Independent power producer AES Corporation announced a reorganization Monday intended to cut costs and reduce carbon intensity.
The move will prune a few business units and concentrate operations around three geographic regions -- the U.S., South America and Central America. The organizational streamlining will include layoffs from its 10,500-person workforce, although the company did not specify how many.
“Our new structure will accelerate our transformation to an energy company of the future," President and CEO Andrés Gluski said in a statement. "These changes will allow us to quickly capitalize on opportunities by delivering safe, reliable and affordable energy solutions that create shareholder value.”
The cuts at AES earn it a spot on the growing list of global energy companies that have had to shift business structures in response to a changing energy landscape.
Industrial giant Siemens laid off 2 percent of its workforce in November, mostly targeting its power turbine manufacturing business. The next month, GE decided to cut 12,000 jobs from its power division, constituting 18 percent of that unit. The move was part of an effort to cut $1 billion in structural costs from GE Power in 2018.
Those companies built out production capacity for a world that demanded more new conventional power. Renewables have slashed into demand for combustion turbines; the International Energy Agency expects renewables to make up two-thirds of new power plant investment through 2040.
Those changes are rippling through traditional energy companies, both equipment makers and power producers. Those in the latter group have been scrambling to find a sustainable business model. Some have sought acquisition, like Dynegy and Calpine.
Conversely, AES has expanded its role in clean energy production over the last year. At the start of 2017, solar accounted for just 200 megawatts of the company's 35,000-megawatt global portfolio. Then it bought sPower, a top-10 U.S. solar developer and operator.
The purchase brought in 1,274 megawatts' worth of utility-scale solar power plants, along with a world-class development team and a portfolio of 10,000 megawatts of projects in various stages. That unit appears poised to expand under the new corporate structure.
The company also staked out an early leadership position in the utility-scale energy storage industry, which is small but growing precipitously. GTM Research expects the U.S. market to generate more than $10 billion in revenue over the next five years.
AES reformulated its storage business this year as Fluence, a joint venture with Siemens. It's gearing up to build a 100-megawatt/400-megawatt-hour project for Southern California Edison in Long Beach, which will overtake Tesla's South Australia project as the biggest grid battery in the world.
The joint venture was meant to give the storage unit more independence. With changes afoot, the relatively tiny storage and renewables units are poised to become more prominent within AES.