1 Company At The Cutting Edge Of The Energy Business
The way we make and use energy is changing rapidly. These changes include everything from windmills to natural gas trains. Industrial giant General Electric seems to be taking part in more than a few of the hottest areas, making it a virtual one-stop shop for exposure to the changing energy landscape.
Natural gas
Natural gas is an example of a changing industry in which GE has been planting seeds. The company is working with Clean Energy Fuels to foster the adoption of natural gas as a transportation fuel in the long-haul trucking industry. Clean Energy Fuels, at great cost, has been building out the fueling infrastructure needed to support a nationwide trucking fleet. Only that fleet doesn't yet exist on a large enough scale to make that investment profitable.
Clean Energy Fuels and GE are working together on multiple fronts. For example, Clean Energy purchased MicroLNG plants from GE's Oil & Gas arm to help provide the fuel to its stations. A more recent deal, however, is out of GE's finance arm. The conglomerate is going to help finance the purchase of LNG powered trucks for companies that sign fuel agreements with Clean Energy.
With such a broad reach, General Electric can touch multiple aspects of the same trend. The Clean Energy partnerships is just one example. GE is also set to begin testing a kit that would allow trains to run on LNG with CSX . According to the railroad, "LNG technology has the potential to offer one of the most significant developments in railroading since the transition from steam to diesel in the 1950s."
Once again, GE is at the forefront of a potentially historic shift. Only this time it's out of the company's Transportation business. The trucks that Clean Energy is looking to serve and the trains that CSX and others operate use 42 billion gallons of diesel a year, according to GE. With historically low natural gas prices, using LNG for long-haul trucks and trains will allow companies to both save on fuel costs and reduce their pollution footprints.
Being at the forefront of this "historic" shift in multiple ways puts GE in a good position to ride the natural gas wave. Although, a company like Clean Energy may be cutting edge, GE's diversified business gives it more ways to benefit.
How about another example...
And natural gas is just one of the energy revolutions that GE is helping to shape. For example, GE just inked a deal to install software at wind farms operated by E.ON . E.ON lays claim to being the third largest offshore wind company in the world and the eighth largest onshore. The new technology is expected to increase energy output by as much as 5% from the company's over 450 GE turbines.
According the companies, that's like adding 19 new turbines. But one of the most interesting twists to the deal is that GE only gets paid for increased output. That's the type of deal that only a large and financially strong company could afford to put in place.
No shortage of ideas
The partnerships with E.ON, Clean Energy, and CSX are just a trio of examples of how GE is working to change how the world makes and consumes energy. It's also working with Sasol to clean water and, at the same time, generate biogas, and on home fueling stations for natural gas powered consumer vehicles.
Basically, if you are looking to invest in new advances in the energy space, GE gives you broad exposure. Although it may not have the upside of a focused company like Clean Energy, GE's diversification limits risk while still providing notable upside potential. And you can collect an around 3% yield along the way. If you are a conservative investor looking to invest in the changing energy landscape, GE is worth a deeper dive.
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The article 1 Company At The Cutting Edge Of The Energy Business originally appeared on Fool.com.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Clean Energy Fuels and Sasol. The Motley Fool owns shares of CSX and General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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