GE Energy is moving its hydro base and hydraulic laboratories to Brazil in an expansion of its joint venture with Inepar


Stay ring

GE Energy recently transferred its hydro global headquarters to Brazil and announced the expansion of a joint venture called ge-hydro Inepar (GEHI), which has been based in the state of São Paulo since 1998. The JV has been a co-operation between GE’s local business General Electric do Brasil Ltda and Brazilian industrial group Inepar S/A Indústria e Construções.

The decision to move GE’s hydro HQ was motivated by Brazil being one of the largest hydro generation markets in the world, GEHI says. It adds that the JV’s “excellent” economic results as well as its performance in quality and deliverance were other determining factors in choosing Brazil to be global HQ also of the expanded GEHI.

Initially conceived to attend the Brazilian market, GEHI has been present in recent years in many of the main hydroelectric projects in Brazil and Latin America. The expanded JV will now serve beyond the region with responsibility for covering the entire global hydro generation market.

A large part of GEHI operates in Campinas, in São Paulo state. Following the strategic change by GE Hydro, the JV’s unit in Araraquara – one of the most important industrial centres of Latin America – will be home to a good part of its expanded structure. The investment in Araraquara last month attracted local tax incentives in recognition of the boost to employment (adding approximately 300 direct jobs plus many indirect jobs) and income. To guarantee the success of the joint venture, GE Energy is investing heavily in technological and human resources, manufacturing equipment and on the construction of a turbine development hydraulic laboratory.

The JV plans to expand its infrastructure to have the largest turbine and generator manufacturing plant in Latin America, with the capacity to process thousands of tonnes of equipment each month. It plans to double its industrial production capacity over approximately next three years, including benefiting from the transfer of GE Hydro manufacturing equipment. Under the changes to its hydropower operations, GE Hydro will also close its workshop in Lachine, in Montreal, Canada, by the middle of this year.

GE Energy is progressing a technology transfer programme with the JV that involves transferring design documentation, reference projects, training of GEHI engineers in all the activities related to design, manufacturing and installation of turbines and generators. The training of the hydraulic engineering team is on course to be completed by September this year, GEHI says.

The investment move is a strategic step with both industrial groups investing more capital in GEHI. While the percentage ownership split in GEHI was not immediately determined at the outset of the new strategy it was agreed that GE would be the majority partner, and IWP&DC understands that the capital invested by the group will be accounted for primarily in equipment and facilities, the minority of the equity being cash. The total being invested is approximately US$140M.

Much of the equipment and facilities are for the JV’s new hydraulics lab, the first in Brazil, which GE is funding. The laboratory will, though, house equipment from both firms. Construction of the facility and installation of equipment is expected to take approximately two years. The lab will have two universal test stands for low to high head models. The first test stand is to be in place by September 2009 and be able to test any type of turbine (Francis, Kaplan, Bulb, Pelton, reversed pump turbine, etc). The second test stand will be used for the research and development of new products.

The lab will receive the majority of GE Hydro’s model references from across the world. Until the technological transfer process is concluded, however, in terms of design, including the development of hydraulic profiles, the hydraulic work will be conducted in Finland, Norway and the new Montreal Engineering Center (MEC).

With respect to future operations, GE and Inepar will, within the JV, set up mechanisms to ensure that optimum risk measures are used in line with the scale of contracts being sought. It could be that for particularly big project bids the JV would be backed by GE with commensurate requirements.

Beyond Brazil HQ

While Brazil will be the prime base for GE Energy’s future global activities in hydropower, the group will have some assets elsewhere, such as in Canada and in parts of Scandinavia.

GE is working on the creation of the Montreal Engineering Center (MEC), composed of key people in Lachine, and this is to continue to support all the required GE Hydro activities. The engineering and project management functions are working to complete GE Hydro’s local, and international, backlog of hydropower work.

GEHI also incorporated the GE Hydro operations in Sweden and Finland, including the manufacturing facility and a hydraulic test lab in Tampere, Finland (low head lab) and has negotiated an agreement to use Rainpower ASA’s lab (formerly GE Norway’s) in Trondheim, Norway, and engineering capability for high head until the technological transfer process is completed.

Rainpower was launched in November 2007 following the transfer of the lab from GE to its owner, the Norwegian industrial group Nordheim Larsen Industrier (NLI). The owner had previously acquired the workshop in Sorumsand, near Oslo, from GE. Previously, in 1999, GE had acquired the lab and workshop from Kvaerner Energy and, in effect, the team and assets of Kvaerner Energy are now in Rainpower, which is now based in Kjeller, near Oslo.

Under the changes, GE says its hydro staff will have the opportunity of working with the JV or possibly other energy sectors within GE.

In China, the workshop of GE Hydro’s local market JV is completing its backlog of hydro orders and the plan is that afterwards it will move on to serve other energy sectors.

GE’s strategic choices in hydro

GE is a diversified technology, media and financial services company with products and services ranging from aircraft engines, power generation, water processing and security technology to diagnostic imaging, corporate and consumer credit, television media and advanced materials. The group provides its services to more than 100 countries and employs more than 300,000 people worldwide.
A key business in the US group is GE Energy, which supplies to the coal, oil, natural gas, nuclear and renewable energy sectors, including hydro through GE Hydro. In total, the Atlanta, Georgia-based group had revenues of US$19B in 2006. In that same year the group decided to sell most of its hydro business and a deal was made with the Pescarmona Group of Companies, the parent of Argentina-based Impsa. The sale had until the end of May 2007 to be completed but did not happen.
In the meantime, GE had come to recognise the growing prospects for hydro sector amongst the booming renewables industries, the chief focus of which is wind power in the groupâ€â„¢s corporate energy briefings. GE Hydroâ€â„¢s management worked up a new business plan, the outcome of which was a firm determination for the group to remain in hydro but refocus the base and location, choosing to build upon the strengths of the GEHI JV in Brazil.

Major project activities of GE Hydro & GEHI in Latin America

Prior to the major work underway for the 241MW Ṣo Salvador project in Brazil, GE Hydro and GEHIӪs experience in hydro has seen work on 42 engagements in a range on supply roles, providing 26 new units, 9 component, 8 refurbishment services and 1 runner replacement. In total, the JV has worked on 92 units with a total installed capacity of 14GW.
The recent (since the early 1990s) larger turbines have been supplied to the Serra da Mesa, Tucurui II, Salto Caxias and Campos Novos plants. These have all been above 150MW, and the firms have supplied many units below that threshold.
GE Hydro and the JV has also undertaken designs for 80 hydrogenerators for 160 units totalling 14,000MVA. The largest relatively recent generators supplied were for the biggest, Ertan (612MVA) scheme in China as well as Tucurui II, Campos Novos, Pangue and Porto Primavera plants. At the smaller end of the range were generators for the Itiquira I, Foz do Chopim, Muniz Freire, Jordao and Mogi-Guacu plants.
For the Campos Novos plant on the Canoas River, in the state of Santa Catarina in southern Brazil, three units – Francis turbines (300MW; net head 175m), and generators (311MVA; 200rpm) – were supplied and commissioned in the first quarter of 2007. The plant was awarded in auction to Enercan for approximately US$840M. The project was initiated in 2001 and has a 202m high CFRD dam, and its construction challenges are described on p27 of this issue of IWP&DC.
Currently, work is underway on a landmark contract won by GEHI in late 2006 to supply the two 121.6MW Kaplan turbines as well as generators and other electromechanical equipment required for the Sao Salvador plant being built by Suez group. The plant is under construction on Tocantins river, near Sao Salvador in Tocantins state in northern Brazil. The two units are scheduled to enter commercial operation in January and March next year.
Another project the JV is furnishing is the 67MW Monjolinho plant at the reservoir of the same name on Passo Fundo river, near Nonoai, in the southern state of Rio Grande do Sul. Under a US$5.8M (2004 prices) contract GEHI will provide two 35MW rated Francis turbines and generators (37.5MVA). The engineer procurement and construction (EPC) contractor is Engevix Engenharia.