This guest article was written by William Laraque who is the Managing Director of US-International Trade Services.
It was announced today that GE is considering a $20 billion deal to merge its oil and gas business with Baker Hughes Inc.
GE is under intense pressure to show to investors that its 2015 pivot away from financial services and its focus on industrial businesses is yielding benefits.
Other GE Businesses
Besides its business in oil and gas, with products such as blowout preventers, GE is involved in:
- power turbines
- jet engines
- medical scanners
By increasing its investment in oil field services through Baker Hughes and subsequent to its recent doubling down on coal processing technologies, GE is bypassing one of the salient technologies in future power generation.
In The Hydrogen Economy, Jeremy Rifkin writes about the decentralization and democratic diffusion of everything from communication to power generation brought about by the internet. The question is how is this to be achieved. I have a few suggestions.
The New Economy and Energy
How will energy be diffused in such an unprecedented manner? As Daniel Yergin, then of IHS, explained, energy is a layered business subject to slow changes, one layer at a time. One layer does not necessarily replace another immediately. Energy is a slow-cooking process; an evolution rather than a revolution.
The oil age did not completely replace the coal age. The hydrogen or renewable energy age will only slowly replace that of fossil fuels. This process has already begun. Electric cars and vehicles that were just a dream not long ago are now a reality, and the object of gigafactories with Tesla and mainstream industrial producers like GM (the Bolt).
The ravages and power outages caused by hurricane Sandy provided the impetus for change. Now, exactly 4 years later, the Museum of Modern Art in NY, among other large, iconic buildings, the harbor area lights of Freeport, NY and New Jersey have implemented energy independence and savings. Freeport Harbor and New Jersey beaches are now lit by the elegant solar-powered lights of Lumi-Solair. Big Belly solar-powered trash compactors are now seen in many municipalities and villages.
Highly efficient GE gas turbines, cogeneration systems for heat, for hot water, for chillers and the conversion to LED lights that are more efficient and last longer, offer savings for the owners of these and other, similar buildings. These technologies provide stand-alone energy independence and savings for buildings and municipalities.
Telecommunications towers are part of the energy evolution. Hybrid solar and wind-powered turbines power telecommunications towers, a technology which is proving to be particularly useful in providing communications to the hard-to-reach places of the world. Not having to resupply diesel engines in these areas is a great relief and an aid to the fuel importation budgets of numerous countries.
The arguments against renewable energy are mainly focused on government subsidies, the need to provide fossil-fuel, natural gas back-up for intermittent solar and wind energy which cannot be stored. It is also argued that the long transmission lines needed to connect the high population centers of the US and solar and wind farms in the US’s solar intense and windy areas are not practical.
It is more practical it is argued, to use the US natural gas pipeline system, one of the most extensive in any country.
The limits of batteries and ultra-capacitors make fossil fuel back-up essential, it is argued. The semi-stand-alone buildings described earlier depend still on natural gas to power their gas turbine engines. This symbiotic relationship between renewables and fossil fuels is slowly ending. The opposition to innovations in energy transformation has been fierce.
The investment in the existing fossil-fuel based infrastructure of countries has been huge and expensive and these interests are not likely to yield without a protracted fight.
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Apple, Amazon, Google, High Tech and Energy
“Apple has invested in renewable energy before and says it ultimately wants all of its operations to be powered by 100% renewable sources. It’s not alone in such efforts, either. Online retailer Amazon just announced the construction of a new, 253-megawatt wind farm in West Texas. Google, meanwhile, has invested in the Ivanpah Solar Electric Generating System and it recently joined forces with the company SunPower to provide solar panels to home-owners. Why are tech companies so interested in renewables?”
“For these big corporations, electricity is one of their biggest costs,” says Ash Sharma, a solar energy analyst at IHS Technology. “Locking that in at a low price is really critical for them.”
It takes a lot of energy to power modern data centers. Besides running servers 24/7, all that machinery needs to be kept cool – a huge cost by itself. Why, though, would Google be interested in putting solar panels on people’s homes? The firm says it wants to map “the planet’s solar potential” – the data from these panels, including their uptake, could inform future energy strategies.
And yet the price of solar energy has been falling more quickly than some expected. At an energy auction in Abu Dhabi in the United Arab Emirates last month, a Japanese and Chinese consortium bid to build a solar farm that would produce energy at less than 2.5 cents per kilowatt hour – that’s significantly cheaper than the average cost of energies like gas and coal in the US, and by far the lowest bid for a solar farm yet.
IHS Technology expects the cost of solar energy to plummet “by about 30%” next year, he says.
Enter Elon Musk
Elon Musk wants to make solar-roof panels as sexy as his electric luxury cars.
Mr. Musk, who is chairman of both Tesla Motors Inc. and SolarCity Corp., laid out in broad strokes his vision for how his proposed merger of the two companies would result in an integrated system of solar panels, wall-mounted batteries and electric cars.
“People always think of Tesla as an electric-car company, but really the whole point of Tesla was to accelerate the advent of sustainable energy,” Mr. Musk said on a stage at Universal Studios in Los Angeles surrounded by houses outfitted with glass solar tiles roughly the size and shape of roofing shingles.
Enter the Hopewell Project
The Hopewell Project predates Elon Musks initiatives. It is a feasibility study initiated in the 1980s and supported by the New Jersey Dept. of Transportation.
The project was designed to demonstrate that roof-mounted solar panels (on a house in Hopewell) could be used to power electrolyzers that turn water into hydrogen and oxygen. The hydrogen is safely stored in tanks which dispense and dissipate the excess hydrogen into the air. The excess hydrogen dissipates so rapidly that it cannot combust even with an open flame.
Mike Strizki, the homeowner and project lead, also demonstrated that the hydrogen thus produced could be used in fuel cells to run every appliance in his home, his car (the Genesis), his boat and lawn mower. Mr. Strizki has taken this technology to several highly isolated countries, where villages are powered by converting sunlight to hydrogen that in turn powers fuel cells that provide electricity to entire villages.
Hybrid systems are used to power telecommunications towers with a combination of solar and wind energy.
The important takeaway from the Hopewell Project is that hydrogen can be the means whereby wind and solar power, hybrid power, is stored. Hydrogen can be safely stored and piped to power telecommunications towers, villages, homes and industries. Some examples of recent and long existing industrial pipelines are:
- 1938 – Rhine-Ruhr The first 240 km (150 mi) hydrogen pipes that are constructed of regular pipe steel, compressed hydrogen pressure 210–20 bars (21,000–2,000 kPa), diameter 250–300 millimetres (9.8–11.8 in). Still in operation.
- 1973 – 30 km (19 mi) pipeline in Isbergues, France.
- 1985 – Extension of the pipeline from Isbergues to Zeebrugge
- 1997 – Connection of the pipeline to Rotterdam
- 1997 – 2000: Development of two hydrogen networks, one near Corpus Christi, Texas, and one between Freeport and Texas City.
- 2009 – 150 mi (240 km) extension of the pipeline from Plaquemine to Chalmette.
Back to the Future
The entire point of this thesis is to indicate that GE in striving to create shareholder value, has and continues to double down on coal, gas, oilfield and other fossil-fuel resources and services. In contrast to Tesla and Solar City whose leadership seeks to create a cleaner and higher-quality world, GE’s leadership has acknowledged that energy is a slowly evolving scenario which merits its deep dive back to the future.