General Electric Company (NYSE:GE) is back to retool its industrial business with a more efficient and powerful gas turbine. The company is working on an air-cooled turbine that converts natural gas into electricity. General Electric anticipates strong demand for the improved gas turbine given the early indications from the preorders. The company hopes to sell 500 units of the HA gas turbine by 2030.
General Electric Company (NYSE:GE) failed to make impressive gains from the earlier model of its large gas turbine. One of the reasons for the failure was that the maintenance of the earlier model was overly complicated, especially because of its steam-cooled system. The company has now come up with a way to address the cooling complications with a new gas turbine that uses air cooling.
$2 billion investment
General Electric disclosed that it is investing $2 billion in the new gas turbine project, which has the capacity to generate electricity from natural gas to power some 400,000 homes. The new turbine will be quite heavy, weighing 433 tons. The first delivery of the revamped high-performance gas turbine is expected in July.
So far, General Electric Company (NYSE:GE) has received $1 billion preorders of the new gas turbine and is currently negotiating more deals worth $11 billion. The early interest in the 433-ton gas turbine unit is impressive compared to the previous model.
One of the early requestors of the new gas turbine is Exelon Corporation (NYSE:EXC), which placed a $500 million order for the unit. Exelon praised General Electric Company (NYSE:GE)’s air-cooling system in the improved gas turbine given that the company operates in some drought areas. If all goes according to plane, Exelon expects to start using its new gas turbine by 2017.
Battle for market control
With the air-cooled high-end gas turbine, General Electric Company (NYSE:GE) not only hopes to correct the problems with the earlier model, but also capture a larger market share. The company saw its share of the gas turbine market by megawatts falling to a three-year low at 43% in 2011, down from 61% in 2001. There have been significant improvements, though, with the company accounting for 51% of the market gas turbine last year, but the management believes they can do more.
General Electric Company (NYSE:GE)’s new gas turbine unit is coming a decade after the earlier model that failed it in many ways.