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Why GE and Siemens are investing heavily in gas-fired technology

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Changing energy mix

As we regularly cover in our coal articles, the energy mix in the US and across the world is changing. The shale gas boom and the EPA’s[1. Environmental Protection Agency] war on coal has helped natural gas increase its market share in electricity generation substantially over the last decade. The quest for cleaner energy has made policymakers around the world look at natural gas as an alternative. The world’s biggest polluter, China, is also trying to diversify its energy sources. China has recently inked two deals for natural gas supplies from Russia. General Electric (GE) expects natural gas to top coal in global capacity additions over the next decade.

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Opportunities

General Electric (GE) expects natural gas-fired capacities to account for a quarter of total new capacity additions (3,400 gigawatts or GW) over the next decade. In comparison, coal will account for 23%, followed by oil’s 18%. So over 800 GW of new natural–gas fired capacities are expected to come online by 2023.

While the US will remain the biggest market, other countries—including Japan and China—are expected to add substantial natural gas–fired capacities in the years to come.

Who benefits?

GE is the world leader in gas turbines, holding a 29% market share, according to McCoy Power Reports. With the acquisition of Alstom (ALSMY), GE has strengthened its product offering in combined cycle technology. GE is part of various ETFs, including the SPDR S&P 500 ETF (SPY) and the Industrial Select Sector SPDR ETF (XLI). Siemens (SIEGY) stands second with an equivalent share. Mitsubishi-Hitachi Power Systems, a Japanese alliance, is the third-largest player in gas turbines, with a share of 16%.

According to the International Energy Agency, around $1 trillion is expected to be invested in gas-based power plants over the next two years. With established market positions and diversified product offerings, GE and Siemens are poised to benefit from this investment.

However, natural gas isn’t free from troubles. Let’s take a look at these challenges in the next part of this series.

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