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    A blow to GE’s wind turbine business


    September 9, 2022 - By Jon Chesto|Globe Staff

     

      General Electric made a huge splash four years ago with plans to build what it called the Haliade-X, the most powerful wind-driven turbine to go up in the ocean at the time.

      Taller than the Hancock tower. Each blade, roughly as long as a football field. Able to generate enough electricity for at least 6,000 homes. These goliaths would accelerate the adoption of offshore wind power and help Boston-based GE leapfrog its primary rivals in the quickly growing US market, Siemens Gamesa and Vestas. Then in 2020, GE outmaneuvered Vestas for the contract to supply the nation’s first commercial-scale offshore wind farm, the Vineyard Wind project planned for waters south of Martha’s Vineyard.

      However, these grand plans ran into significant turbulence in federal court in Boston on Wednesday, when US District Judge William Young blocked the sale of the Haliade-X in the United States. With only three major players here, taking GE’s modern offshore turbine off the market could complicate life in a big way for US wind-farm developers.

      Young’s ruling was based on a jury verdict in June that found several elements of GE’s Haliade-X infringed on a patent held by Siemens Gamesa, a European company considered to be the global market leader in offshore wind. Young allowed Haliade-X turbines to be installed at Vineyard Wind and another wind farm off the New Jersey coast, because they are so far along in development, as long as GE pays royalties. But beyond those projects, the injunction would require GE to come up with a new design. That’s not something that happens overnight.

      This decision is a setback for GE, of course. But it may be an even bigger setback for the nation’s nascent offshore wind industry — the latest of many.

      For its part, GE’s renewable energy division says it remains committed to the US offshore wind industry and is “confident in the legal and technical options available to us."

      Those legal options could include an appeal of Young’s ruling or a request to stay his injunction.

      On the technical side, teams within GE are already considering design workarounds. From GE’s perspective, Siemens Gamesa is hurting the public interest by taking an invention off the market for the sole ­purpose of harming a competitor.

      GE investors seemed unfazed. The company’s stock ended the day essentially unchanged, at $73.77 a share. But GE shares have already taken a beating this year, and offshore wind represents a relatively small part of the conglomerate’s current operations. Eventually, GE’s energy businesses will be spun out, creating a new company to be called GE Vernova in 2024.

      “My sense is this is not ‘game over,’ this is not the end of the Haliade-X in the US," said Nick Heymann, an analyst who follows GE for investment bank William Blair. “My guess is, this is really, ‘Let’s go back to the locker room and figure this out.’?"

      Heymann said a rejiggering of the Haliade-X won’t be simple. Any redesign will need to be incorporated into GE’s production line and its supply chain.

      John Dalton, president of consulting firm Power Advisory LLC, said he thinks GE will pursue this “technical solution." The big question, he said, is how long it will take.

      When a competitor gets ­taken out of such a concentrated market, Dalton said, it seems likely that there would be an impact on pricing and ­delivery times, potentially ­hampering the growth of offshore wind in the United States.

      “I’m hoping it’s just a hiccup," Dalton said. “But it’s not an insignificant hiccup."

      At the Northeast Clean Energy Council, president Joe Curtatone tried to look on the bright side.

      He said he’s relieved Vineyard Wind and Ocean Wind were carved out, so those projects can continue to advance. And Curtatone said properly enforcing patent law helps ensure a level playing field for a still-emerging industry. The ruling, he added, might prompt GE to come up with an even better design.

      But Kris Ohleth, the leader of an offshore wind policy think tank, couldn’t help but be disappointed.

      Ohleth, who heads the Special Initiative on Offshore Wind, said the injunction will make it even more challenging for the United States to reach the Biden administration’s ambitious goal of having 30 gigawatts of offshore wind capacity up and running by 2030.

      Until Vineyard Wind is completed, that number will remain at essentially zero, with only two small offshore wind farms operational today (one off Block Island, the other off the Virginia coast).

      Her group’s calculations show the need for more than 2,000 offshore wind turbines to reach that 30 GW goal. Even counting 62 for Vineyard Wind and nearly 100 for New Jersey’s Ocean Wind, that leaves more than 1,800 still to be built. The industry needs all the suppliers it can get right now. And global supply chains are constrained already as other countries look to invest in offshore wind as well.

      The most recent big tax package passed by Congress could help, by extending industry tax credits and providing funds for loan guarantees, she said. But she also points to a dispute between Dominion ­Energy and its regulator in ­Virginia that threatens Dominion’s plans for the country’s largest-ever offshore wind farm.

      With GE out of the mix, even if temporarily, it will be just that much tougher for the United States to be taken seriously by the offshore wind industry’s big players, primarily those in Europe, and by investors.

      The nation’s new offshore wind industry often seems to be locked in a frustrating two-steps-forward, one-step-back approach to growth. With the Siemens Gamesa vs. GE decision this week, she said, it’s time to take one step back again.

      Jon Chesto can be reached at jon.chesto@globe.com. Follow him on Twitter @jonchesto.

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