Please ensure Javascript is enabled for purposes of website accessibility

General Electric to Stop Building New Coal Plant Equipment as Renewables Take Focus

By John Bromels – Sep 21, 2020 at 2:20PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's another nail in the coffin for the coal industry.

General Electric (GE 1.90%) announced on Monday that it would exit the "new build coal power market," in yet another blow to the troubled coal industry.

In a press release, the company said it would "work with customers on existing obligations," which it expected would include servicing equipment at existing plants. According to the release, though, the exit could include divestitures, site closings, and job impacts.

A large pile of coal.

Image source: Getty Images.

Chase the money

The U.S. coal industry has been in decline for years, according to data from the U.S. Energy Information Agency (EIA). Consumption peaked in 2007 at 1.1 billion short tons and since then has declined to just 587.3 million short tons per year as of 2019. U.S. coal production has seen similar declines. 

Russell Stokes, the CEO of GE's power businesses, said in a statement that the company was repositioning its portfolio away from energy markets in decline. "With the continued transformation of GE, we are focused on power generation businesses that have attractive economics and a growth trajectory," he said. While he didn't explicitly say that coal doesn't meet those parameters, it was certainly implied. 

Portfolio changes

GE has been making major changes to its portfolio over the past several years, divesting underperforming businesses like appliances (sold to Haier in 2016), oil and gas (merged with Baker Hughes and spun off in 2019), and transportation (merged with Wabtec in 2019). 

With the change, GE's power portfolio will primarily consist of making and servicing wind turbines, steam turbines for natural gas and nuclear power plants, and power-management equipment. 

John Bromels owns shares of General Electric. The Motley Fool owns shares of and recommends Westinghouse Air Brake Technologies. The Motley Fool has a disclosure policy.

Stocks Mentioned

General Electric Stock Quote
General Electric
$86.88 (1.90%) $1.62
Westinghouse Air Brake Technologies Stock Quote
Westinghouse Air Brake Technologies
$103.38 (0.33%) $0.34
Baker Hughes Stock Quote
Baker Hughes
$29.51 (0.85%) $0.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.