Industrial conglomerate General Electric Company (GE) announced on May 16, 2022 that its Power arm has secured an order from a leading Vietnamese engineering, procurement, and construction (EPC) consortium to provide power generation equipment for PetroVietnam Power Corporation's Nhon Trach 3 and 4 combined cycle power plant.
The energy company expects the 1.6 gigawatt (GW) Nhon Trach plant to become operational in 2025 and power industrial areas in the country's Vung Tau provinces, situated roughly 43 miles from Ho Chi Minh City. GE says the project is its first H-Class gas turbine order in Vietnam and will be the country's first liquefied natural gas (LNG)-fueled power plant. Additionally, GE will improve the efficiency of PV Power's Nhon Trach 1 power plant by improving visibility, reliability, and availability while reducing costs.
- GE has secured an order to provide power generation equipment for PV Power's Nhon Trach 3 and 4 combined cycle power plant.
- The energy company expects the Nhon Trach plant to become operational in 2025 and power industrial areas in Vietnam's Vung Tau provinces.
- GE will also improve the efficiency of the Nhon Trach 1 power plant by improving visibility, reliability, and availability while reducing costs.
- This order indicates GE's commitment to providing solutions for customers transitioning to cleaner energy infrastructure as it prepares to split into three separate companies in the coming years.
Shift to Renewable Energy and Natural Gas
In recent years, Vietnam—which currently generates about a third of its electricity output from coal—has accelerated its transition from coal-fired power toward renewables and natural gas alternatives as the Southeast Asian country strives to achieve net-zero emissions by 2050.
"Renewable energy is expected to grow significantly in Vietnam while at the same time, lower-carbon and highly efficient gas power generation will play a crucial role in supporting this growth while ensuring grid stability and reliability," said Ramesh Singaram, CEO of GE Gas Power's Asia region. "This first of its kind project is expected to open up a new chapter for gas power generation in Vietnam, and we are proud to begin developing the first HA project in the country, in alignment with its national energy goals for a more sustainable national economic growth," Singaram added.
Impact for Investors
GE's order to provide PV Power with energy-generating equipment comes as a welcome development for the conglomerate's struggling Power business. The segment, along with the company's renewable energy division, has posted an operational loss of around $2 billion in the past three years. Although the Power segment turned over sales of $16.9 billion in 2021, profit margins have fluctuated between +14% and -5% since 2016.
This latest deal indicates GE's commitment to providing solutions for customers transitioning to cleaner energy infrastructure as the conglomerate prepares to split into three separate companies in the coming years focusing on aviation, healthcare, and energy. Under the restructure, GE plans to consolidate its renewables, power, and digital businesses. Since the start of the year, GE shares have fallen 20.4%, underperforming the S&P 500 Index over the same period by around 3%.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.
Correction - May 25, 2022: A prior version of this article incorrectly attributed the turbine deal to GE's renewable energy division rather than its power division.