- Access to XD Electric's high voltage equipment strengthens GE's capabilities to build out and upgrade of electrical infrastructure in the Middle East
- GE is bringing technology and expertise closer to its customers to build and modernize the electric grid
- Investment allows GE to better serve utilities and energy-intensive sectors that demand reliable power such as oil & gas, steel and mining
- T&D is a US$100 billion industry with strong growth potential in emerging economies and in electrification of industrial processes
Dubai, UAE; August 28, 2013: With the population in the Middle East expected to grow by 31 percent by 2025, and gross domestic product set to grow at 4.3 percent from 2009-2020, there is greater need to build out reliable, safe and efficient electrical infrastructure. Compared to the United States, where electricity consumption per capita is set to grow 0.8 percent annually through 2035, in the Gulf Co-operation Council countries, the increase is set to be at over 2.5 percent.2
Building on its commitment to partner in initiatives that enhance the social and economic welfare of the Middle East and to promote energy sector efficiencies, GE (NYSE: GE) and XD Electric Group (SHA: 601179) have underscored the formation of a new partnership that combines GE's grid automation capabilities with XD Electric's comprehensive portfolio of primary high-voltage (HV) equipment.
Originally announced in May 2012, the partnership expands GE's capabilities as a leading provider of transmission and distribution (T&D) solutions and creates a new global competitor to provide utilities and energy-intensive industries with HV solutions.
"With over 80 years of presence in the Middle East region, we're currently focused on grid expansion projects and greenfield network interconnections as we continue to create a modern power grid that is stable, resilient and energy efficient. This is in line with the emphasis that regional governments place on boosting the energy sector infrastructure, with a particular focus on sustainability, to meet growing demand from an increasing population and greater urbanization," said Jalal Qutob, Regional Product Leader -- High Voltage Solutions, GE Digital Energy.
"Adding high-voltage capabilities will help our utility customers to transmit power with minimal losses over long distances and rough terrains---from the generation point to the consumers in large cities. We'll also continue to eliminate power islands, creating energy reserves and allowing us to more efficiently use a greater supply of energy," he added.
Through the partnership, GE and XD will offer end-to-end T&D solutions to meet growing demand for electricity in the emerging economies of the Middle East where demographic and urbanization trends are creating a need to build out the current grid infrastructure.
According to United Nation's projections, the urban population in the Middle East and North Africa region is set to be over 280 million by 2020, of an estimated total of 430 million people -- accounting for an increase in urban population by 65 percent.3 This increase will require sustained electrical infrastructure investments to support water, power, energy and telecommunications systems. The rise in global electricity demand and population growth is economic drivers leading the expansion of the $100 billion T&D industry.
To prevent grid disruptions and build a strong, resilient grid, utilities will be able to expand their T&D systems with HV transformers, circuit breakers, HV breakers, gas-insulated switchgear and other HV equipment to improve reliability.
Together, GE's and XD's combined portfolios will provide utilities with the T&D solutions necessary to outpace these megatrends, increasing their electricity demand. GE and XD also will provide energy-intensive industries with the HV solutions necessary to meet the rapid electrification of industrial processes.
Modernization of electrical systems is contributing to the industry's growth, driven by new requirements to integrate renewable and distributed power sources -- an ideal fit to the Middle East region, where more governments are setting ambitious renewable energy targets through a diversified energy mix.
The electrification of industrial processes in energy-intensive industries, such as mining and metals, will also drive electrical infrastructure investments as they upgrade their equipment to improve the efficiency of their operations.
"Global grid modernization investments will grow by 10 percent over the next five years. This is a growth trend we are prepared to support and have begun to engage customers in fast growth regions," said Robert Turko, General Manager, Power Delivery, at GE's Digital Energy Business. "We are not only bringing increased technology capabilities to the region through holistic solutions to meet power needs from generation to consumption, but we also have a local team on the ground focused on regional trends and partnering with customers from day one."
XD Electric is one of China's largest and preeminent HV equipment manufacturers dedicated to the research, application and development of high- and ultra HV transmission and distribution equipment. XD Electric's technology enables customers to transform and direct the flow of power for industrial, commercial and residential users.
GE is a global provider of grid automation systems that enhance customers' power reliability and operating efficiency. GE's global reach, domain expertise and strong customer relationships in both utility and energy-intensive industries such as oil and gas, metals and mining will help the partnership broaden its customer footprint.
Citigroup acted as sole financial advisor to GE on this transaction. Weil, Gotshal & Manges LLP and Fangda Partners are GE's lead legal advisers.
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