Show notes
This week we discuss the recent GE Vernova investor call, discussing the company's current situation, future plans, and how the US market will react. We also cover an article by TRESIOS from PES Wind Magazine about their offshore construction business. Join us at The Wind Energy O&M Australia Conference - https://www.windaustralia.com
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Allen Hall: In an extraordinary display of memory and pattern recognition, a man who doesn't speak Spanish has dominated the Spanish World Scrabble Championships. Nigel Richards, a New Zealander living in Malaysia, defeated 145 competitors and won 22 consecutive matches to claim the title in Grenada, Spain. Known as the quote, Tiger Woods of Scrabble, Richards has mastered the game across multiple languages despite not speaking them.
He has a unique ability to memorize dictionaries without understanding anything what the words mean, and has led him to winning nearly 200 tournaments, including French in 2015 and 2018. Now, that is crazy, guys. Did you ever meet somebody with that kind of photographic memory, and you're like, that is a very odd person?
If you have done it, if you've won championships in Spanish and French, and I assume English, wow, that is a unique person.
Joel Saxum: Is there money to be won playing Scrabble?
Allen Hall: Evidently there is because he's won so many championships. It's the, from all the information I could find online he, this guy is super human in how he does this.
According to some of his friends, he can look at a page of words and remember all those words. It's like a photographic memory, even though he couldn't carry a conversation in French or Spanish at all, he can't carry one. It's just understanding how words go together.
Phil Totaro: It's technically a I forget specifically what it's called, but it's actually technically a form of autism that allows you to do that.
allows a person to do that. It's still an astonishing talent. So
Joel Saxum: what I would say to as a segue into the show today is some people have an optimized electrical grid in their brain and it works better.
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Allen Hall: In the latest edition of PES Wind Magazine, which you can download at PESWind. com, a good article from Tresios, and I did not know that business very well until I read the article. It's a big subsea construction and marine services company. And they've actually reorganized themselves because there's so much offshore wind work that they're, they have divided into basically two sections to do that, subseas construction and marine services.
And they have a third division because there's so much work in offshore wind. They have a sort of a human resources division. It's a company, workforce company called Mr. James. You can go to the Mr. James website. It's actually quite good. It's one of the better human resource workforce websites that I've ever seen, honestly.
It's pretty cool. So when you're looking for people to work at sea, Mr. James is not a bad place to go look for those people. But Joel the interesting thing about this is that there's so much activity around wind. And you just don't see all this work that's happening, but it's major construction work.
You got to know what you're doing out there and Trecios is one of those companies. The
Joel Saxum: tough thing with
Allen Hall: offshore
Joel Saxum: construction is like the general public doesn't see it, right? As for understanding, like you drive down the highway, high rises going up, cranes, big machines building the highway.
So it's so visible and you can understand it a little bit. But when you go offshore, it's just, it's it's imaginary to most people to see Oh, you see these turbines in the water. Great. The one I always compare it to Allen, you and I talk about this often is like the subsea oil and gas infrastructures.
Same thing with wind. Like you see these towers and the big blades up there, but you don't see all the stuff that happens below the surface. The pile driving, the rock dumps, the cable lays, the trenching, all of the geo geophysical work that has to be done beforehand. There's so much to do there and it's inherently complex, right?
Because almost everything you do outside of basically an offshore wind driving monopiles is remote work. So you're working with ROVs. You don't actually have people on it. You have, robotics and you're dealing in sea states and keeping the vessel steady and customizing that vessel to be able to work with the kit that you need for that specific job.
So having people like Tresios that have a lot of experience, it says, we're reading the article here, doing a little research, the founders both previously worked for Allseas, huge offshore construction company. So these kinds of people that you grab for a construction project like this, they have these skill sets.
They're very specialized, right? I've been on projects before. We're like, Hey, we need this one person to come in because they have the knowledge of how to do this. And that person costs 2, 500 a day. That's the kind of crazy stuff that happens in offshore construction. Having a partner like Trecios, it has a lot of experience.
They have the body shop part figured out. They know how to upfit vessels. They know how to go from feed study all the way through construction as a full on EPC. They're the partner, the kind of partner you want to have.
Allen Hall: Yeah. It's quite remarkable. So if you want to learn all the things that TRESIOS is doing, just go to peswind.com
,download your issue and give it a good read. There's a lot of great articles in this issue. This. This quarter.
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Allen Hall: right, GE just held an investor update as we're recording this. It happened last night. Very interesting.
GE Vernova is broken into the three main parts. They have a gas turbine division. They have an a switch transformer division. And they have the wind energy division. So they call different titles, but it's essentially it. So she, understand what products are they're serving there. So it's really three different businesses that are all wrapped together, but it's all about electrification.
That's where their emphasis is. That business is seeing tremendous growth in gas turbines, and it's seeing really good growth in electrification, the switchgear and transformers that it's delivering and the the, Outlook for that is fantastic. They're sold out through 2028 for a lot of equipment already.
They're selling slots into 2029 right now, but the wind division, not so much. All right. So the wind divisions is reporting about a negative 10 and a half a percent EBITDA margin in 2023, but they're expecting that to be have about a 50 percent improvement in 2024. Still negative, but half what it was, which is good.
And they're projecting EBITDA losses between 200 and 400 million into 2025. And that is all, or vastly all, from offshore. The offshore wind business is really dragging them down in terms of numbers, right? So they had the blade break at Dogger Bank and they had blades break at Vineyard. That and the slowdown of those projects really are pushing them to the right, which they wanted to have done sometime next year.
Whatever now you're talking about. 26 ish timeframe when they're going to be wrapped up. And that is killing them because you can imagine, Joel, as you pointed out numerous times, ships are expensive and if you're not producing, putting turbines up, you're just spending money. And that's what's happening.
Onshore, which is the real focus here, GE has not taken an order for offshore in 35, 37 months. And they don't plan to take any more, so their focus is onshore. The vast majority of the onshore sales are in the United States, like 80 percent of the business is going to be in the United States, which kind of makes sense.
But the projection of revenue is flat. So 2024 is expected to be flat. It's roughly what it was last year, about almost 10 billion, 9 billion, 10 billion. And they're projecting it's going to be down a little bit in 2025. As I think Phil pointed out a while ago. They're planning to make about 2, 000 wind turbines, and Joel and I had talked to a couple other people and involved with that, and he said, GE's planning to make about 2, 000 wind turbines.
They have the capability to make 4, 000. Their break even's at 1, 000 for onshore. So they're gonna get to 1, 000, be break even, make another 1, 000 more, and that's essentially it. They have a capability to do twice that, but they have no plans to do it right now. Because they're really focused on improving the quality.
And that is the big driver. I mentioned in the Slack chat Also that GE said the word lean probably a thousand times during that hour and a half.