Today General Electric announced that it would be investing $72 million in a power plant in Mexico to provide electricity to a natural gas processing plant owned by state-run Petroleos Mexicanos in Villahermosa, Tabasco. Investing $108 million in the 333 mw power plant alongside G.E. is Spanish company Abengoa.  In Mexico, G.E. will get back its equity capital and then some. It has lined up $460 million in debt from a consortium of banks to finance construction, which will involve installing two G.E. Frame 7FA gas turbines. Pemex has agreed to buy electricity from the plant for the next 20 years. G.E. Energy Financial Services owns $400 million in energy investments in Mexico.  The power plant itself is nothing new or unusual. What is interesting is that this project once again showcases G.E.'s unusual version of vendor financing--where G.E. co-owns a power project and hires itself to build it. In effect, G.E. is simply using its products as currency to acquire an (often tax-advantaged) income stream.  This is only the latest in G.E.'s string of self-financed power projects. A few months ago G.E. invested $117 million alongside Horizon Wind Energy for an equity stake in an Oklahoma wind farm. G.E.'s cash will help pay G.E. for the 60-odd wind turbines that will go into the 99 mw wind project, which has a 20-year contract to supply electricity for the Public Service Company of Oklahoma.  And in March G.E. said it will invest $150 million for a 30% interest in a liquefied natural gas receiving terminal on the Mississippi coast. G.E.'s partners are El Paso and Sonangol, the state oil and gas company of Angola.  A spokesperson says that no G.E. technology will be used in the construction of the LNG plant, and that half of G.E.'s investments like this don't involve the purchase of G.E. gear. Well, perhaps not directly. But the gas plant in Angola that will likely supply the LNG uses G.E. Frame 6 and Frame 7 turbines.  Worldwide G.E. holds equity stakes in power projects that produce 26 gigawatts. By comparison, utility giant Exelon owns 33 gigawatts of power plants.  And in the oil and gas business G.E. owns a surprising 30,000 miles of natural gas pipelines in the U.S. through companies like Regency Energy Partners. In February 2009 it invested $150 million with ATP Oil & Gas to buy a 49% stake in a deepwater Gulf of Mexico production platform.  Through its G.E. Energy Financial Services unit it owns more than $1.5 billion in oil and gas reserves that produce 90 million cubic feet of gas and 26,000 barrels of oil a day. In February it paid $137 million to acquire reserves in North Dakota. All this equates to a lot of captive opportunities to push products like pumps and compressors and blowout preventers. Hiring yourself is a pretty cool way to drum up business, huh?  Who knew that G.E. had such a big oil and gas (and wind and pipelines) company in the palm of its hand? We've requested an interview with Alex Urquhart, chief executive of G.E. Energy Financial Services to learn more about G.E.'s long-term strategy for vertically integrating its energy projects, but a spokesperson said "this is not the right time for such a story, from our standpoint."  That's too bad, because it's a neat strategy. Don't we all wish we had the wherewithal to finance ourselves to hire ourselves to work for ourselves?  Yet I can't help but wonder, how many of these projects (especially in wind turbines) wouldn't be economically viable if it weren't for G.E.'s willingness to subsidize upfront costs in exchange for a decades-long payback?
G.E. owns the equivalent of a big oil and gas company and a giant electric power utility. Good way to drive sales.