To understand the future of the energy economy, take a look at GE Vernova. The company’s equipment provides a quarter of the world’s electricity today, and its stock has taken off alongside growing power demand globally. On paper, the company is an old-school industrial firm. In the stock market, it trades like a high-growth technology company.
On the surface, that success appears to be largely from the growing demand for the company’s gas turbine business. But, just like the wider changes happening in the energy system today, GE Vernova’s growth story is much more complicated. The company has thus far avoided investing in new gas turbine factories, its R&D budget has increasingly flowed toward its electrification business, and growing sales to new tech customers have forced out-of-the-box thinking.
“We’re selling the gas turbines, but we’re also selling the electrical equipment, the substation equipment, and we’re selling the software to help them manage the load of the data center connected to our gas turbines,” CEO Scott Strazik tells me on the sidelines of the Milken Global Conference in Beverly Hills this week. “Although we talk a lot about gas, practically speaking, our fastest growing business is electrification.”
Asked for a succinct description of his business today, Strazik frames it around delivering the “resilient electron,” whatever the source of that electron may be. GE Vernova’s edge comes from a refusal to over commit to any singular energy future. In an era of competing narratives that no one can credibly adjudicate, the winning bet may be to sit at the center of all of them.
If you only follow the GE Vernova story loosely, you’re likely to hear a lot about gas. Observers across the energy sector follow every development with the company’s gas turbine order book closely (right now, it is mostly fully subscribed through 2030). On earnings calls, analysts press on whether the company might build more factories, thereby juicing earnings. Climate advocates, of course, have pointed out that the volume of new gas power generation enabled by the company’s product will put climate targets even further out of reach.
It can sometimes sound almost as though the company is a pure-play gas turbine maker. But in striking contrast to some of the customers clamoring for the product, Strazik takes a more measured approach. He has invested in existing gas turbine manufacturing facilities to try squeezing out capacity, but has declined to commit to building new ones, citing a range of uncertainties in the market. Construction firms, gas pipelines, permitting, and grid interconnection are bigger challenges than production capacity. “Even if we could wave a magic wand and create more gas turbines, the reality is, there aren’t pedestals in the world that are simply waiting for the gas turbine,” he says.
There is still growth in gas. In a huge shift, some of the biggest buyers of those turbines—some 20% of contracted capacity globally—are data center developers. Those firms are buying up gas capacity to ensure that data centers can be built quickly, even if that means sidelining climate targets.
Serving this new type of customer has pushed GE Vernova to adapt, says Strazik. In a way, its gas prowess has opened the door for the company to sell other technologies. Big tech demand is pushing GE Vernova further down the power value chain, from turbines and grid equipment outside the data center toward electrical equipment and software closer to the rack.
The company logged $2.4 billion in equipment orders for data centers in the first quarter alone, more than it made in equivalent sales in the entirety of last year. And the company has grown its electrification R&D spending. Analysts project electrification will soon be the company’s second-biggest business. “We aren’t today providing any electrical equipment inside the data center, but we’re working on it,” he says.
Clean tech provides yet another source of optionality. Tech companies, for example, are increasingly ordering generators from GE Vernova outfitted for potential future carbon capture (though many barriers remain to actually retrofitting them so they can do that). The company has also made a long-term bet on small modular nuclear reactors (SMRs) as it works with partners to build its first in Canada and potentially many more in the U.S. The goal is to rebuild the nuclear supply chain that has fallen dormant in the U.S. to give SMRs a long-term future. And, at a time when wind has become a dirty word in Washington D.C., Strazik isn’t keen to abandon it. Today’s wind business is mostly servicing and repairing units that have already been installed. In the future, though, it could be something more. “This certainly isn’t the moment, in my view, that you walk from wind,” he says, adding that “it’s clearly at volume bottom, at least in the U.S.”
Gas may be powering GE Vernova’s moment today, but its future growth depends on a much more diverse set of technologies, all running through electrification. It’s something that companies and policymakers should take note of.
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