General Electric Co. and Vestas Wind Systems A/S, the world's two biggest wind-turbine makers, are reaping benefits from record orders by U.S. utilities racing to add generating capacity even as they face the loss of subsidies.
GE, Vestas and Siemens AG stand to gain although the extension of the production tax credit, due to expire in December, is stalled in Congress. Four years ago, the last time the credit wasn't renewed, orders came to a near standstill. Now, rising natural gas prices and state greenhouse-emission laws are fueling a surge in demand for wind power, which accounts for 30 percent of new generating capacity and may boost GE's wind-turbine sales 25 percent to $6 billion this year.
Xcel Energy Inc., the biggest U.S. provider of wind power, is buying 67 GE turbines for a Minnesota wind farm because the state requires it to get almost a third of its power from non- polluting sources. That will help GE reach operating income margins of 17 percent on wind turbines based on this year's sales, as much as 5 percentage points greater than those of Danish competitor Vestas. Wind is the fastest-growing unit at GE Energy, the world's biggest power-plant equipment maker.
``Customers are giving billions of dollars of orders already because they're afraid they're going to lose their spot in line,'' John Krenicki, who runs the GE Energy division, said March 5. GE posted more than $4.5 billion in wind-turbine sales last year, the most since it bought the business in 2002 for less than $300 million from Enron Corp. GE's total revenue last year was $172.7 billion.
Alternative Play
GE became the biggest U.S. supplier last year with 45 percent of the market and has announced $1.7 billion in orders since Feb. 28, including its second billion-dollar contract since November with Invenergy Wind LLC. Chicago-based Invenergy has developed wind farms for companies including MidAmerican Energy Holdings, the utility owned by Warren Buffett's Berkshire Hathaway Inc....MUCH MORE
