In October 2013, I participated in the GE ECLP Case Competition in New York. Teams were asked to identify sales solutions for a data analytics service being offered to independent power producers using GE generation technology. This deck supported our 20 minute team presentation, and was created by Alexander Boutelle, Ariel Chua, Sam Massey, and Avner Penchas (all MIT Sloan MBA Class of 2015). All data was gathered from public sources. Alexander Boutelle's personal website can be found at www.internetadjacent.com or www.alexanderboutelle.com.

1. ECLP Case Competition 11-01-2013
Leveraging Big
Data to Optimize
Power Generation
Experienced Commercial Leadership Program
NE Regional Case Competition
Friday, November 1st 2013
Alexander Boutelle, Ariel Chua, Avner Penchas, Sam Massy

2. ECLP Case Competition 11-01-2013
Agenda
Introduction
Our Larger Strategy
A change moment in GE’s storied history
Our Pitch to Potenza
Responding to the client’s questions, and the reasons behind them
Deal Structure and Business Model
Creativesolutions to win this deal and establish a beachhead
Questions

3. ECLP Case Competition 11-01-2013
OurA Pivot Point for GE
“This Industrial Internet… is about
combining the world’s best technologies
to solve our biggest challenges. It’s about
economically and environmentally
sustainable energy… and preparing our
infrastructure and cities for the next 100
years.”
-Jeff Immelt, GigaOm (11-28-2012)
Larger Strategy >> Potenza Pitch >> Business Model >> Conclusion >> Questions

4. ECLP Case Competition 11-01-2013
Opportunities in Utility Analytics
Projected Analytics Market for Utilities2
1 Utilities Analytics Institute
2 GreenTech Media
• 39% increase in utility analytics software by 20161
• $1.5 billion in the US alone by 20202

5. ECLP Case Competition 11-01-2013
The Challenge of Energy
Share of Total GE revenue 2010-20121
Market in need of solutions
• Growing and unpredictable global market
Massive opportunity in the power industry
• Net sales of energy 3.75 billion MWh, representing $371 billion revenue
• 1% fuel saving for power generators = $66B savings over 15 years
Growth Market for GE specifically
Year
Power and
Water
Energy
Management
2012 19.2% 5.0%
2011 17.4% 4.4%
2010 16.6% 3.5%
1 GE Annual Report 2012
2 “Game changers: Five opportunities for US growth
and renewal” - McKinsey Global Institute, 2013
Incremental Annual GDP by 20202

6. ECLP Case Competition 11-01-2013
Creating dominance in Energy Market
2016 2017 20192018 202020142013 2015
Our strategic approach:
Zero-Capital, Gain-share Model
GE revenue:
Predictivity
Power
Equipment
$22.5B
$46B
$2.3B
$0.3B

7. Pitching Potenza
Larger Strategy >> Potenza Pitch >> Business Model >> Conclusion >> Questions

8. “We cannot suffer any more imbalance
charges. We’re leaving money on the table.”
-CEO
CEO Responsibilities
• Accountable for firm’s sustainable
performance; Optimizing people & assets
• “Seeing around corners” to ensure future
stability, profitability and growth;
• Balancing risk: safety, environmental
compliance, insurance and regulations
Sales Strategy
• First and foremost, demonstrate GE
software’s impact on profitability
• Demonstrate awareness of the
diverse risks managed by the CEO,
and our product’s role in proactively
managing these concerns.

9. ECLP Case Competition 11-01-2013
ROI: Value Proposition for Potenza
Improving Efficiency
Output, GE 7F-5* 216MW
Increased output (Predictivity) 8%
Increased fuel economy 0.2%
Wholesale electricity $50/MWh
Per MWh savings $887.38/MWh
(GE 7F-5)
Annual Savings (GE 7F-5) = $3.1M
Annual Savings (500MW Plant)=$6.6M
Meeting Demand
• Remove charges directly impacting
Potenza’s bottom line
• Ripple effects: improved
dependability translates into
increased demand from Dispatch
GE 7F 5-Series Gas Turbine
* GE website

10. ECLP Case Competition 11-01-2013
ROI: Additional Value Adds
Enhanced performance
• Supply demand at full capacity
Maximize Renewable Energy Use
• Improved forecasting and weather
data enables real-time integration of
wind power; stop “leaving money on
the table”
Safety and Predictability
• Transforming unpredictable, costly
maintenance emergencies into low-
impact, low-cost, low-skill tasks
Increase
revenue &
reduce
operating
costs

11. “You’re not software experts. Besides, we
already have relationships with IT firms.”
– Asset Manager .
Asset Manager Responsibilities
• Managing and optimizing all the
costs associated with an asset
over its useful life
• Communicates about the health
and maintenance schedule of an
asset with the Plant Manager.
Sales Strategy
• Highlight the Predictivity™ maintenance
savings and operational improvements
• Recognize that software costs may be
incurred on her P/L, but fuel savings will
accrue to different cost center.

12. ECLP Case Competition 11-01-2013
GE vs. Traditional Software Companies
General Electric IT Companies
Experience
More than a century
in power generation
1 – 20 years in tech
Focus
State-of-the-art, holistic
power solutions
IT-specific
Timeframe
Can commit to decades
of maintenance
Survived the last bubble
Capabilities
Investment
$1B investment in
Industrial Internet
Energy consultant hired
Relationship
with Potenza
Helped install half
the factory floor
Recently signed a contract
Proactivity
Can identify what
must be fixed
Can fix what you
identify for them
Offices 160 countries Silicon Valley

13. “What if we can’t fire GE because you
have a stranglehold on our data?”
- Plant Manager
Plant Manager Responsibilities
• Ensures power is generated
safely and reliably, in accordance
environmental regulations.
• Responsible for responding to
trading and dispatch solicitations
at the lowest possible cost.
Sales Strategy
• He has the most direct experience with
GE equipment: highlight our history of
engineering excellence, safety, and
maintenance.
• May be concerned that software will lead
to reduced headcount on his team.

14. ECLP Case Competition 11-01-2013
Data Issues
• Data is yours.
• Security is our top priority
• Access performance reports 24/7 with secure,
backed-up online data storage
• GE Information Security Center: 100 staff hired
over last year, and will double our staff within 2
years
• Why do you need other companies machinery info?
• Predictivity will work with both GE and non-GE
equipment; it will help the two perform better

15. “What kind of guarantees are
you willing to make?” - CEO

16. Deal Structure and
Business Model
Larger Strategy >> Potenza Pitch >> Business Model >> Conclusion >> Questions

17. ECLP Case Competition 11-01-2013
The Zero-Capital, Gain-Share Model
• GE: Provides Predictivity (both sensors and
software), analytics and system maintenance
• Potenza: Shares (40%) of gains from fuel savings
and increased energy output
Potenza Savings
Potenza
Savings
GE
Revenue
Both sides to agree
upon baselines.
GE to manage
Measurement and
Verification process.

18. ECLP Case Competition 11-01-2013
Gain-sharing = Win-Win
Value to Potenza
•No initial capital
requirements
•No-risk Guarantee: Pays
GE when efficiency value is
realized
•Potenza keeps other
value-adds (increased
revenue, reduced
maintenance)
Value to GE
• Establish strategic
beachhead in this market
• Obtain real-world data,
enhance future products
(both software and
hardware)
• Turn customer into
intra-industry advocate;
let their experience drive
business to GE

19. ECLP Case Competition 11-01-2013
Gain sharing:
Contractual service
agreements (CSAs):
Future of Predictivity
Outcome-based
approach to
demonstrate
efficacy and create
revenue streams
Create a holistic
energy solution
for our customers
2013 2014 2015 2016 2017 2018 2019 2020

20. What this means
for GE
Larger Strategy >> Potenza Pitch >> Business Model >> Conclusion >> Questions

21. ECLP Case Competition 11-01-2013
Organizational Change
• Transitioning from selling hardware
to providing holistic solutions
• Same GE brand, wider scope
• Culture Transition
• Greater collaboration and joint P/L
responsibilities across IT & Hardware Sales
team
• Leverage ITLP, San Ramon Software Center
of Excellence, EEDP Software track

22. Questions?

23. Appendix

24. ECLP Case Competition 11-01-2013
Revenue Projection for GE
(1) 1% fuel saving = $66bn over 15 years, GE Annual Report
(2) GE website
(3) International Atomic Energy Agency, assuming 8% growth in investment per year
* Assuming 1% improvement as initial estimate
Global Revenue from Software/Analytics 2013 2014 2015 2016 2017 2018 2019 2020
GE Market Share 25% 25% 25% 25% 25% 25% 25% 25%
Fuel saving for 5% improvement in fuel efficiency
($bn) (1) 4.4* 22 22 22 22 22 22 22
5% increase in energy output ($bn) (2) 1 1 1 1 1 1 1 1
Assume GE sharing 40% of savings/gains ($bn) 0.54 2.3 2.3 2.3 2.3 2.3 2.3 2.3
Assume growth of adoption 15% 20% 25% 40% 60% 80% 100%
0.345 0.46 0.575 0.92 1.38 1.84 2.3
CAGR 37%
Global Revenue from Power Equipment 2013 2014 2015 2016 2017 2018 2019 2020
GE Market Share 25.0% 25.7% 26.4% 27.1% 27.9% 28.6% 29.3% 30.0%
Global Investment in Power Generation ($bn) 90 97 105 113 122 132 143 154
GE Revenue from Global Power Generation
Investment ($bn) (3) 22.5 25.0 27.7 30.8 34.1 37.8 41.8 46.3
CAGR 10%

25. ECLP Case Competition 11-01-2013
Savings Analysis: GE 7F-5 w/ GE Predictivity AGP & OPFlex
Units:
INPUTS:
Output, GE 7F-5 (Simple cycle) 216 MW
Increased output (AGP & OPFlex) 8%
Increased fuel economy (AGP & OPFlex) 0.20%
Average wholesale electricity price (U.S., 2013) $50.00 per MWh
Average Capacity Factor (CCP) 40%
ANALYSIS:
Increased output (AGP & OPFlex) 233.28 MW
Associated cost savings$864.00 per MWh
Fuel efficiency savings (per MWh) $23.33 per MWh
Total Cost Savings (per MWh) $887.33 per MWh
Annual Savings, GE 7F-5 w/ AGP & OPFlex = $3,109,197.31
Extrapolated savings, 500MW plant $6,664,088.89
Savings Analysis