It's all in the imagination

16th July 2012


Ecomag

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IEMA

Christine Ottery discovers how GE is successfully pursuing superior economic and environmental performance

General Electric (GE) has proven to be a nimble giant when pushing forward its environmental agenda. One of the world’s biggest companies, with an annual turnover of $150 billion, GE launched its green strategy, called “ecomagination”, in May 2005.

The strategy was designed to increase the growth of the mammoth US corporation, whose operations span energy, aviation, healthcare, finance and technological innovation, while significantly reducing CO2 emissions and water usage.

At the time of its launch, the Washington Post described ecomagination as “the most dramatic example yet of a green revolution that is quietly transforming global business”.

But don’t think that ecomagination is anything less than a savvy business strategy. GE is a commercial beast, and as such its priority is to increase revenue.

Tore Land, director of the international arm of ecomagination, which covers Europe, the Middle East and Africa, says: “It’s all about resolving this false choice we are often presented with, which is that we have to pick between economic success and environmental performance. We very firmly believe that you can have both, and we demonstrate this each and every day with our ecomagination strategy.

“Key customer groups that GE is serving – like the aviation industry, transport industry and utilities – have to become more and more efficient in using natural resources, be it water, be it fossil fuels, be it other resources. But on the other hand they also have to improve their competitiveness.”

Land believes that the innovation at the heart of ecomagination is the recipe to make that happen. Essentially, ecomagination is GE’s strategy to build innovative solutions to environmental challenges, while at the same time driving economic growth.

Facts and figures

The figures tell a convincing story that the plan is working. At the end of June, GE reported that the ecomagination initiative had achieved more than $105 billion in sales and services since its launch in 2005. And, in 2011, GE generated $21 billion in revenues from ecomagination products and services. It also reports that 34 new products and services were added to the ecomagination portfolio in 2011, bringing the overall total to 142.

Announcing the results, Mark Vachon, vice-president of ecomagination, said: “The results we have generated through ecomagination prove we are delivering to our customers what they need most. Whether they are countries, municipalities, companies or individuals, ecomagination is about resource efficiency and increased productivity – ecomagination offers great economics.”

Land explains that the ecomagination portfolio is growing at a rate of 15% a year, twice as fast as the rest of GE. He adds: “As GE is absolutely committed to achieving faster growth, we obviously want to be as big in ecomagination as we can.”

To qualify as for the ecomagination portfolio, products and services must significantly and measurably improve customers’ operating performance or value proposition, as well as their environmental performance. The latter focuses on lowering reliance on fossil fuels; reducing greenhouse-gas (GHG) emissions; and improving energy and resource efficiency.

According to the 2011 ecomagination annual report, GE exceeded every goal it set six years before. Specifically, it managed to lower GHG emissions by 29% compared with the 2004 baseline – when adjusted for divestments and acquisitions. The company also reduced water usage by 25% between 2006 and 2011, with a 13.5% fall reported for 2011 alone.

The ecomagination investment strategy has included spending heavily on wind energy, which has helped the firm hit its target of a $6 billion outlay on renewable energy by 2010. It also put money to a lesser extent into solar and hydroelectric power generation. These investments, in 14 different countries, created a jump in the proportion of GE’s business unit portfolio in renewables from 6% in 2006 to 30% in 2010.

Overall, in 2010 GE’s wind turbines were estimated to have reduced GHG emissions equivalent to 45.4 million metric tonnes of CO2 (tCO2). Land says that GE has installed more than 17,000 wind turbines to date, making the company one of the market leaders in the industry.

Many more projects are in the pipeline, such as the Shepherds Flat wind farm in Oregon using GE’s 2.5MW wind turbines, which will be one of the largest land-based wind farms in the world when completed in August 2012. Shepherds Flat is projected to save 1.5 million tCO2 a year.

Another important focus for GE has been saving energy, both through efficiencies in its own operations and by improving the performance of its products. For instance, the CFM LEAP aviation engine has been designed to improve fuel efficiency by 15% and consequently cuts CO2 emissions by 15% in comparison with previous CFM models. Obviously, this reduces costs for the airline as well as benefiting the environment.

Another example is GE’s gas engines, which are suited to combined heat and power (CHP). In May 2012, the first of two new 2MW Jenbacher engines was installed at a new CHP plant to power and heat the massive King’s Cross development in London, which will include housing, council buildings and retail spaces.

These engines will supply all of the development’s heat and offset almost 80% of its electricity. This is expected to cut CO2 emissions by one-third compared with a similar development using a conventional power source.

Adopting new technologies has also played an important role in improving GE’s own energy usage, alongside retrofitting buildings and employee engagement programmes. Overall, the company has achieved a 19% reduction in energy consumption since 2004, cutting GHG emissions by 5.09 million tCO2.

Innovation is the name of the game

Of course, innovation has to be funded. Since the start of ecomagination, GE has poured $5 billion into research and development. But innovation is not only about spending money on developing new technologies; it is also about harnessing the resources of one of the world’s largest companies, and cross-pollinating ideas throughout its various divisions. GE’s latest offering in the realm of electric vehicles (EVs), for example, draws on expertise from its automotive, home and electricity distribution divisions, among others.

The offering encompasses EV cars, charging points, and smart grid technologies – a whole infrastructure. This is includes the WattStation and DuraStation EV charging points. Both types of charger are designed to help accelerate the adoption of plug-in electric vehicles by significantly decreasing the time required for vehicle charging.

There are now iPhone and Android applications to help WattStation customers find their nearest charging point, and to book it in advance and pay through their smartphone. WattStation owners can then track energy use history, the amount of CO2 emissions saved and which stations are used most often, to inform future placement strategy.

This EV infrastructure is intended to go global: “Ecomagination has been tremendously helpful with getting us to be able to reach out to stakeholders in different regions around the world so that we can work together to make it a reality for people who want to own and drive EVs,” says Michael Mahan, product general manager for GE energy’s industrial solutions business.

The DuraStation charging point has already been rolled out in the US, Europe, China and Australia, and was selected by the organising committee of the London 2012 Olympic and Paralympic games to charge the fleet of 200 BMW and Mini electric vehicles that will be used to transport athletes and officials between the various venues.

GE has also launched a wall-mounted version of its WattStation charging point in the US to supplement the original pedestal version, and both are due to be introduced to the UK market in the near future.

Giving start-ups a step-up

Since 2010, it has not only been GE product managers who can benefit from the advantages of GE’s vast size, diversity and technological expertise. Start-ups and individual entrepreneurs can take part in an annual innovation challenge to join the ecomagination portfolio.

The first round of the challenge was themed “powering the grid”, and the second, launched in 2011, is called “powering your home”. Applicants had to send in proposals to get a chance of receiving part of a $200 million fund, co-funded by GE and four venture capital firms – Emerald Technology Ventures; Foundation Capital; Kleiner, Perkins, Caulfield & Byers; and Rockport Capital – as well as securing a possible working partnership with GE.

“So far we have looked at in excess of 5,000 business plans,” says Land. “We have built a world-class portfolio of more than 25 companies. We have invested, together with our venture capital partners, more than $130 million and we keep investing.

“The most common way we operate with companies is that we make an initial investment [minority investment or equity investment] and we build the relationship with the company. When the company is mature enough we invite it to become a commercial partner or some other relationship,” Land explains.

But one company is being acquired outright. Irish-based FMC-Tech, which developed a smart grid technology called an “intelligent line monitoring system”, was acquired by GE last year.

Mike McCormack, formerly of FMC-Tech and now a product manager for GE Digital Energy, explains that it took eight engineers nine years to develop the product, which is a system of sensors that sit on the power line and measure current and conductor temperature.

The data are then sent to a central source, which can help locate faults in the network, increase capacity and make networks more flexible – which is useful for networks fed by renewable-energy sources. He calls it “a nervous system for the distribution network”.

“The product was pretty much developed, almost ready for market, so the marriage was ideal because GE gives this technology global scope and us additional resources in terms of technological development,” McCormack says. The system will be ready for launch by the end of 2012.

Another interesting partnership is one that GE has developed with Oblong Industries, a company working to develop visualisation technology. Imagine dynamic screens similar to those used in the sci-fi film Minority report being used by utility companies to manage huge amounts of data, such as from smart meters.

“The vision is that you basically don’t click on a mouse any more,” explains Land, “You are able to stand in front of a screen and with one gesture you are able to trigger 20 different responses.”

Oblong’s chief executive, Kwin Kramer, says: “Digital systems are only as effective as the people using them. We always say that the smartest computers in a room are between the ears of the people inside. The more that people can see, process and understand their data, the better their decisions are.”

Oblong’s innovation is now being sold as part of Grid IQ – a smart grid solution from GE’s Digital Energy division that utilises software and hardware technologies.

Green leadership

Leading environmentalists have touted GE’s ecomagination strategy as an example of bold, green leadership. “We need to move past the policy disputes of today and take bold action to build a clean energy economy for tomorrow,” writes Eileen Claussen, the president of the Center for Climate and Energy Solutions, formerly the Pew Center on Global Climate Change.

“Fortunately, a handful of leading companies such as GE have committed themselves to doing their part to achieve this goal.”

Land says that even though ecomagination is focused on growing the business, it is not “greenwashing”. “Nothing could be further away from greenwashing, or just being a PR strategy,” he says. “By having the right criteria we can accomplish both improving environmental footprints and the competitiveness of our customers.”

GE has set tough goals for pushing the ecomagination strategy, despite a global recession, serving to underline the company’s commitment to growth via the green economy. It has pledged to continue to grow ecomagination at a rate that is double that of the rest of its business.

In 2010, GE announced a commitment to reduce energy intensity by 50% and water consumption by 25% by 2015. It has also promised to double investment in research and development to $10 billion over the same five-year period.

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