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Tacit Admission

September 10, 2010

While reading General Electric’s announcement about its new battery business and the refurbishment of Building 66 in Schenectady to manufacture the new battery, I was surprised to see that the wind turbine business is part of the Transportation business.

Was this a tacit admission that wind turbines are inefficient?

There is very little synergy between wind turbines and locomotives. Sales and marketing in the transportation business wouldn’t have many existing contacts with contractors or utilities.

Organizationally it would have seemed more appropriate to place the wind turbine business under the power generation business. The power generation business has long established relationships with utilities such as Florida Power and Light (FPL); companies that would be interested in wind turbines.

Was GE management concerned that the power generation business would relegate wind turbines to a lowly third position behind gas and steam turbines, a position reflecting the inefficiency of wind turbines? Putting wind turbines under power generation would have required sales personnel who called on utilities to attempt to sell a less efficient product. Would this have created a conflict within the power generation business?

If this was a concern of GE management, it’s a tacit admission that wind turbines are inefficient and can’t compete with gas and steam turbines.

As I have noted in earlier articles, wind turbines are anywhere from two to four times more costly to build per KW, when adjusted for capacity factor and the amount of electricity actually produced, than steam turbine power plants – And, on the same basis, four to eight times more costly than natural gas combined cycle (NGCC) power plants.

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