Why is GE launching a 12MW offshore turbine?

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Ilaria Valtimora
March 9, 2018
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Why is GE launching a 12MW offshore turbine?

Last week, General Electric unveiled plans to invest $400m over the next three to five years to develop a 12MW offshore turbine. It is a bold statement from a company that has so far struggled to make much of an impact offshore.

The 12MW machine is set to be developed and manufactured in France, where the firm plans to invest up to $100m in a new blade manufacturing facility in Cherbourg and up to $60m in its current Saint-Nazaire turbine plant. GE expects its first nacelle to be ready for demonstration in 2019 and to be delivered in 2021.

The plan is significant not only for the extraordinary capacity of the turbine but also because it shows that GE is trying to seize the initiative in the offshore sector.

Philip Totaro, chief executive of tech-focused advisory Totaro & Associates, told us this week that GE has had “an on-again, off-again relationship with offshore wind over the years”. Its previous attempts at deploying offshore turbines include the 3.6S machine, which it developed in-house; and the Haliade 150-6MW, which came with its acquisition of French manufacturer Alstom’s power and grid businesses in a €9.7bn deal in 2015.

However, GE has only seen nine of its 6MW turbine installed so far: in the US, at the 30MW Block Island scheme, and in Belgium and China. This puts it a long way behind its competitors, including Senvion and the now-defunct Adwen.

So what can we read into the fact it is launching this now?

Totaro argues that the timing is mainly to do with cost reductions in offshore wind that are associated with larger turbines. He forecasts that the levelised cost of energy in 2020 will be 40% lower than it was in 2010 in part due to larger turbines, and GE wants to make sure it is in the mix for projects completed in the early 2020s.

Because the fact is that GE is not just playing catch-up with market leaders Siemens Gamesa and MHI Vestas, but it is also looking to beat them. It is hoping that it will be able to leapfrog Siemens Gamesa’s 8MW and MHI Vestas’ 9.5MW turbines, even if these firms respond by announcing their own 12MW-plus platforms.

Incidentally, MHI Vestas chief executive Jens Tommerup has often said that his firm doesn't yet see the case for launching a larger offshore turbine, even though it is technically possible to do so.

Furthermore, the 12MW launch could also open up opportunities for GE in the US and China.

In the US, GE was the second-largest turbine supplier in the onshore market and is the leader offshore – albeit that only one offshore wind farm has completed. It has several facilities near the US east coast, where offshore wind will happen first, and GE will be looking to stay ahead of the competition in its home market.

Totaro argues that GE might gain traction by offering its turbine in China, where most offshore turbines have been 4MW or smaller: “A 12MW offshore turbine might be a bit premature for the current Chinese market, but it could also jumpstart it beyond their currently installed 1.9GW as of the end of 2017”, he says.

Finally, this high-profile launch could well be part of a broader plan to revive GE’s fortunes.

The announcement comes at a tough time for the GE group, which in its annual results in January reported a $9.8bn net loss in the fourth quarter and profit margin that halved from 11.4% to 5.7%.

In contrast, GE Renewable Energy was one of GE’s brightest spots last year, and so the 12MW platform could be part of a wider effort to reshape the group with a renewed focus on offshore wind. The firm followed this with a big storage announcement this week.

Will it succeed? Well, GE is a serious industrial player, but doesn't have the same track record in offshore wind as its big rivals enjoy. The 12MW platform is a long-term plan that would consume huge time and attention, and would need to be developed in a quick timeframe while industry onlookers pick up on any slips. No doubt, it will also have to contend with big plans from rivals too.

But, if it succeeds, the turbine would be phenomenal and offshore wind sector would be the winner. It’s going to be an exciting ride.

Last week, General Electric unveiled plans to invest $400m over the next three to five years to develop a 12MW offshore turbine. It is a bold statement from a company that has so far struggled to make much of an impact offshore.

The 12MW machine is set to be developed and manufactured in France, where the firm plans to invest up to $100m in a new blade manufacturing facility in Cherbourg and up to $60m in its current Saint-Nazaire turbine plant. GE expects its first nacelle to be ready for demonstration in 2019 and to be delivered in 2021.

The plan is significant not only for the extraordinary capacity of the turbine but also because it shows that GE is trying to seize the initiative in the offshore sector.

Philip Totaro, chief executive of tech-focused advisory Totaro & Associates, told us this week that GE has had “an on-again, off-again relationship with offshore wind over the years”. Its previous attempts at deploying offshore turbines include the 3.6S machine, which it developed in-house; and the Haliade 150-6MW, which came with its acquisition of French manufacturer Alstom’s power and grid businesses in a €9.7bn deal in 2015.

However, GE has only seen nine of its 6MW turbine installed so far: in the US, at the 30MW Block Island scheme, and in Belgium and China. This puts it a long way behind its competitors, including Senvion and the now-defunct Adwen.

So what can we read into the fact it is launching this now?

Totaro argues that the timing is mainly to do with cost reductions in offshore wind that are associated with larger turbines. He forecasts that the levelised cost of energy in 2020 will be 40% lower than it was in 2010 in part due to larger turbines, and GE wants to make sure it is in the mix for projects completed in the early 2020s.

Because the fact is that GE is not just playing catch-up with market leaders Siemens Gamesa and MHI Vestas, but it is also looking to beat them. It is hoping that it will be able to leapfrog Siemens Gamesa’s 8MW and MHI Vestas’ 9.5MW turbines, even if these firms respond by announcing their own 12MW-plus platforms.

Incidentally, MHI Vestas chief executive Jens Tommerup has often said that his firm doesn't yet see the case for launching a larger offshore turbine, even though it is technically possible to do so.

Furthermore, the 12MW launch could also open up opportunities for GE in the US and China.

In the US, GE was the second-largest turbine supplier in the onshore market and is the leader offshore – albeit that only one offshore wind farm has completed. It has several facilities near the US east coast, where offshore wind will happen first, and GE will be looking to stay ahead of the competition in its home market.

Totaro argues that GE might gain traction by offering its turbine in China, where most offshore turbines have been 4MW or smaller: “A 12MW offshore turbine might be a bit premature for the current Chinese market, but it could also jumpstart it beyond their currently installed 1.9GW as of the end of 2017”, he says.

Finally, this high-profile launch could well be part of a broader plan to revive GE’s fortunes.

The announcement comes at a tough time for the GE group, which in its annual results in January reported a $9.8bn net loss in the fourth quarter and profit margin that halved from 11.4% to 5.7%.

In contrast, GE Renewable Energy was one of GE’s brightest spots last year, and so the 12MW platform could be part of a wider effort to reshape the group with a renewed focus on offshore wind. The firm followed this with a big storage announcement this week.

Will it succeed? Well, GE is a serious industrial player, but doesn't have the same track record in offshore wind as its big rivals enjoy. The 12MW platform is a long-term plan that would consume huge time and attention, and would need to be developed in a quick timeframe while industry onlookers pick up on any slips. No doubt, it will also have to contend with big plans from rivals too.

But, if it succeeds, the turbine would be phenomenal and offshore wind sector would be the winner. It’s going to be an exciting ride.

Last week, General Electric unveiled plans to invest $400m over the next three to five years to develop a 12MW offshore turbine. It is a bold statement from a company that has so far struggled to make much of an impact offshore.

The 12MW machine is set to be developed and manufactured in France, where the firm plans to invest up to $100m in a new blade manufacturing facility in Cherbourg and up to $60m in its current Saint-Nazaire turbine plant. GE expects its first nacelle to be ready for demonstration in 2019 and to be delivered in 2021.

The plan is significant not only for the extraordinary capacity of the turbine but also because it shows that GE is trying to seize the initiative in the offshore sector.

Philip Totaro, chief executive of tech-focused advisory Totaro & Associates, told us this week that GE has had “an on-again, off-again relationship with offshore wind over the years”. Its previous attempts at deploying offshore turbines include the 3.6S machine, which it developed in-house; and the Haliade 150-6MW, which came with its acquisition of French manufacturer Alstom’s power and grid businesses in a €9.7bn deal in 2015.

However, GE has only seen nine of its 6MW turbine installed so far: in the US, at the 30MW Block Island scheme, and in Belgium and China. This puts it a long way behind its competitors, including Senvion and the now-defunct Adwen.

So what can we read into the fact it is launching this now?

Totaro argues that the timing is mainly to do with cost reductions in offshore wind that are associated with larger turbines. He forecasts that the levelised cost of energy in 2020 will be 40% lower than it was in 2010 in part due to larger turbines, and GE wants to make sure it is in the mix for projects completed in the early 2020s.

Because the fact is that GE is not just playing catch-up with market leaders Siemens Gamesa and MHI Vestas, but it is also looking to beat them. It is hoping that it will be able to leapfrog Siemens Gamesa’s 8MW and MHI Vestas’ 9.5MW turbines, even if these firms respond by announcing their own 12MW-plus platforms.

Incidentally, MHI Vestas chief executive Jens Tommerup has often said that his firm doesn't yet see the case for launching a larger offshore turbine, even though it is technically possible to do so.

Furthermore, the 12MW launch could also open up opportunities for GE in the US and China.

In the US, GE was the second-largest turbine supplier in the onshore market and is the leader offshore – albeit that only one offshore wind farm has completed. It has several facilities near the US east coast, where offshore wind will happen first, and GE will be looking to stay ahead of the competition in its home market.

Totaro argues that GE might gain traction by offering its turbine in China, where most offshore turbines have been 4MW or smaller: “A 12MW offshore turbine might be a bit premature for the current Chinese market, but it could also jumpstart it beyond their currently installed 1.9GW as of the end of 2017”, he says.

Finally, this high-profile launch could well be part of a broader plan to revive GE’s fortunes.

The announcement comes at a tough time for the GE group, which in its annual results in January reported a $9.8bn net loss in the fourth quarter and profit margin that halved from 11.4% to 5.7%.

In contrast, GE Renewable Energy was one of GE’s brightest spots last year, and so the 12MW platform could be part of a wider effort to reshape the group with a renewed focus on offshore wind. The firm followed this with a big storage announcement this week.

Will it succeed? Well, GE is a serious industrial player, but doesn't have the same track record in offshore wind as its big rivals enjoy. The 12MW platform is a long-term plan that would consume huge time and attention, and would need to be developed in a quick timeframe while industry onlookers pick up on any slips. No doubt, it will also have to contend with big plans from rivals too.

But, if it succeeds, the turbine would be phenomenal and offshore wind sector would be the winner. It’s going to be an exciting ride.

Last week, General Electric unveiled plans to invest $400m over the next three to five years to develop a 12MW offshore turbine. It is a bold statement from a company that has so far struggled to make much of an impact offshore.

The 12MW machine is set to be developed and manufactured in France, where the firm plans to invest up to $100m in a new blade manufacturing facility in Cherbourg and up to $60m in its current Saint-Nazaire turbine plant. GE expects its first nacelle to be ready for demonstration in 2019 and to be delivered in 2021.

The plan is significant not only for the extraordinary capacity of the turbine but also because it shows that GE is trying to seize the initiative in the offshore sector.

Philip Totaro, chief executive of tech-focused advisory Totaro & Associates, told us this week that GE has had “an on-again, off-again relationship with offshore wind over the years”. Its previous attempts at deploying offshore turbines include the 3.6S machine, which it developed in-house; and the Haliade 150-6MW, which came with its acquisition of French manufacturer Alstom’s power and grid businesses in a €9.7bn deal in 2015.

However, GE has only seen nine of its 6MW turbine installed so far: in the US, at the 30MW Block Island scheme, and in Belgium and China. This puts it a long way behind its competitors, including Senvion and the now-defunct Adwen.

So what can we read into the fact it is launching this now?

Totaro argues that the timing is mainly to do with cost reductions in offshore wind that are associated with larger turbines. He forecasts that the levelised cost of energy in 2020 will be 40% lower than it was in 2010 in part due to larger turbines, and GE wants to make sure it is in the mix for projects completed in the early 2020s.

Because the fact is that GE is not just playing catch-up with market leaders Siemens Gamesa and MHI Vestas, but it is also looking to beat them. It is hoping that it will be able to leapfrog Siemens Gamesa’s 8MW and MHI Vestas’ 9.5MW turbines, even if these firms respond by announcing their own 12MW-plus platforms.

Incidentally, MHI Vestas chief executive Jens Tommerup has often said that his firm doesn't yet see the case for launching a larger offshore turbine, even though it is technically possible to do so.

Furthermore, the 12MW launch could also open up opportunities for GE in the US and China.

In the US, GE was the second-largest turbine supplier in the onshore market and is the leader offshore – albeit that only one offshore wind farm has completed. It has several facilities near the US east coast, where offshore wind will happen first, and GE will be looking to stay ahead of the competition in its home market.

Totaro argues that GE might gain traction by offering its turbine in China, where most offshore turbines have been 4MW or smaller: “A 12MW offshore turbine might be a bit premature for the current Chinese market, but it could also jumpstart it beyond their currently installed 1.9GW as of the end of 2017”, he says.

Finally, this high-profile launch could well be part of a broader plan to revive GE’s fortunes.

The announcement comes at a tough time for the GE group, which in its annual results in January reported a $9.8bn net loss in the fourth quarter and profit margin that halved from 11.4% to 5.7%.

In contrast, GE Renewable Energy was one of GE’s brightest spots last year, and so the 12MW platform could be part of a wider effort to reshape the group with a renewed focus on offshore wind. The firm followed this with a big storage announcement this week.

Will it succeed? Well, GE is a serious industrial player, but doesn't have the same track record in offshore wind as its big rivals enjoy. The 12MW platform is a long-term plan that would consume huge time and attention, and would need to be developed in a quick timeframe while industry onlookers pick up on any slips. No doubt, it will also have to contend with big plans from rivals too.

But, if it succeeds, the turbine would be phenomenal and offshore wind sector would be the winner. It’s going to be an exciting ride.

Last week, General Electric unveiled plans to invest $400m over the next three to five years to develop a 12MW offshore turbine. It is a bold statement from a company that has so far struggled to make much of an impact offshore.

The 12MW machine is set to be developed and manufactured in France, where the firm plans to invest up to $100m in a new blade manufacturing facility in Cherbourg and up to $60m in its current Saint-Nazaire turbine plant. GE expects its first nacelle to be ready for demonstration in 2019 and to be delivered in 2021.

The plan is significant not only for the extraordinary capacity of the turbine but also because it shows that GE is trying to seize the initiative in the offshore sector.

Philip Totaro, chief executive of tech-focused advisory Totaro & Associates, told us this week that GE has had “an on-again, off-again relationship with offshore wind over the years”. Its previous attempts at deploying offshore turbines include the 3.6S machine, which it developed in-house; and the Haliade 150-6MW, which came with its acquisition of French manufacturer Alstom’s power and grid businesses in a €9.7bn deal in 2015.

However, GE has only seen nine of its 6MW turbine installed so far: in the US, at the 30MW Block Island scheme, and in Belgium and China. This puts it a long way behind its competitors, including Senvion and the now-defunct Adwen.

So what can we read into the fact it is launching this now?

Totaro argues that the timing is mainly to do with cost reductions in offshore wind that are associated with larger turbines. He forecasts that the levelised cost of energy in 2020 will be 40% lower than it was in 2010 in part due to larger turbines, and GE wants to make sure it is in the mix for projects completed in the early 2020s.

Because the fact is that GE is not just playing catch-up with market leaders Siemens Gamesa and MHI Vestas, but it is also looking to beat them. It is hoping that it will be able to leapfrog Siemens Gamesa’s 8MW and MHI Vestas’ 9.5MW turbines, even if these firms respond by announcing their own 12MW-plus platforms.

Incidentally, MHI Vestas chief executive Jens Tommerup has often said that his firm doesn't yet see the case for launching a larger offshore turbine, even though it is technically possible to do so.

Furthermore, the 12MW launch could also open up opportunities for GE in the US and China.

In the US, GE was the second-largest turbine supplier in the onshore market and is the leader offshore – albeit that only one offshore wind farm has completed. It has several facilities near the US east coast, where offshore wind will happen first, and GE will be looking to stay ahead of the competition in its home market.

Totaro argues that GE might gain traction by offering its turbine in China, where most offshore turbines have been 4MW or smaller: “A 12MW offshore turbine might be a bit premature for the current Chinese market, but it could also jumpstart it beyond their currently installed 1.9GW as of the end of 2017”, he says.

Finally, this high-profile launch could well be part of a broader plan to revive GE’s fortunes.

The announcement comes at a tough time for the GE group, which in its annual results in January reported a $9.8bn net loss in the fourth quarter and profit margin that halved from 11.4% to 5.7%.

In contrast, GE Renewable Energy was one of GE’s brightest spots last year, and so the 12MW platform could be part of a wider effort to reshape the group with a renewed focus on offshore wind. The firm followed this with a big storage announcement this week.

Will it succeed? Well, GE is a serious industrial player, but doesn't have the same track record in offshore wind as its big rivals enjoy. The 12MW platform is a long-term plan that would consume huge time and attention, and would need to be developed in a quick timeframe while industry onlookers pick up on any slips. No doubt, it will also have to contend with big plans from rivals too.

But, if it succeeds, the turbine would be phenomenal and offshore wind sector would be the winner. It’s going to be an exciting ride.

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Not a member yet?

Become a member of the 6,500-strong A Word About Wind community today, and gain access to our premium content, exclusive lead generation and investment opportunities.