USA- GE and local leaders strike deal to spur development of offshore wind turbine market

The General Electric Co. dominates the country's wind turbine market on land. Local leaders want to help GE realize similar success on the water -- an effort that could employ thousands of Ohioans.

Thus was born the unique agreement, struck in late May, under which GE and a regional development corporation aspire to erect hundreds of turbines in Lake Erie in the next decade, while building an offshore wind industry here. The first big step in their mutual goal: a $100 million plan to locate five massive wind turbines eight miles off Cleveland's shore.

GE and the Lake Erie Energy Development Corp., known as LEEDCo, are pursuing their vision as part of an innovation and market-development roadmap, laid out in a memorandum of understanding LEEDCo released this week. The two parties agree to pursue cost-cutting advances in technology, advocate for policies that spur the emerging industry and build a network of Ohio suppliers. The GE-LEEDCo agreement culminates a three-year search by the Great Lakes Energy Development Task Force to find a turbine maker willing to go beyond just selling the multimillion-dollar machines.

"It's not about finding a turbine supplier," said Wagner of LEEDCo, which spun out of the public-private task force. "It's about finding a partner. There is no [offshore wind] industry and we're looking to build it over the next 10 years." There are no wind turbines in North American waters, much less the Great Lakes. But growth of hundreds of megawatts a year is expected by 2020.

GE's aim to capture a big chunk of the offshore wind market is no pipe dream. GE Energy supplied nearly half of the 5,700 turbines installed on land in the U.S. last year, the American Wind Energy Association reported. After years of building a land-based turbine market, GE last fall acquired a Norwegian company that builds offshore wind turbines.

Then in March, GE said it would spend $450 million to expand its turbine-making capacity in four countries, to grab a share of Europe's fast-growing market for offshore wind.

"We are excited about this opportunity to be potentially the first freshwater, offshore wind farm in North America," Rich Reno, head of GE's offshore wind efforts, said in an interview today. "We see the Great Lakes as a great match with our technology and LEEDCo being a great first step in bringing offshore wind turbines into the U.S."

The project faces daunting financial and regulatory hurdles. Under their agreement, GE and LEEDCo commit to tackling many of the issues together. A key will be driving down the high cost of offshore wind, estimated at three times the cost of conventional power. GE would pursue cost cuts by refining its direct-drive turbine technology, under the agreement. GE wants to improve the performance and reliability of its gearless technology, and cut maintenance costs.

Both GE and LEEDCo would join with universities and other partners to find the best methods of erecting the turbines, as well as the best design for the turbines' foundations in Lake Erie. GE has already seeded related research at Case Western Reserve University's energy institute. Projects include foundation design, the use of advanced materials in turbine blades and the optimal layout of wind farms. GE and LEEDCo will advocate for more federal dollars to support offshore wind research, as well as new laws and policies to spur the market.

Efforts they like include a bill recently co-sponsored by U.S. Sen. Sherrod Brown, which would expand incentives for offshore wind development and require the U.S. Department of Energy to develop a comprehensive strategy for the deployment of offshore wind turbines. To develop Ohio's offshore wind industry, GE and LEEDCo plan to identify Ohio manufacturers for GE's supply chain. A number of manufacturers across Ohio already supply parts for GE's land-based turbines.

GE's Reno said he is already talking with two potential suppliers for the offshore turbine project. GE said it would be interested in siting a turbine-manufacturing plant here, if a viable market develops. LEEDCo should know within six months whether GE is serious about spurring an offshore wind industry here, Wagner said. "If we bring them the right companies, with the right products and the right price," Wagner said, "then GE and that company should be able to come to terms." LEEDCo will shortly hire a project developer to oversee the five-turbine pilot project in Lake Erie. It's estimated to generate up to 20 megawatts, enough to power 16,000 homes.

Wagner described the partnership with GE as a marriage filled with promise, but one that may not work out. Hurdles could include the cost of buying and installing GE's turbines, along with unforeseen market forces, he said. "We both have the greatest of intentions," Wagner said. "But there could be forces outside our control. . . . We need to drive the cost of [offshore wind power] down. We both believe we can do that, but there are no guarantees we can achieve it."

For more information please contact Trevor Sievert at ts@windfair.net