Bloomberg News

GE’s Abate Says New Turbines May Fuel Europe Wind-Farm Upgrades

November 01, 2011

Oct. 31 (Bloomberg) -- General Electric Co.’s newest high- capacity turbine may draw orders from wind farms across Europe because its increased yield makes equipment upgrades more viable, said Victor Abate, who runs the renewable energy unit.

The 1.6-megawatt turbines with 100-meter (328-foot) rotor blades provide more power in lighter winds than their predecessors, offering a better yield than any turbine in commercial production, GE said. The company has won $2.7 billion in orders since introducing the product in May as developers from Brazil to Kansas pay premiums for higher electricity output, he said.

“You get twice the power for the same number” of aging steel towers, Abate said in an Oct. 28 interview. Some customers already have begun inquiring about so-called repowering for greater efficiency.

GE investors are watching for higher-margin turbines to become a bigger percentage of shipments this quarter after deliveries of lower-priced units dragged down the larger GE Energy Infrastructure’s profit margins by 2.9 percentage points in the previous three months. That mix should improve in the rest of this year and speed in 2012, GE said Oct. 21.

The potential for upgrades with the new turbines is high, said Fraser Johnston, a wind analyst at Bloomberg New Energy Finance in London.

“These older wind farms have some of the best wind resources, and with all the infrastructure already there it could be done profitably,” Johnston said. Germany recently altered its tariff structure “quite generously to accommodate turbine replacements,” he said.

Turbines in Germany now have an average efficiency rating of 20 percent, Abate said.

Wind Turbine Orders

“We’re seeing a 10-point improvement” in power-generation capacity from the new turbines, Abate said. “That takes the cost of electricity down 30 percent over the lifetime.”

Orders for wind turbines, which had slowed because of flat electricity demand, are gaining as developers and utilities seek to complete projects before the expiration of a U.S. Treasury grant program this year and the end of a production tax credit next year, Abate said.

GE last week won an order from BP Plc for 350 wind turbines for two projects in Pennsylvania and Kansas, most of which will use the 1.6-megawatt, 100-meter design, Fairfield, Connecticut- based GE said a statement. The turbines and a five-year service agreement are valued at $750 million.

The newest turbines provide higher rates of return for developers that can be split with utilities in the form of lower power prices, Abate said. “That makes some projects possible that weren’t before.”

--Editors: James Langford, John Lear

To contact the reporters on this story: Christopher Martin in New York at cmartin11@bloomberg.net; Rachel Layne in Boston at rlayne@bloomberg.net.

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net.


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