Warsaw, Prague 21 June 2016 - Jeff Immelt, GE’s global CEO, was in Europe last week for a whistle-stop tour that took him to Paris, Berlin, Warsaw and Prague. In Paris, he attended a ‘Minds & Machines’ event that considered how GE is transforming itself into a Digital Industrial Company. In Warsaw and Prague the theme was similar, but with a particular focus on the energy sector in Central & Eastern Europe (CEE). As Jeff’s meetings with representatives of the energy industry in CEE proved, the energy market faces the challenge to navigate between three objectives - security of supply, limitation of environmental impact and economic sustainability. In CEE, it’s a particularly tough challenge for two reasons.
First, one may like it or not, many years will pass before CEE no longer needs energy from coal. As things stand, 52% of total power in CEE comes from coal. Second, despite the influx of EU funding in recent years, 76% of plants in CEE are more than 30 years old. The focus up to now has, quite rightly, been on upgrading existing infrastructure to improve efficiencies and environmental performance, and the Alstom acquisition has significantly expanded GE’s capabilities to meet customers’ needs. Just recently GE completed boiler modernization projects at the plants at Počerady and Mělník I, operated by the ČEZ Group in the Czech Republic. The new technology reduced their nitrogen oxide (NOx) emissions by 60%. Modernization work like this will remain a crucial area of GE’s business in CEE.
However, we are on the cusp of something even bigger. What if we can harness the full potential of the ‘Industrial Internet’ to the energy sector in CEE? What if we were to connect all turbines and boilers to a single data center in the Cloud, thereby delivering just a 1% improvement in performance through big data analysis and plant optimization? It would have a profound impact on all three of the energy market’s core challenges:
Security of supply: It is estimated that the Industrial Internet could improve the efficiency of power plants by 1-2%. Even at the bottom end of this estimate, it therefore delivers 6MW more power from a 600MW plant. If replicated, this could be an important contribution towards ensuring the security of supply.
Limiting the sector’s environmental impact: This also has a significant impact on CO2 emissions as every 1% improvement in efficiency reduces CO2 emissions by 2%.
Economic sustainability: The potential cost savings are mind-blowing too. Power utilities worldwide could save roughly $60 billion in 15 years if the efficiency of all power plants increased by just 1%. This is why we call it the “Power of 1%”.
And we’re putting our money where our mouth is. We are, at high speed, transitioning into a digital company. GE expects to become a $15 billion software business in four years, which would make the company one of top ten software companies worldwide. These are big bets, and we are placing them in CEE too. Out of GE’s six global digital technology centers, GE Hungary’s Digital Hub is the only one in Europe and already has more than 1,000 IT professionals. We are engaged to hire a further 700 digital specialists across the region over the next two years. In this way, we are building on our extensive industrial footprint in CEE with the best software brains the region has to offer.
I am very excited about the Industrial Internet - because it has the potential to help address some of the core economic issues that CEE is facing today: to deliver growth through increased competitiveness and to create more value-added technology. The Industrial Internet could do both of those things, and it is where I think GE will make its most significant contribution to the development of this region over the next 25 years.
Post by Peter Stracar, President & CEO of GE Central & Eastern Europe