General Electric is leaning into the future of the electricity grid and electric vehicles with a new acquisition.
On Tuesday, GE (ticker: GE) announced its GE Digital business is acquiring Opus One. Opus makes software for managing distributed power assets such as energy storage, solar power generation, and wind farms. Terms weren’t disclosed.
The deal gives GE’s energy business a high-margin software-based solution that its customers can use to manage the grid’s transition to higher levels of renewable power generation.
Having more wind- and solar-based power generation makes managing the grid more complicated. Wind assets aren’t always located near where power is demanded. What’s more, renewable solutions can require energy storage—like backup batteries—to make sure enough power is available during peak demand.
Electric vehicles will also drive the need for more sophisticated grid management software. EVs, essentially, take power demand satisfied by burning gasoline and instead place it back onto the electricity grid. EV penetration in the U.S. is low now, but the transition to EVs will shift things like total demand and peak demand for electricity.
“Electric utilities around the world face new obstacles with the rapid growth of renewables and [distributed generating resources],” said Jim Walsh, general manager of GE Digital’s Grid Software business, in a company news release. “With increased demand for renewable energy and electric vehicles in every region, challenges for grid and market operators are more acute every day.”
GE Digital, the acquiring division, will be part of the GE power generation business. GE is splitting in to three companies over the coming two years: One dedicated to aerospace, another to healthcare, and a third to power generation. The power generation business also includes things such as GE’s natural gas turbine business and its wind power business.
GE hasn’t been making a lot of acquisitions lately. The company has been more focused on selling assets to repair its ailing balance sheet. But after three years of sales and repair, with debt paid back in the range of $75 billion, the company seems to be considering playing offense again. GE has announced or completed a handful of small deals over the past few quarters.
The deal is a small positive for shares, but GE stock is still in the penalty box with investors. Shares are up about 4% year to date, trailing behind the 22% and 14% comparable, respective returns of the S&P 500 and Dow Jones Industrial Average.
GE bulls will hope the three-way split—as well as small deals to add key products—will boost stock price momentum going into 2022.
Write to Al Root at [email protected]
