Hours before Donald Trump was sworn in as president, General Electric Co. Chairman and CEO Jeffrey Immelt told Wall Street analysts that the outcome of the presidential election had not changed the company's assessment that the country's wind power industry will continue growing over the next few years, adding that an important federal tax incentive is "pretty much locked in."
There has been apprehension since Trump's victory that the new administration could derail the renewable energy sector by pulling back on efforts to fight climate change or by pushing Congress to eliminate tax credits for wind and solar development. After Trump was sworn in, the White House website said Trump plans to tear up President Barack Obama's Climate Action Plan, and that the administration will "embrace the shale oil and gas revolution" while "reviving America's coal industry." No mention was made of renewables, which accounted for more than half of new power capacity additions in the U.S. last year.
Ahead of the inauguration, renewable energy executives expressed confidence that falling technology costs and local economic benefits would buoy the industry and protect it from political attacks. Renewables are the cheapest source of energy in some parts of the country.
"We expect renewables to have a solid 2017," GE Senior Vice President and CFO Jeffrey Bornstein said Jan. 20 on an earnings conference call.
GE's renewable energy division earned $163 million during the fourth quarter of 2016 as revenue increased 29% to $2.5 billion. Along with the company's aviation and healthcare divisions, the renewables segment turned in a "very strong" performance last year, Immelt said.
Overall, GE's net earnings fell 45% from a year earlier to $3.49 billion, or 39 cents per share, on $33.09 billion in revenue. The results were worse than analysts expected.
"GE executed well in a slow-growth and volatile environment," Immelt said, adding, "We see optimism in the United States." GE shares were down 1.8% at $30.65 in afternoon trading on Jan. 20.
GE received orders for 1,180 wind turbines during the fourth quarter, up from 827 a year earlier. It shipped 786 turbines compared to 847 a year earlier. Bornstein expects the company to ship around 3,000 turbines this year, in line with last year's results.
Repowering, or upgrading older wind turbines in the field, was also credited with driving growth in the renewable energy division. The company expects that "momentum" to continue, Bornstein said.
GE is in the process of acquiring LM Wind Power to give the conglomerate the ability to insource design and manufacturing of the blades for its wind turbines. The $1.65 billion deal, which is expected to close in the first half of 2017, should help drive double-digit earnings growth in the renewable energy division this year, Bornstein said.
Asked on the conference call about the election's potential impact on GE's various business segments, including power and renewables, Immelt said he has not seen "much change so far." He expressed doubt that Congress would eliminate the production tax credit for wind development, which is already scheduled to phase out by 2020, and the company continues to believe that natural gas will be "a baseload technology in the future."
Outside of the U.S., "I really haven't seen much change in interplay post the election in terms of what our customers are saying and how they're thinking," Immelt said.