GE wind turbine orders nearly double as Inflation Reduction Act benefits kick in

General Electric Co. executives said they are beginning to see the benefits of the Inflation Reduction Act's extended tax credits for renewable energy projects, evident in a sharp increase in wind turbine orders.

The company logged orders for 529 new wind turbines totaling 1.6 GW in capacity in the first quarter of 2023, according to an April 25 investor presentation. That is up from orders of 303 wind turbines totaling 1.1 GW in the first quarter of 2022.

"We've talked about the [Inflation Reduction Act] as a game changer, providing greater near-term and long-term demand certainty," Larry Culp, chairman and CEO, said during GE's first-quarter earnings call. "We're already seeing this play out with significantly better visibility into our commercial pipeline over the next several years compared to this time just a year ago."

The new tax equity is entering the market as the Boston-based industrial conglomerate prepares to spin off its power, grid and renewables business into GE Vernova. GE is projecting low- to mid-single-digit organic revenue growth for GE Vernova in 2023, with operating profit losses ranging from $200 million to $600 million.

While renewable energy had a profit margin loss of 14.6%, GE's renewable energy revenues grew in the first quarter 5% from the year-ago period to $2.8 billion. GE's figures do not break down how many orders were onshore versus offshore wind turbines, but executives said the company logged no new offshore bookings in the first quarter of 2023.

Culp acknowledged continued "growing pains" in offshore wind. GE had entered the offshore market with an effort to build one of the industry's largest wind turbines, the Haliade-X. But the campaign faced obstacles including unfavorable rulings in a federal patent lawsuit filed by competitor Siemens AG subsidiary Siemens Gamesa Renewable Energy SA. The companies reached a settlement in March.

"In offshore, we're managing our existing Haliade-X backlog," Culp said. "This quarter, revenue more than doubled as we produced more nacelles. As discussed in March, we still expect offshore to remain a near-term challenge as we execute our initial projects and improve our learning curve, both in terms of product cost and operational capabilities."

Carolina Dybeck Happe, senior vice president and CFO, said the company knows "that offshore wind is sort of an investment, and we have the learning curve there where we expect to sort of move down that curve with ... better project execution."

GE's grid solutions business has capitalized off the offshore wind market; GE announced in March that two GE-led consortiums were awarded a total of 10 billion with TenneT Holding BV as a part of the Dutch electricity grid operator's program to build high-voltage direct current offshore grid connections in the North Sea.

Culp said modest profits this year within onshore wind and grid solutions will set up GE "to work through some of these growing pains in offshore to position Vernova to go in '24."

"I think we're optimistic that ... GE Vernova will be a stand-alone, independent, investment-grade industry leader in the energy transition sometime early next year," Culp said.

Citing confidence in strong market demand for its products as well as operational improvements across businesses, GE increased the lower end of its 2023 full-year adjusted earnings per share guidance to $1.70-$2 from $1.60-$2.