy in the markets." --- (TSLA, earning call, 2024/Q2)

"So for the longer-term, we do see a viable road map for the sustainability and also the profitability of our power swap business." --- (NIO, earning call, 2024/Q1)

Technological advancements shaping the future

Technological advancements in power technology are being driven by significant investments in sustainability and emerging technologies. Companies like Microsoft and IBM emphasize their commitment to innovation, while AI's rapid growth is seen as a transformative force, promising to address global challenges and optimize energy systems.

"So that's things such as advancing sustainability policy, using our climate innovation fund to invest in innovations into new technology solutions, as well as working with other partners around their sustainability commitments as well." --- (MSFT, event transcript, 2024/08/05)

"We continue to invest in emerging technology as well, bringing new innovations to the market." --- (IBM, earning call, 2024/Q1)

"AI innovations and Search are the third and perhaps the most important point I want to make." --- (GOOG, earning call, 2024/Q1)

"And the use of generative AI has nearly doubled in the last 6 months. So I believe that AI holds the promise of revolutionizing society by tackling global challenges. It is a special moment in time to unleash human creativity and the possibilities are endless." --- (MSFT, Fireside Chat, 2024/08/05)

"We continue to invest in emerging technologies, bringing new innovations to market." --- (IBM, sec filing, 2024/Q1)

Regulatory impacts on power technology

Regulatory impacts on power technology are significant, as companies like ExxonMobil and Chevron emphasize the reliance on timely approvals, jurisdiction-specific policies, and government support. These factors influence technological advancements, investment decisions, and the overall competitiveness of low carbon technologies in the energy sector.

"to closing, including timely regulatory approvals; the capture of efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing efficiencies; unforeseen technical or operating difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; the results of research programs and the ability to bring new technologies to commercial scale on a cost-competitive basis; and other factors discussed under Item 1A." --- (XOM, press release, 2024/05/03)

"Implementation of jurisdiction-specific policies and programs can be dependent on, and can affect the pace of, technological advancements, the granting of necessary permits by governing authorities, the availability and acceptability of cost-effective, verifiable carbon credits, the availability of suppliers that can meet our sustainability-related standards, evolving regulatory or other requirements affecting ESG standards or other disclosures, and evolving standards for tracking, reporting, marketing and advertising relating to emissions and emission reductions and removals." --- (CVX, sec filing, 2024/Q1)

"ExxonMobil has no competitive advantage in low carbon technology. Additionally, these technologies rely heavily on government subsidies and regulatory support, which may not be sustainable or reliable over the long term." --- (XOM, event transcript, 2024/05/29)

"The company will continue to maintain flexibility in its portfolio to be responsive to changes in policy, technology, and customer and consumer preferences." --- (CVX, sec filing, 2024/Q1)

"If you look at expanded disclosure requirements that Europe is looking for, or if you look at regulation around reducing carbon footprint and not necessarily implementing regulation that's technology agnostic and focused on just reducing carbon intensity, that all makes Europe a much tougher investment proposition." --- (XOM, earning call, 2024/Q1)

Future growth strategies for GE Vernova

GE Vernova's future growth strategies focus on accelerating the energy transition and sustainability, leveraging its independence and GE's innovative legacy. The company aims to deliver affordable and reliable energy solutions while navigating potential market risks and uncertainties.

"Now GE begins again, three industry leaders fit for purpose for the next century plus and ready to put their stamps on the world: GE HealthCare, GE Vernova and GE Aerospace, each carry forward GE's innovative spirit, customer focus and passion to build a world that works, fully focused on their respective missions to lead precision health, the energy transition and the future of flight." --- (GE, earning call, 2024/Q1)

"Supported by the Company Purpose, The Energy to Change the World, GE Vernova will help deliver a more affordable, reliable, sustainable, and secure energy future." --- (GE, press release, 2024/04/02)

""Today, GE Vernova becomes an independent company singularly focused on accelerating the energy transition to create a more sustainable future," said Scott Strazik, CEO of GE Vernova." --- (GE, press release, 2024/04/02)

"For GE Vernova, particular areas where risks or uncertainties could cause its actual results to be materially different than those expressed in its forward-looking statements include: the Company's success in executing planned and potential transactions; changes in macroeconomic and market conditions and market volatility, including risk of recession, inflation, supply chain constraints or disruptions, interest rates, the value of securities and other financial assets, oil, natural gas and other commodity prices and exchange rates, and the impact of such changes and volatility on the Company's business operations, financial results and financial position; global" --- (GE, press release, 2024/04/02)

"This stronger foundation enabled the successful creation of three independent companies – GE HealthCare, GE Vernova, and GE Aerospace – each of which are now well-positioned to build upon GE's history of innovation." --- (GE, press release, 2024/04/02)

Market opportunities in emerging power technologies

Emerging power technologies present significant market opportunities, as highlighted by companies like FuelCell Energy, which focuses on hydrogen storage and carbon capture, and Enphase Energy, introducing high-power solar panels for emerging markets. NIO's investment in energy solutions further underscores the sector's growth potential.

"We think with our technologies, we're well positioned today to be around a number of different opportunities depending on how the market evolves, whether that's using hydrogen as a long duration energy storage, which we continue to believe is ultimately a more compelling solution than a mineral-based solution, rather the opportunities emerge faster along the lines of carbon recovery or carbon capture, and the opportunity we see just increasing around distributed power generation as interconnection cues continue to extend out on grids, at least certainly domestically." --- (FCEL, earning call, 2024/Q2)

"Simultaneously, we also introduced this product required for emerging markets where the panels are becoming very high in power." --- (ENPH, event transcript, 2024/05/15)

"Investment in NIO Power On May 31, 2024, NIO Holding Co., Ltd. ("NIO China"), a subsidiary of the Company, and NIO Energy Investment (Hubei) Co., Ltd. ("NIO Power"), a wholly-owned subsidiary of NIO China, entered into definitive agreements with Wuhan Guangchuang Emerging Technology Phase I Venture Capital Fund Partnership (Limited Partnership) (the "Investor") for an investment in NIO Power." --- (NIO, press release, 2024/06/06)

"When we provide reliable power and services to these customers, we win. When we turn our emerging technologies into new project sales, we win." --- (FCEL, earning call, 2024/Q2)

"And on the heels of the 427 watts, we will also offer a 548 watts that will be for emerging markets as well as for some places in Europe and that will be available for both the residential as well as commercial, you know." --- (ENPH, earning call, 2024/Q2)

Strategic partnerships and collaborations for growth

Strategic partnerships are crucial for growth, with GE leveraging supplier collaborations to address supply chain challenges and IBM reporting that over 40% of consulting revenue comes from partnerships with major cloud providers. Both companies emphasize the importance of aligning with partners to meet customer needs and drive long-term success.

"Contributing to growth across the business this quarter, our strategic partnerships continue to make up over 40% of our consulting revenue, with both AWS and Azure practices growing double digits." --- (IBM, earning call, 2024/Q1)

"And we are investing in the business for long term growth. We then evaluate both acquisitions and strategic investments." --- (GOOG, event transcript, 2024/06/07)

"It's a clear challenge that we are facing head on, accelerating the use of FLIGHT DECK in partnership with our suppliers as we work to solve the ongoing supply chain constraints.Last quarter, we shared that the common denominator impacting growth across both services and new engines is constrained material supply with 80% of material input shortages tied to nine suppliers across 15 supplier sites." --- (GE, earning call, 2024/Q2)

"We had strategic partnerships, Red Hat growth profile, and we had future acquisitions as we're going to continue to be opportunistic around our M&A criteria and the synergistic value of how consulting plays to our portfolio.If you look right now, 90 days later, as we look to the second-half, many of those are still playing out." --- (IBM, earning call, 2024/Q2)

"That's one comparison that we focus on, because we still are not as linear through the course of a quarter as we would like and making good use of the first two, three, four weeks of a quarter is critical for us to be able to deliver the year-over-year a little on the sequential growth that we would like to see that's embedded here, and most importantly, what our customers need from us given how active they're working in these assets." --- (GE, earning call, 2024/Q1)