GE'S Embrace Of Wind began opportunistically, with the bankruptcy of Houston's Enron Corp. GE snapped up Enron Wind, the only U.S. manufacturer of utility-scale wind turbines, and by the end of 2003 had more than doubled the company's annual sales, to $1.2 billion.

Suddenly, GE Energy's wind unit looked set to become an industry leader. That year it was second only to Denmark's Vestas, though it would take a dip in the rankings in 2004 with a contraction in the U.S. market[see chart, "Worldwide Wind Energy Sales"]. One deal with utility Florida Power and Light Co. (FPL), headquartered in Juno Beach, clinched within months of the Enron Wind acquisition, showed what a company with GE's resources might be able to accomplish in wind.

Source: BTM CONSULT ApS, 2004 World Market Update

Worldwide Wind Energy Sales

FPL had ordered gas turbines from GE in the late 1990s but no longer needed them. GE, faced with the challenge in 2003 of getting its new wind business on track, saw an opportunity. In exchange for letting FPL off the hook for the gas turbines, it agreed to sell FPL 450 of its 1.5-megawatt wind turbines, each worth over $1 million. The bargain was a bellwether of big changes in the way the U.S. utility industry looked at wind. Once of interest mainly to small, independent power producers who sold their output to utilities, wind power now is attracting the attention of major utilities like American Electric Power Co., in Columbus, Ohio, and PacifiCorp, in Portland, Ore.

Unlike the highly specialized wind-turbine manufacturers that traditionally dominated the market, a company like GE or Siemens has an inside track with these big utilities. They are also better equipped financially to manage the larger scale of today's wind farms, which may have dozens or even hundreds of turbines. "Warranty obligations are getting more stringent and are now five years instead of two to three, as in the past," says Steven Taub, research director of emerging generation technologies at CERA. "This assurance is becoming more important as projects get larger and more complex."

Market heft may, however, be the least significant of GE's advantages. According to Steve Zwolinski—the GE executive who led the launch of GE Energy's wind operations and served as its president until March—the unit's technical staff more than tripled following the acquisition, as the wind group absorbed engineers from other GE businesses who had expertise in areas such as materials, aerodynamics, and gearboxes.

The results, he said, are improvements in every major subsystem in the 1.5-MW turbine that was Enron Wind's mainstay, as well as the accelerated development of two new turbines. One is a 2- to 3-MW machine with beefier power electronics and a simplified asynchronous generator that should yield more megawatthours of energy than the 1.5-MW machine. The other is a 3.6-MW turbine hardened for the corrosive offshore wind environment [see photo, "The Latest"," and diagram, Inside a GE Turbine Nacelle"].

Zwolinski added that plugging into GE's supply chain has helped cut manufacturing costs, another factor that pleases analysts. The company's global supply chain could also make GE Energy's wind operations more nimble in new markets like China.

In the U.S. market, GE's wind turbine sales dropped last year with the 31 December 2003 expiration of the U.S. Production Tax Credit, a 1.8 cent per kilowatthour tax write-off that underpins the U.S. wind power industry. However, since Congress reinstated the tax credit last October, U.S. demand for wind turbines has come roaring back, and GE expects to sell $2 billion worth of turbines this year, lifting its global market share to 20 percent.