Wind Challenges and Opportunities

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GE Energy

Wind Challenges and Opportunities Seth Dunn

Policy Leader Renewables

Penn State University Smeal College of Business Center for Strategic and International Studies Washington, DC October 13, 2009

Opportunities

2009

GE Company Proprietary

2030

GE Company Proprietary

A Changing World … Growing population & energy density

Cost of energy … fuel supply & demand

Increasing environmental requirements

Driving power generation technology

Escalating security concerns

5 GE Company Proprietary

Global Renewable Energy Targets North America U.S. … State RPS (35 + DC) Canada … Provincial targets (9)

Europe EU … 20% by 2020

China 10% by 2010 20% by 2020

India Mid East & Africa Latin America Chile … 10% by 2024

Morocco … 20% by 2012 Jordan … 10% by 2012 Egypt … 20% by 2020

14 GW wind by 2012

Asia Pacific Japan … 11% by 2030 Australia … 20% by 2020 New Zealand … 90% by 2025

Targets in 73 countries worldwide … 400 GW Wind & 80 GW Solar … 800,000 wind turbines + 400 million solar modules Copyright 2009 General Electric Company

Renewables ... A global non-linear shift Global Wind & Solar PV annual installations CAGR

(GWs)

The world today ~30

% 25 Solar PV 4 Wind '00

R G CA

Solar PV 36%

1% shift toward renewables Wind 23%

17

~40,000 wind turbines ~500,000,000 solar panels

8

'03

• 4,600 GW installed

'06

'09

Wind & Solar … Zero fuel cost, zero CO2 … Massive opportunity 77 7

Source: REN21 2008, EER, GE Marketing GE Company Proprietary

Challenges

Policy … Foundation for wind growth Manufacturing, materials & labor

Technology Transmission & integration

Siting & environment Electricity markets

Five key components … policy is the foundation 9 GE Company Proprietary

Policy … Foundation for wind growth Manufacturing, materials & labor

Encourage capacity expansion

Technology Reward performance

Transmission & integration

Siting & environment Streamline permitting

Motivate grid investment

Electricity markets Enable new revenue streams

10 GE Company Proprietary

’08 financial crisis shocked wind market 32 (view as of 8/08)

Annual wind installs (GW) Asia EU Americas

~5,000 WTG correction

27

22 (19%)

20

(13%)

15

Market inhibitors • $55B ’08 industry poised for $70B ’09 … drops to $40B • Financial crisis impacting all regions … tax equity compounding US drop • 1st global wind slowdown in a decade … 30% excess equipment “overnight” • US/Europe forecast ’09-11 wind & solar installs 260% of load growth (67 TWh)

11 7

7

8

(12%)

8

4 (33%) '00

'01

'02

'03

'04

'05

'06

'07

'08

'09 Est.

Policy accelerators • Stimulus $ (Treasury grant, LGP, Mfg ITC) • National RES • Carbon price

'09

New policies required to restore US growth 11 GE Company Proprietary

Waxman-Markey RES … designed to come in 3rd 1st

2nd

Europe

China

US

Fredrik Reinfeldt EU President

Hu Jintao PRC President

Barack Obama US President

EU Renewable Energy Directive

Wind installed base (GW)

2.3MM wind job years

National Energy Administration/NDRC* “State New Energy Revitalization Plan”

GW 5 16

1.5MM wind job years

+

GW 8 13

150

65 2020

GE actions

2008

1.3MM wind job years

GW 0 0 +1

125

25

12 2008

American Clean Energy & Security Act “Waxman-Markey”

*Proposed increase to 100 GW target

230

+

3rd

2020

Immediate: Advocate for higher near-term targets

2008

2020

Future: Strengthen RES in future revisions

75% of wind industry could be outside U.S. 12 GE Company Proprietary

Technologies & Strategies

GE and Wind … Combining Strengths GE Energy Financial Services

GE Oil & Gas

Energy investing and financing

Offshore platforms/experience

GE Energy

GE Transportation

Controls, materials, technology Fulfillment & logistics capability Efficient supply chain management

Gearbox and power converter technologies

GE Aviation GE Global Research Centers

Aerodynamic and aero-acoustic modeling expertise

China, India, US and Europe

Wind Product Strategy 1. High Reliability 2. Capacity Factor Leadership … Most Efficient 3. Advanced Grid Integration 14 GE Company Proprietary

Operating performance

Environmental performance

Double R&D… $1.5 Billion

Grow Revenues… Reduce $25 Billion Emissions

Report Progress

15 GE Company Proprietary

GE Energy

Wind Challenges and Opportunities Seth Dunn

Policy Leader Renewables

Penn State University Smeal College of Business Center for Strategic and International Studies Washington, DC October 13, 2009

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