Renewable energy, energy storage, efficiency, and energy management all face an uphill battle against establishment utility, oil, and gas interests in the U.S. But they're slowly winning the battle piece by piece, both economically and politically, disrupting the energy business as we know it. The problem is that it's usually small companies with a singular focus going up against the world's energy giants, making it a tough war to win.
If there's one established industrial giant that can change that dynamic and play a major role in innovating the future of energy, it's the company that created the light bulb in the first place: General Electric (NYSE:GE). That's why CEO Jeff Immelt's recent announcement that everything from LED lighting, solar, energy storage, EV charging, and GE Predix will move to a new company called Current is such a big deal. GE expects this $1 billion business today will have $5 billion in revenue by 2020, and if it executes correctly, that could just be the start for this company.
Primed for disruption
One of the challenges energy companies face today is that they're underfunded and don't bring a full suite of products to the fight against established energy interests. SolarCity can offer you solar energy for less than the utility, but if net metering rules change the company's business model would be sunk. Tesla Motors can offer you an electric vehicle but (in most cases) can't integrate smartly to your solar system or home, knowing when to charge your car so electricity isn't sent back to the grid.
There's also a disparate group of companies offering efficiency, energy management, demand response, and other services. It's a confusing mess and there's value in each single component, but they're better together than they are separately and no one offers a full suite of products that could make energy smarter, better, and easier. At least not yet.
GE could change that with Current. The vision of the company is to work with businesses -- Walgreens, Simon Property Group, Hilton Worldwide, and Intel are early partners -- to solve energy needs while increasing control and independence, all while saving costs. It's a holistic approach to energy that no one but GE can pull off at the moment.
Talk is cheap
Integrating new energy technology isn't a new concept in energy. NRG Energy said it was building the energy company of the future, combining giant renewable energy systems with EV chargers, consumer products, and home solar and energy management. But the company abandoned those plans and will spin them off into a new company with far less capital.
GE previously invested millions into solar energy, only to sell those assets to First Solar when it decided that getting into utility scale solar power wasn't in its best interest.
While GE can disrupt the energy space by bringing a full suite of energy solutions to customers, it's not certain that GE will remain invested in this business long enough to see fruit from this potential. Talk is cheap in renewable energy and efficiency, so we'll see what GE actually does.
A potential growth platform
GE has the potential to be a disruptive force in energy and without some of the conflicts that have made disruptive businesses tough for tradition energy companies (utilities as well as oil and gas) to house. The company doesn't own fossil fuel assets -- it just builds them, and its big interest is expanding its reach in energy, not undercutting other parts of its business like a fossil fuel utility might do with renewables.
In fact, it may be a necessity for GE to play a bigger role in these new technologies if the growth in wind and solar means less demand for fossil fuel or nuclear generators in the future. At the very least, this is an energy behemoth to watch in the future and one that could play a bigger-than-expected role in paving the path to a renewable energy future.