Export financing crucial for suppliers in the geothermal sector
Los Azufres geothermal power plant, Mexico (source: Alstom)
Alexander Richter
16 Sep 2015
With export financing now being a crucial element in securing successful bids for power equipment supply contracts, GE has decided to move parts of its activities to Europe in order to qualify for export financing from French export finance agency COFACE.
With the increasing internationalisation of renewable energy development, financing more than ever is crucial in getting projects of the ground and sell equipment. We have seen this in the geothermal arena with export credits often determining the choice of turbines for projects.
So it might not be surprising to now read about a milestone decision by GE, following its acquisition of French group Alstom. GE has decided to move production and jobs for turbines and generators from the U.S. to Europe.
In a statement yesterday, GE reports it is bidding on $11 billion of projects that require export financing. After reaching an agreement with French export credit agency COFACE to provide a line of credit for global power projects, GEA plans to move final assembly activities from the U.S. to Hungary and China. With the authorisation of the U.S. Export Import Bank (Ex-Im) having expired July 1, 2015, the U.S. is now the only major economy in the world without an Export Bank.
While there are no news on how the GE, Alstom merger will effect the geothermal business of particularly Alstom, it should be clear driven by the European side of the business. So it will be interesting to see this plays out. For now, it seems suppliers from the U.S. will have a tough stand against international competition in the growth markets for the power sector.
Turbine producers from Europe, Japan and elsewhere often will have to provide not only export-financing, but often also finance projects fully in order to sell their products.
Source: GE News Room
