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GE Engages in Chinese Joint Ventures to Advance the Development of Smarter Energy and the Electrification in Local Infrastructure Projects

published: 2010-11-10 14:52

GE and State Grid Corporation of China announced plans for several joint ventures to address China’s growing energy needs and to electrify its vast transportation infrastructure. These joint ventures, part of GE’s plans to invest US$2B in China through 2012, will play a vital role in supporting the country’s energy demand through the development of a smarter grid that will help achieve environmental and economical goals.

“To support current energy needs and future growth, China is rapidly expanding its use of renewable energy sources, which rely heavily on smart grid technologies to optimize their effectiveness”

“China is one of the world’s fastest growing areas with a tremendous need for infrastructure,” said Dan Heintzelman, president and CEO, GE Energy Services. “Since opening our first light-bulb factory in China over 100 years ago, GE has been committed to providing cleaner, smarter and more efficient solutions, and these joint ventures are the latest step in this commitment.”

“Currently, China is experiencing one of the largest rural to urban migrations in history and is expected to become a predominantly urban society by 2020, when urbanization rates reach at least 50 percent1,” said Heintzelman. “This shift means significant changes to the electric distribution needs for a country boasting one of the world’s largest populations. Doing this in a sustainable manner will be a challenge we will help provide solutions for,” Heintzelman promised.

To tackle the country’s pressing energy needs and overcome challenges related to grid infrastructure, GE has signed two joint venture agreements with SGCC. GE will work with Wuhan Nari, a subsidiary of SGCC, to improve the efficiency and reliability of China’s electric grid by developing and implementing asset optimization technology solutions. GE also will work with Electric Power of Shanghai (EPS), controlled by SGCC, to jointly acquire a 77.5 percent controlling stake in Shanghai Tianling Switchgear Co., a Shanghai-based company developing and selling green power distribution equipment. This acquisition by GE and Shanghai Grid will reposition Tianling competitively in US$10 billion global medium-voltage switchgear industry. The formation and operation of joint ventures are subject to certain conditions, including applicable governmental approvals.

Addressing Grid Stability and Reliability

The joint venture between GE and Wuhan Nari will focus on improving grid efficiency and reliability with asset optimization solutions. The venture marks China’s dedication to modernizing electrical infrastructure, which will help meet aggressive renewable energy targets by delivering a smarter, more automated network that will enable the integration of more clean, domestic energy.

“With energy demand expected to double over the next 10 years, China is focused on building a smarter electric grid to meet demand with less environmental impact2,” said Bob Gilligan, vice president—digital energy for GE Energy Services. “GE has been collaborating on technology and delivery with organizations around the globe to realize the promise of a smarter grid. This joint venture with Wuhan Nari expands GE’s role in developing a smarter, more reliable and sustainable infrastructure for Chinese consumers. GE’s energy business is dedicated to modernizing the world’s electrical systems, providing the expertise and solutions to meet global energy challenges.”

The venture with Wuhan Nari follows GE’s work with the city of Yangzhou in April of this year to launch the first government-sponsored smart grid demonstration center in China. This new venture, coupled with GE’s work with the city of Yangzhou, will enable China’s grid to embrace more renewable energy, improve power reliability and increase network efficiencies—while transforming the way consumers use and pay for power.

“To support current energy needs and future growth, China is rapidly expanding its use of renewable energy sources, which rely heavily on smart grid technologies to optimize their effectiveness,” said Hai-An Zhu, general manager—digital energy in China for GE Energy Services. “These solutions will provide the region with a new supply of additional power, helping minimize the need for large investment in transmission networks while improving reliability and reducing pollution.”

Building Infrastructure Efficiency

To ensure China is able to deploy and deliver cleaner and more efficient infrastructure projects, such as high-speed rail and electric vehicle charging, GE and China EPS will jointly acquire a controlling stake in Tianling Switchgear, a Shanghai-based company making and selling power distribution equipment.

Tianling switchgear utilizes leading technology and holds a competitive position in the industry. With China's increasing environmental awareness, this competitive position will support GE’s growth plans both within China and Global IEC markets. The two primary products manufactured by Tianling are cubicle gas insulated switchgear and ring main unit switchgear.

“China is the world’s largest market for infrastructure projects, and medium voltage switchgear is one of the most critical components in building that infrastructure,” said Luis Manuel Ramírez, vice president, GE Energy, Industrial Solutions. “This joint venture with EPS will expand our portfolio and presence in China with the best products and people needed to support the tremendous growth of Chinese infrastructure projects. Building our business around supporting our customers with local operations, like here in China, is critical to evolving a truly global company.”

The joint venture is intended to position Tianling Switchgear in the US$10B global medium- and low-voltage switchgear market and expands GE’s electrical distribution products portfolio.

“Infrastructure for new construction projects, meeting increased urbanization demand and providing transport solutions such as high speed rail are all growth opportunities for GE in China,” said Jim Fisher, GE’s general manager, Asia, for Industrial Solutions.

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