IN DEPTH: GE's European push
General Electric has some bad news for suppliers of onshore wind turbines in Europe.
After several years of happily gorging on US demand whipped up by the production tax credit (PTC), GE has once again set its sights across the Atlantic.
It is a major strategic pivot for GE, and one with huge significance for the European turbine market.
GE effectively tied with Vestas last year as the world’s largest supplier of wind turbines (although some estimates put the US supplier narrowly ahead of its Danish rival).
Yet the discrepancy between GE’s position in the US and European markets is striking — 96% of the turbines GE commissioned globally last year were in the US, where it commanded a 38% share of the market. By contrast, in Europe its market share sat at about 6%, trailing a long list of familiar rivals. Three of them — Vestas, Siemens and Gamesa — all held far higher market shares in the US last year than GE did in Europe.
The man tasked with bringing GE’s market share in Europe into closer alignment with its US position is Cliff Harris, who took the reins this summer from Stephan Ritter as GE’s general manager for renewables across Europe, the Middle East and Africa.
It is a sweeping remit for a man who has never before worked in the renewables business.
An Englishman and 15-year GE veteran, Harris began his career several decades ago in the coal generation sector, before working his way through gas and nuclear — and finally landing on wind. “I’m getting greener as I go on,” he jokes.
In explaining GE’s newfound fixation with Europe’s onshore wind market, Harris, who is based in Germany, cites all the typical reasons renewable-energy suppliers like doing business in Europe — the size of the market, the political stability, the affluence and green-mindedness of the consumers.
Yet none of these factors are exactly new. Why, then, had GE allowed its wind business to dwindle so much in Europe in recent years?
The simple answer, Harris acknowledges, is that over the past few years the US has represented a much easier win for GE’s wind business, which was purchased a decade ago from the scandal-ridden Enron. With the PTC acting as rocket fuel for demand, more than 5GW of GE turbines were installed last year in the US.
“In America we’ve been selling into very big projects — it’s not uncommon in the US for a wind farm to have 50 or 100 [turbines],” Harris says.
In Europe, by contrast, an average wind project might be closer to “nine or ten units”.
“But you have to put virtually as much effort into building that project — you’ve still got to get your permits, your grid connection, negotiate all your contracts.”
“We’ve realised that we need to be a pan-European player.”
One advantage GE has in Europe is its decades-long relationships with many of the continent’s largest power generators.
“For me, one of the things that has been very transferrable is that a lot of the customers are the same [across GE’s power divisions],” Harris says. “Whether you’re building a gas turbine or a wind turbine with E.ON, it’s still E.ON.”
Germany’s E.ON is one big customer that pops up several times during the interview; SSE, based in Scotland, is another.
But Harris acknowledges that — unlike in the thermal-generation business — small and medium-sized customers really matter in onshore wind, especially in Europe.
To that end, GE is “investing in putting extra people on the ground so we can get out in front of customers and get them to know our products better”.
Establishing a future target for market share can be “very difficult”, claims Harris, who insists GE is more concerned with growing its European wind business profitably than simply grabbing new customers.
But by the end of 2015, “I’d personally like to see us doubling our penetration” compared to 2012’s 6% market share, he says.
The British Isles, Scandinavia and Germany are all considered core to GE’s European plans.
“We’ve just signed some really big deals in Germany, and we’re looking really good there for the end of this year and next year.”
“You will definitely see GE turbines in South Africa [at some point]”, he says.
There is one major segment of the European wind market in which GE has openly stated it does not intend to make a splash: offshore.
A single 4.1MW GE turbine has been spinning off the coast of Sweden since 2011, but that will be the last one GE erects offshore for the foreseeable future, and perhaps forever.
Given the challenging economics of offshore wind, Harris says, “how many areas outside of the UK [and Germany] are really going to see major development?”
“We’ve made the strategic decision to focus our resources onshore. We think that’s the market for us — that’s where we’ll put our product dollars, our feet on the ground.”
“Does that mean we’d never get back into offshore wind? You should never say never.
“We’ll continue to watch the market and see how things develop," he says. “But at the moment it’s a watching brief.”
For more on GE Wind's strategy in Germany, turn here.