GE to go Solar and Offshore

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There’s no such thing as a free lunch someone once said and that’s as true of countries and corporations as it is individuals. Take green energy initiatives. There were many doubters as to how realistic talk by President Obama and European leaders about incentives for green technologies would be in creating green jobs. It is not our intention to go into the wider discussion here of pumping subsidies into A means sucking taxes out of B, so creating jobs in A will ultimately cost jobs in B. But certainly pumping money into renewable energy subsidies has encouraged major industrial corporations like GE to plow serious dollars and create hundreds potentially thousands of jobs for their renewable energy division.

According to an FT article, GE already has a strong position in onshore wind power: it sells about half the new turbines being installed in the US, and has a global market share of about 20%. Now the company is moving into off shore turbines. The market needs players of GE’s size and technical expertise to drive down costs and achieve levels of reliability that give the technology a chance of being viable. To help ensure it meets those objectives, GE is buying ScanWind, a small Norwegian-Swedish turbine company, for $18m, giving it access to new turbine technology, tested in harsh conditions on the coast of Norway.

GE has the philosophy that if it can’t be number 1 or 2 in a field then it won’t take part so when the same renewable division recently made the announcement they were going into solar power it raised a few eyebrows. GE’s wind turbines have already made that leap. The company developed its 2002 acquisition from Enron, the collapsed energy-trading firm, into a power generation business expected to generate $6.5-7bn in sales this year. By comparison, the solar division started following the purchase of Astropower earlier in the decade and manages just $200m in sales from their photovoltaic cell business. However the firm has started a new pilot production line in Colorado and is set to give more details on their plans early in the new year. GE has plans for it to become a multi-billion dollar business but they may face intense competition from China among others. Chinese producers are raising efficiencies and reducing unit costs quarter after quarter. Aided by an artificially low currency and a government requirement that 75% of the content of government-purchased solar panels be Chinese-made Chinese producers are ramping up production and achieving economies of scale that have allowed them to rival German and US firms in the international market.

But it is not all one way, at least for thermal solar power stations design. First Solar Inc of Arizona is expected to sign a deal to build a 2GW solar thermal power station complex at Ordos in Inner Mongolia. First Solar will begin constructing a 30 MW demonstration project in June 2010 in Ordos. The second and third phases call for 100 MW and 870 megawatt projects that will be completed in 2014. A final 1,000 MW installation will be finished in 2019. Expect the Chinese to build subsequent plants themselves though.

–Stuart Burns

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