Wednesday, October 28, 2009

"Can R&D Save General Electric?" and "GE's Risky Energy Research" (GE)

Combined with lobbying and firing Immelt.
We had quite a few GE stories pop up in the readers today, here's the first one, from BusinessWeek:

Most of the news out of GE these days is bad. If the stories aren’t about the company’s deeply screwed up credit subsidiary, they’re about the uncertain future of the NBC Universal media and entertainment business. Now, with Comcast apparently on the verge of buying controlling interest in NBC Universal, the key to GE’s future is coming into focus: It’s the company’s core industrial businesses—which make everything from nuclear power generators and locomotives to jet engines, wind turbines, refrigerators, and health care equipment. And, of course, light bulbs.

Fortunately for GE and its investors, CEO Jeff Immelt takes innovation in the core businesses very seriously. Since he took over as CEO from Jack Welch in 2001, he has tripled the annual output of patents and doubled the company’s level of investment in overall R&D. That includes increasing the funding of basic scientific research at the labs from $315 million in 2001 to $555 million last year.

It can take years or even decades for investments in this kind of research to pay off, but Immelt and GE don’t have the luxury of time. They need to see those R&D payoffs in the next couple of years. Otherwise, GE could wind up shivering in Wall Street’s dog house for a very long time and Immelt could be out of a job.

I recently spent a day chock-full of meetings with scientists at GE’s main laboratory in Niskayuna, New York. What I saw there gave me the belief that an innovation-led surge at GE is at least in the realm of possibility. It’s no sure thing. But R&D could save GE.

GE has launched a PR spin campaign around its R&D initiatives. It invited equity analysts up to Niskayuna a couple of weeks before my visit, but got mixed reviews. While Scott Davis of Morgan Stanley recommended the stock after he came back, Sterne Agee analyst Nicholas Heymann, who didn't attend the briefing, warned that "Increasingly, the success of today's technologies can be made or broken by legislative reforms." He has a "sell" recommendation on the stock.

I don't mind being spun if there's real substance behind it--and, in this case, there is.

To me, the main thing that counts in GE's favor is it's thinking really big. A number of its research innovations could reshape entire industries. For instance, it's developing so-called continuous detonation systems for powering aircraft--which it claims could deliver 30% energy savings. A prototype is due out in 2010. "In each of the advanced technology areas, we have advances that will change the world," I was told by Michael Idelchik, vice-president for advanced technology at GE Global Research.

The science GE is working on is quite diverse, from nanotechnology and molecular imaging to organic electronics, sustainable energy, and energy conversion. In addition to Niskayuna, GE has labs in Bangalore, Shanghai, and Munich--and plans a clean energy technology center in Masdar City, Abu Dhabi; and a manufacturing technology center near Detroit. It has 2800 research employees worldwide....MORE

From MIT's Technology Review:

GE's Risky Energy Research

Michael Idelchik, VP of Advanced Technologies, discusses energy research.
Michael Idelchik is vice president of advanced technologies at GE Research, one of the world's largest corporate research organizations. He oversees a wide range of projects, including ones aimed at improving conventional energy sources--with better coal and gas turbines, for example--as well as projects involving renewable energy, primarily wind turbines. At the EmTech@MIT 2009 conference, Technology Review spoke to Idelchik about some of GE's most daring long-term research efforts.

Technology Review: What is the riskiest, most early-stage research going on at GE Research?

Michael Idelchik: We're an industrial research lab, so early-stage is relative. But we have a number of projects that take years to develop. I'll give you a couple. Pulse detonation technology, or supersonic combustion. With this one, rather than burning fuel at constant pressure, you let the pressure rise, so basically you generate a shock wave; you're releasing heat in a detonation. An existing turbine burns at constant pressure. With detonation, pressure is rising, and the total energy available for the turbine increases. We see the potential of 30 percent fuel-efficiency improvement. Of course realization, including all the hardware around this process, would reduce this.

TR: In reality, the efficiency improvement in a power plant would be lower than 30 percent. How much would the improvement actually be?

MI: I think it will be anywhere from 5 percent to 10 percent. That's percentage points--say from 59 to 60 percent efficient to 65 percent efficient. We have other technology that will get us close [to that] but no other technology that can get so much at once. It's very revolutionary technology.

TR: How will this technology be used?

MI: The first application will definitely be land-based--it will be power generation at a natural-gas power plant.

TR: You will be detonating the fuel over and over again, something like an internal combustion engine?

MI: Basically you detonate anywhere from 50 to 80 hertz. Then you have unsteady flow going into the turbine. So you need to rethink how your turbine works. You don't have a steady flow anymore.

TR: What are some of the challenges, in terms of materials or that sort of thing, to making that work?

MI: You have to look at the mechanical stability, vibrational analysis. You have to protect the compressor; detonation happens in both directions, so you have to close one end. So controls and synchronization of the detonation chambers become a really big challenge as well. You have to absorb the energy from detonation and convert it to shaft horsepower. That has to be done very well, otherwise you can lose everything in the turbine. What blade design and nozzle design will allow you to extract the most horsepower?>>>MORE