TOKYO (Nikkei)--Toshiba Corp. (6502.TO) and General Electric Co.
will begin discussions about forming a joint venture for the
development and sale of fossil-fuel power equipment, The Nikkei
reported in its Thursday morning edition.
The two firms are seen taking equal stakes in the unit, which
may be launched as early as this year.
A deal would mark another instance in which
heavy-electric-machinery firms combine their strengths in such
equipment to gain an edge in a highly competitive market. Last
November, Mitsubishi Heavy Industries Ltd. (7011.TO) and Hitachi
Ltd. (6501.TO) decided to integrate their power equipment
businesses.
GE controls roughly 35% of the global market for large gas
turbines that are the core component of natural gas-fueled power
plants, vying for the lead with Germany's Siemens AG. The U.S. firm
developed a gas turbine with record efficiency last September.
Meanwhile, Toshiba builds generators that convert the rotation of
turbines into electricity, and it also constructs power plants.
Toshiba and GE aim to jointly develop cutting-edge, highly
efficient combined cycle gas turbine equipment. The plants are seen
having outputs of up to 1 million kilowatts, roughly equivalent to
a nuclear reactor.
The firms anticipate a boost in orders stemming from sales
synergies. Toshiba has ties with Japanese utilities that are
rushing to build new fossil-fuel power plants following the 2011
nuclear accident, and it also has major clients in Thailand and
other Southeast Asian markets. GE has powerful sales networks in
the U.S., Europe and such emerging markets as India. Demand is seen
growing in the U.S., where inexpensive shale gas has become widely
available, and in emerging markets enjoying economic growth.
The global output capacity of fossil-fuel power plants in 2035
is expected to be 70% higher than the 2009 level. This projected
increase is equivalent to the output of more than 2,000 large power
plants. And facilities that use natural gas, which emit half the
carbon dioxide as those burning coal, are expected to become
mainstream.
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