General Electric Co. (GE) and Harbin Electric Machinery Co. Ltd. (“HEC”), a subsidiary of China based Harbin Power Equipment Co. Ltd. (“HPEC”), have entered into a joint venture agreement. The joint venture is for manufacturing and supplying wind turbines for Chinese customers.
 
The agreement provides enhanced opportunity for General Electric to develop a solid footing in the $13 billion Chinese wind industry segment, the largest wind turbines sales territory in the world. In 2009, the country produced 25 gigawatts of wind energy, which with continued expansion of installed wind capacity is expected to reach 150 gigawatts by 2020, leading to a further expansion of 500% of the country’s wind industry.
 
With rising population and increased infrastructure development activity, there has been a surge in demand for electricity in China, increasing at an annual rate of 12%. The Chinese government has encouraged development of renewable means of power supply, leading to a clean and safe environment. General Electric’s advanced wind power solutions provide a sustainable and environmental friendly means of power supply.
 
There has been an express need for plants worldwide, which can generate power as well as clean water at a single site, and General Electric provides leading innovative solutions for these industrial units. The company’s power generating products are used all over the world. Currently, one of the projects on which the company is working is the Salalah Independent Water & Power Project (IWPP) in the Dhofar region of southern Oman.  General Electric has been working on a number of projects in the Middle East, with the Salalah project being an addition to its scope of activity there. About 70 gigawatts of electricity currently generated in the Middle East are through plants using General Electric’s turbines.
 
Apart from wind energy, General Electric has also been actively involved in the development of solution for nuclear power generation. Recently, General Electric through its alliance, named  GE Hitachi Nuclear Energy (GEH), with Hitachi (HIT) signed memorandums of understanding (MOUs) with several local companies, like Energy Steel & Supply Co., Curtiss-Wright Flow Control and CLYDEUNION Pumps, to initiate discussions about supplying mechanisms for new nuclear power plant projects in the United States and worldwide.
 
The increasing demand for electricity, with development of infrastructure and rising population, has increased the need for sustainable and efficient means of energy production system. A modernized power grid for energy production will not only reduce pollution, but will also increase the production capacity of the plants. Construction of such novel, modernized plants will provide employment opportunity to the local people, hence leading to economical and social development of the region.
 
Operating in more than 100 countries globally and employing about 300,000 people worldwide, General Electric Co. is a diversified infrastructure, finance and media company.  Within the energy sector, the company aims to develop and install technology for the efficient use of natural resources. The major competitors of General Electric are Honeywell International Inc. (HON), Siemens AG (SI) and United Technologies Corp. (UTX).
 
We currently maintain our Neutral rating on General Electric, with a Zacks #3 Rank (short-term Hold recommendation) over the next one-to-three months.
 
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