To help modernise and expand Australia’s electric grid, GE and XD Electric Group have announced the official formation of a new partnership that combines GE’s grid automation capabilities with XD Electric’s portfolio of high-voltage power equipment.

Originally announced in May 2012, the partnership expands GE’s industry capabilities as a leading provider of transmission and distribution solutions and creates a new global competitor to provide customers with state of the art high-voltage technology offerings in a $100 billion industry.

GE’s Digital Energy business general manager of Australia and New Zealand Matt McKenzie says today’s announcement would help Australian utilities meet standards of reliability and efficiency, as growing demand and a more rapid deployment of off-grid generation requires the replacement and reinforcement of electricity assets and networks.

At the same time, the bi-partisan Renewable Energy Target is working to ensure 20% of Australia’s electricity comes from renewable sources by 2020.

“Continued investment is needed in grid infrastructure to replace ageing assets and networks while integrating renewable energy sources and modernising Australia’s grid,” Matt says.

“As more wind, solar and geothermal energy enter the mix of generation sources, GE’s new high voltage capabilities will help utilities to integrate renewables into their grid systems in a safe, reliable and cost efficient way. This is particularly important in Australia where electricity prices have risen significantly in recent years largely due to increases in transmission and distribution costs.”

Additionally, differences in demand growth between regions of Australia will lead to greater needs to interconnect the grid, allowing more electricity trading between regions and more tightly integrated energy segments.

“By combining the strengths of both GE and XD Electric, we will provide Australian utilities with flexibility and local expertise to meet their transmission needs,” Matt adds.

“Our investment in XD Electric is core to GE’s long-term commitment to Australia.”

GE Digital Energy business president and chief executive John Lavelle says the partnership put GE and XD Electric in the best position to help utilities and industrial customers upgrade their electrical infrastructure at a time when the world’s electricity demand expected to increase by more than 70% by 2035.

“Global grid modernisation investments will grow by 10% over the next five years,” John says.

“This is a growth trend we are prepared to support and have begun to engage customers in fast-growing regions like Australia.”

The partnership also includes a new joint venture with XD Electric to offer customers in China access to GE’s localised grid automation solutions, as well as GE’s 15 per cent equity stake in XD Electric and a seat on XD’s Board of Directors.

Energy-intensive industries

Energy-intensive industries, which currently account for around 33% of end-use demand in Australia, require large amounts of efficient, reliable and safe power (Link). GE’s and XD’s combined portfolios will help to provide Australian customers in these industries with the high voltage solutions necessary to meet the rapid electrification of industrial processes like mining, metals and petrochemicals.

“Many of our mining and resource customers in remote regions of Australia need a combination of high, medium and low voltages to get their entire electrical system connected,” Matt says.

“GE now has a complete portfolio to generate, distribute and convert power more efficiently, at a lower cost and with enhanced productivity gains.”

XD Electric is one of China’s largest and pre-eminent primary equipment manufacturers dedicated to the research, application and development of high and ultra-high voltage transmission and distribution equipment. XD Electric’s technology enables customers to transform and direct the flow of power for industrial, commercial and residential users.

GE is a global provider of grid automation systems that enhance customers’ power reliability and operating efficiency. GE’s global reach, domain expertise and strong customer relationships in both utility and energy-intensive industries such as oil and gas, metals and mining will help the partnership broaden its customer footprint.

Citigroup acted as sole financial advisor to GE on this transaction. Weil, Gotshal & Manges LLP and Fangda Partners are GE’s lead legal advisers.