GE Says Big Promise In Wind Power

FAIRFIELD, CT -- - General Electric Co. is injecting some pinstriped corporate muscle into the still-evolving world of wind power. A year after the purchase of Enron Corp.'s wind-turbine business, GE expects the operation to generate more than $1 billion (U.S.) in revenue during 2003 and expand about 20 per cent annually.

GE Wind Energy has landed several major orders, including turbines for a project that would be the first offshore wind farm in the United States.

As a major supplier to the electric-power industry, GE's lead is closely watched.

"The purchase of the wind manufacturing company by GE is really a historic move that symbolizes the maturation of the wind industry," said Randall Swisher, executive director of the American Wind Energy Association.

GE's foray into wind energy comes as the company's Power Systems Division, which makes traditional gas turbines for power plants, is on the down side of a long business cycle. GE has laid off hundreds of workers at its turbine plants, shipments are down and the near-term outlook is weak.

At the same time, wind power, which in the past often involved smaller companies, has become one of the fastest-growing segments of the global energy industry. Wind-turbine sales represent a $7 billion business globally and should grow to about $20 billion in the next five to 10 years, Swisher said.

"The market has been doubling about every three years," he said.

Government incentives and advances in technology have made wind power more economical, while utilities are under pressure to develop alternative sources of energy, Swisher and GE officials said. Thirteen U.S. states now require utilities to include renewable energy such as wind and solar power as a portion of their business, Swisher said.

GE chief executive Jeffrey Immelt said at the company's annual meeting last month the wind-energy business has taken in more than $2 billion in orders in the past year.

The revenue is a small fraction of GE's total revenue of $131.7 billion last year and won't be enough to totally offset a sharp decline in gas-turbine sales. But wind energy is one of several new growth areas targeted by GE. Others include Hispanic media, security and water treatment.

John Rice, chief executive of Power Systems, which operates the wind business, said the operation has "met or exceeded our expectations in the year we've operated it."

GE studied the wind-power business for at least three years and saw an opportunity to make the acquisition when insolvent Enron began shedding its assets, Rice said. He cited three main reasons: The cost of electricity generated from wind power dropped to the point where it was competitive with other sources; the business could benefit from technology from other GE businesses; and customers were increasingly interested in renewable energy.

The company said it's using its expertise from other businesses, such as rotating machinery parts, grid technologies and gearbox advancements, to expand the business and introduce new models with the latest technology.

GE could also benefit in terms of public image, which has been battered for years because of PCB pollution in the Hudson River and GE's contention that dredging for clean-up could make the problem worse.

Chris Ballantyne, director of the Hudson River campaign for the Sierra Club, said GE's move is encouraging.

"If they weren't so scurrilous on other environmental matters, they'd probably get much higher marks," Ballantyne said.