In 2005, General Electric (NYSE:GE) CEO Jeff Immelt announced the creation of “ecomagination, a GE initiative to aggressively bring to market new technologies that will help customers meet pressing environmental challenges.” Through the initiative, GE has doubled research and development spending on cleaner technologies to $1.5 billion annually, developed a thick portfolio of cleaner energy products, and achieved a goal of doubling revenues from cleaner energy products to more than $20 billion a year.
A cocktail of regulatory and consumer pressure and the development of new drilling technology (some of which General Electric helped pioneer) has fueled a fairly rapid evolution in the energy market, and Ecomagination reflects GE’s adaptations to the changes. The program has made GE not just a competitor but a leader in the cleaner-energy revolution, an enormously powerful and profitable position that allows the company to service both the oil and gas industry and the renewable energy industry. This position gives GE an enormously broad revenue base that captures both ends of an extremely large and diverse market.
For example, on one end of the market, GE is establishing deep alliances with major oil and gas companies like Chevron (NYSE:CVX). The two companies announced on February 3 the creation of the Chevron GE Technology Alliance, a partnership designed to develop an commercialize technology for the oil and gas industry. On the other end of the market, GE is building the WattStation EV Charger, a 4-kilowatt wind turbine that powers an EV charging station with a relatively small wind turbine. Wherever people are conducting the business of energy production and consumption, GE is there to sell a product or solve a problem, profiting all the way.
Energy is one of the the fastest-growing markets for General Electric, and through Ecomagination, GE has turned its commitment to the environment into a business machine. The company has sunk nearly $15 billion into the initiative so far, but the investment has been worth it.
At this point, ecomagination is as much a brand as it is anything else. Investors and consumers will have some idea of the nature of any product in the ecomagination portfolio and a pretty good idea of what any ecomagination research and development spending will be used for. On that note, GE is expected to announce another round of funding for the initiative. Reuters reports that Immelt will make the announcement on Monday.
The funding commitment is expected to be for $10 billion, fueling the program through 2020. General Electric’s chief technology officer and head of research told the news service that the money will go toward the development of technologies such as waterless fracking and more efficient gas turbines.