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The industrial giant began a few years ago to buy up some of the renewable-energy divisions from larger companies like Enron. Now, GE is increasing its R&D and marketing development budgets to create a larger name for itself in coal gasification, wind power and fuel cells.
Ali Iz, the general manager of technology growth at General Electric, the group that oversees GE's solar and other alternative-energy efforts, recently sat down with News.com Editor at Large Michael Kanellos to discuss how the conglomerate will bring out products that will pollute less and add to GE's bottom line.
Q: GE has been running a lot of ads on alternative energy lately. Is this a new direction for the company, or are you just bringing attention to it now?
Iz: We entered wind four years ago and solar a year and a half ago. We're working on integrated coal gasification. There wasn't an epiphany earlier this year or last year where we said, "We're going to do cleaner and better stuff." We've always been doing it. It's just that it has not been focused.
One thing we are doing though is doubling the R&D spending from about $700 million to a billion and a half by 2010 on cleaner technologies. That's a major commitment, and that includes fuel cells, wind, coal gasification, combined cycle and cleaner gas-turbine technology.
And this is not just energy. Cleaner products and technology also will impact our transportation business, rail and our aircraft engine business.
When you look at the alternatives, which ones seem most promising? What do you like about solar, for instance?
Iz: The installation today is costly. It has to be a lot less. The inverter has to be more robust and less costly than today. We're going to be introducing a new inverter (a device that converts direct current into alternating current) in early '06 for residential applications that is going to be, we believe, significantly more reliable.
Also, we are working on module technologies that integrate seamlessly with rooftops. If you integrate seamlessly, it doesn't jut out of the roof. It's a great product.
It's been very successful in California. We're in 55 home development sites in California. The home builders see it as a differentiated house, and it reduces the electricity bill of the buyer significantly--like to about a third. In Ladera Ranch in Orange County, many home builders are using solar. Our consumer finance, GE Consumer Finance, came up with a mortgage product (for solar homes).
Here's a good example. Shafer Vineyards in Napa Valley installed a 129-kilowatt solar system, and they are 100 percent solar powered. That includes their processing units, refrigeration, their offices. It's a 100 percent solar powered facility.
One thing that has hurt solar before is that the panels make it look like you're putting up an aircraft hangar on your roof. They are very ugly.
Iz: Right. So we want to do away with that, and we've done it with concrete roof tiles. We're also working on other roof systems.
At the end of the day, solar has to be under $3 a watt without incentives to become mainstream because, under $3 a watt, it will compete with the retail price of electricity. And that's the key. Today it's between $6 and $8. (Editor's note: Japan, Germany and several U.S. states give rebates and tax cuts to property owners who install solar systems.)
Who is buying solar? Demand is obviously way up because of the shortage in panels.
Iz: Even today with all the attention solar is getting in the U.S., the U.S. market is about 10 percent of the total. Japan is about 30 percent, Europe is about 50 percent. And the biggest market in Europe--in the world, actually--is Germany, a country that is really not known for its abundance in sun, right? Germany grew by 90 percent last year.