European Central Bank President Christine Lagarde stressed the importance of the soundness of public finances, in a speech she delivered to ministers responsible for budgets from around the world in Thailand.
She said in her statement before the International Monetary and Financial Committee, which includes finance ministers and central bank governors from around the world, that financial sustainability remains a “fundamental pillar” of broader economic stability, according to Bloomberg News Agency.
Lagarde added: “It is important to maintain sound fiscal policies, including adherence to fiscal rules, and where debt is high, spending priorities must be rearranged, and the efficiency, efficiency and effectiveness of public finances must be enhanced, to rebuild protective barriers.”
She added: “Governments must seek to ensure that any fiscal response to the energy shock is temporary, targeted, and tailored.”
Lagarde's comments come after a week of tense discussions in the Thai capital, where the International Monetary Fund held its annual meetings. Discussions focused on the risks surrounding the global economy as it faces increasing levels of debt, a revolution in artificial intelligence, and increasing complexities in the geopolitical arena.
Global demand for electricity is increasing as artificial intelligence applications and data centers expand and industrial activity grows, raising the need for additional generation capacity and more efficient and reliable electricity transmission and distribution networks. In the face of this demand, GE Vernova intends to invest about $11 billion in manufacturing, research and development until 2028, as part of a plan to raise its annual gas turbine production capacity to 30 gigawatts by 2030.
The company's president in Saudi Arabia, Hisham Al-Bahkali, told Asharq Al-Awsat that the acceleration in demand for electricity, driven by artificial intelligence, data centers and industrial expansion, reinforces the importance of securing additional sources of energy to ensure security of supply.
GE Vernova is an American global company specializing in energy technologies, electricity generation, and network solutions, and operates in about 100 countries around the world. The company's relationship with Saudi Arabia dates back more than 90 years, as it has a presence in manufacturing, maintenance, research and development, through the “Gemtech” energy technology complex in Dammam and a network solutions facility in Khobar, while its exports from the Kingdom extend to more than 40 countries around the world.
Al-Bahkali added, “Talk about completely dispensing with traditional fuels in favor of clean energy is unrealistic,” noting that the practical solution lies in using traditional and renewable energy sources together, and benefiting from modern technologies that increase electricity production and reduce emissions.
Natural gas keeps pace with increasing demand
Al-Bahkali explained that the digital revolution did not reduce the importance of natural gas, but rather emphasized its necessity, in light of the need of data centers and huge factories for continuous and guaranteed electrical current throughout the day, in parallel with the expansion of solar and wind energy projects.
He said that modern gas stations are no longer limited to basic electricity generation, but have become an auxiliary element that achieves balance in the energy system, allowing countries to increase renewable energy projects while ensuring the availability of stable electricity to support economic and industrial growth and digital development.
He added that meeting the needs of the energy sector requires a diverse mix that combines gas, renewable energy, and nuclear energy, in addition to developing networks, rather than being limited to one solution.
Regarding data centers, Al-Bakhli explained that GE Vernova’s role is not limited to supplying equipment; Rather, it extends to participation in developing the infrastructure of these centers, through heavy gas turbines that provide stability for basic loads, and electrification solutions that include transformers, electrical switchgear equipment, and software used in managing energy transmission.
He pointed out that the company uses diagnostic solutions supported by artificial intelligence and digital integration to help operators extend the operational life of assets, improve their efficiency, and prepare them to use hydrogen mixtures in the future.
Lack of network equipment is the biggest obstacle to expanding projects
Al-Bahkali said that the energy sector should be viewed as an integrated and interconnected system, because adding new electricity generation capacities remains useless if it cannot be transmitted and distributed efficiently and reliably to consumers.
He added that “the pace of building stations and modernizing transmission and distribution networks is slower than the pace of the significant increase in electricity consumption,” noting that developers are facing delays in connecting their projects to the network and a backlog of connection requests, in addition to old networks that need to be renewed. He explained that these challenges appear clearly in data center and artificial intelligence projects, which only begin work with a guaranteed power source.
He said, “The shortage of basic network equipment, such as transformers and electricity distribution and transmission devices, has become the biggest obstacle to expanding projects.”
To address this problem, he called for work on two parallel tracks: They are to accelerate the laying of new power lines, and to use digital programs and smart systems to make the most of the existing networks, with the aim of making them smarter, more flexible and efficient.
Saudi Arabia balances gas and renewable energy
Regarding the Saudi market, Al-Bahkali said that the Kingdom is leading a transformation program in the energy sector within “Vision 2030”, in parallel with the diversification and digitization of the economy, which generates additional demand for electricity, while continuing to work to achieve the goals of reducing carbon emissions.
He pointed out that the Kingdom's goal is to reach an energy mix consisting of 50 percent renewable energy and 50 percent natural gas by 2030.
He expected the sector to witness more integration between major renewable energy projects, highly flexible gas generation plants, network modernization projects, and advanced energy management solutions.
He said that GE Vernova is proud of its presence in the Kingdom for more than 90 years, and continues to support efforts to modernize power plants, increase network flexibility, and expand local industrial capabilities. The company's initiatives with partners in Saudi Arabia include high-efficiency gas technologies, network stabilization solutions, and localization efforts consistent with the goals of Saudi Vision 2030.
The company increases its annual turbine manufacturing capacity
At the level of supply chains, Al-Bahkali said that the high demand for electricity, along with the modernization of networks and transformation projects in the energy sector, has increased pressure on factories and suppliers around the world, and delays in the delivery of basic equipment, such as gas turbines, transformers and control systems, have become among the most prominent challenges facing electricity companies and affecting the timetables for project implementation.
He explained that addressing these challenges requires expanding manufacturing capabilities, strengthening partnerships with suppliers, and early planning for projects, noting that establishing new factories and increasing production capacity require time and close cooperation between technology companies, governments, and customers.
In this context, GE Vernova has allocated about $11 billion for capital investments and research and development until 2028, with the aim of expanding its manufacturing capabilities and accelerating innovation.
The company is working to increase its annual turbine manufacturing capacity to 20 GW, then to 24 GW by 2028, and reaching 30 GW by 2030, in response to the demand for energy sources that can be operated when needed, which is largely driven by the needs of artificial intelligence data centers and utility companies.
Al-Bahkali added that the company is working to increase production in its current facilities by applying flexible manufacturing methodologies, gradually investing in equipment, and expanding the use of automation and robotics, instead of establishing entirely new factories.
He stressed the importance of localizing the industry, qualifying national cadres, and building local supply chains that contribute to enhancing flexibility and providing economic value.
Manufacturing and maintenance capabilities in Saudi Arabia
Al-Bahkali said that GE Vernova possesses capabilities in manufacturing, maintenance, research and development within the Kingdom, including the “Gemtech” energy technology complex and the integration facility in Al-Khobar in the Eastern Province.
The “Gemtec” complex includes one of the company’s largest international centers for gas turbine maintenance, in addition to the “Jasat” company, which specializes in manufacturing heavy gas turbines and their ancillary units and components, and the Regional Center of Excellence for the Middle East and North Africa in reducing emissions, which is designed to contribute to the development of low-carbon solutions for the energy system in the Kingdom.
According to Al-Bahkali, the complex’s services have extended to more than 40 countries around the world. As for the Khobar facility, it provides station control and network management technologies, which contribute to the reliable integration of the network infrastructure in the Kingdom, modernizing the energy system and expanding its capabilities.
Al-Bahkali said that this local presence supports the transition from the commercial relationship with customers to a long-term strategic partnership, which contributes to reducing delays, enhancing the clarity of implementation plans, and accelerating the completion of projects.
