GE boss expects onshore wind business to turn to profit in 2023

The head of GE’s global energy business expects its onshore wind business to turn a profit in 2023 and its offshore wind unit to be back in the black in 2024 as the company looks to turn around “unacceptable” financial results in its renewable energy division.

Scott Strazik said the company must be more selective in which international onshore wind markets it focuses on and expects offshore wind earnings to improve as the company delivers on its Haliade-X order book.

At the company’s investor day, Strazik told investors and the media that he expects onshore wind to be unprofitable in 2022 due to a slowdown in market activity in North America, but that he expects business to pick up from 2023.

He added that GE’s renewable energy and power units – which are due to be merged and spun off in early 2024 – could have a low-single digit profit margin in 2023 and then a mid-single digit margin in 2024.

“Smarter pricing” and “simplifying the organisation” will also help the onshore wind be profitable, he added. GE Renewable Energy has already raised onshore wind prices in a bid to offset cost inflation.

“The last three years, the financial results of these businesses (renewables and power) have been unacceptable – but also fixable,” Strazik said.

Market opportunity

Pat Byrne, GE’s head of onshore wind, added that by the mid-2020s, he expects there to be 50GW of annual additions outside of China – a market western manufacturers have typically found it difficult to succeed in.

About a quarter of that annual demand will be in North America, where GE is the market leader, Byrne added. Accordingly, he said that GE sees growth opportunities in North America and abroad.

Byrne added that he expects North America to add 12GW per year as utilities seek to boost their renewable energy capacity and as the market for power purchase agreements (PPAs) grows.

He said that GE must build a better backlog internationally, and agreed with Strazik’s assertion that the manufacturer should focus on markets it thinks it can compete in.

Neither specified which markets these might be, although Strazik added: “For international onshore wind, we need to have conviction on what markets we can make money on equipment on day one, and then services on day two.”

Offshore wind

Strazik added that he expects GE to turn a profit from offshore wind in 2024 as volume ramps up for the company’s Haliade-X turbine.

GE is continuing to invest in developing its offshore wind technology, Strazik added.

Strazik concluded: “The world is going to electrify with the need to simultaneously decarbonise – these two macro themes are ones that position this company to lead for a very long time. 

“Our power businesses are in very good shape to generate a substantial amount of cash flow for a long time.”