United States

United States

Focus stays on workhorse product -- GE sticks with 1.5 MW turbine

GE Energy is committed to delivering 4700 wind turbines over the next two years in a period when shortages and rising prices of raw materials is contributing to a worldwide bottleneck in major wind turbine components. The volume of turbines to be manufactured this year and next exceeds GE's entire fleet of operating 1.5 MW turbines, which at the end of 2005 was roughly 3300.

Most of the new turbines will be the 1.5 MW workhorse rather than turbines from GE's 2 MW-plus series; 70% of them will be for the US, says Robert Gleitz, general manager of GE Energy's wind business. Last year, GE supplied 60% of all turbines installed in the US (page 37).

Gleitz believes that the hikes in wind turbine prices over the past year have been vital to maintaining the industry's equilibrium. "If you're talking 2006 and 2007, very little capacity is available and prices are set," he says. "But I think we need to keep the industry at a viable level for the period after 2007. I think the industry will not play out if the prices go down sharply."

Rising costs

The higher prices, according to Gleitz, are largely a function of the rising cost of steel, copper and other raw materials, along with a volatile market of ebbs and surges in demand, largely caused by the on again, off again production tax credit (PTC) for wind in the US, currently the industry's largest market. With the PTC due to expire again at the end of 2007, long term planning of raw material supply cannot be done

Most of the new machines on order will be assembled in Pensacola, Florida, and Greenville, South Carolina. A third assembly plant, in Tehachapi, California, serves mainly to provide turbine control systems. A Canadian assembly facility in Gaspe, Quebec, began production at the end of 2005 and 2006 will see a new facility in Shenyang, China, where 100 units will be assembled before year's end. Beyond that, the company declines to provide specific manufacturing quotas for its various production sites.

GE also maintains wind turbine manufacturing facilities in Germany and Spain, but with sales of GE turbines yet to seriously take off in either Spain or Portugal and with the German market in decline, rumours abound that GE's European operation is being downgraded.

"But it's not a question of assembly," says Gleitz. "It's about obtaining components. We do not have an inside supply for components. We've looked at all the possibilities and came to the conclusion that we are better served with sub-suppliers for blades and gearboxes."

PTC extension

A quickly renewed PTC, says Gleitz, would provide the long term market visibility that sub-suppliers need. "If we want to have a stable industry and a positive sign for our sub-suppliers, a PTC extension will have to happen in late '06 or early '07," he adds. "If it happens in the second half of '07, it will continue to create this on-and-off effect." It took just weeks after last summer's renewal of the PTC as part of the US Energy Policy Act for customers to order more wind turbines that GE could deliver, says Gleitz. A consistent sub-supply chain, he maintains, would have led to more finished turbines now and in the future.

GE is launching its new multi-megawatt platform this year--one machine at 2.5 MW and another at 3 MW. "For the time being we've decided to focus on Europe and Japan for the larger machines," Gleitz says. The company expects a similar commercial rollout for the US and Asia in 2008. "We expect the US and Canada will shift to larger machines for 2008 and beyond," he adds.

Potential

On the massive potential of offshore wind, Gleitz believes any major advances are at least a few years away. So far GE has equipped just one offshore wind plant, the 25 MW Arklow Bank facility commissioned in 2004 using a relatively old 3.6 MW design. "We are very happy about this plant and we're learning how to use these offshore machines," he says. "But the market is really, really slow. Customers are asking a lot of questions but they have not yet pressed the button to go forward. It will probably take a few years before offshore takes off."

GE Energy, based in Atlanta, is reporting 2005 revenues of $16.5 billion for its all-encompassing power generation and energy technology businesses. It is responsible for the delivery of more than 7500 wind turbines in use worldwide.

"I'm very positive about the future of wind. We're confirming that it's the right way to go. What I've noticed is that the demand is everywhere and this industry has a bright future. I think it will continue to expand for the next ten years," says Gleitz.

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