12/22/2005

Source: LOHAS Weekly Newsletter

Author: Fortune/Greenbiz.com

Six miles off the coast of Ireland in the Irish Sea are windmills so huge that they look like leftover props from last summer's War of the Worlds. In fact, these 35-story structures, with rotor blades each the length of a football field, make up a pilot wind farm built and operated by General Electric. The turbines supply Ireland's electricity grid near the town of Arklow with enough power to serve 16,000 homes.

For a country that's 90% dependent on imported fossil fuel, the arrival of the world's largest offshore wind farm is a boon. Having recently completed its first year of operation, the Arklow Bank installation saves Ireland 15,000 tons of imported fossil fuel a year and prevents the release of about 68,000 tons of carbon dioxide into the atmosphere, the equivalent of taking about 16,000 cars off the road. Officials are talking about increasing the size of the Arklow installation tenfold, enabling it to supply 10% of all Ireland's electricity needs.

The Arklow wind farm is GE's latest entry in the search for ways to generate power without releasing carbon dioxide and other greenhouse gases into the atmosphere. In perhaps the broadest and largest corporate effort anywhere, GE spent $700 million in 2004 on clean-energy R&D--ranging from hydrogen production to solar cells, cleaner coal plants, and biofuels. CEO Jeff Immelt has frankly described the effort as designed not only to meet environmental challenges but also to "enhance our bottom line." As another GE official succinctly told FORTUNE, "Green is green."

At the company's sprawling Global Research Center near Schenectady, N.Y., scientists think they are nearing breakthroughs in a variety of energy technologies. In August, for instance, GE reported that it had developed nanodiodes--whiskers 1/80,000th the thickness of a human hair--displaying a photovoltaic effect that converts sunlight into electricity. It is working to incorporate them in new types of solar cells. At the other end of the product spectrum, GE has built a prototype of a hybrid-powered locomotive that uses less fuel and produces fewer toxic emissions than a conventional one. "The hunt for clean, sustainable energy will be the defining story of the 21st century," says Michael Idelchick, VP of advanced technology at the research center.

Some forms of new energy are already on their way to becoming big businesses for GE. It expects to report more than $2 billion in wind-turbine sales to private developers and private and government utilities this year. That's up 300% from $500 million in 2002, when GE acquired a struggling wind-power business from Enron. Some 5,500 of the turbines have already been installed around the world, and another 1,600 are due to go up this year. GE is the only U.S. manufacturer. "This market is exploding," says Vlatko Vlatkovic, a Croatian-born electrical engineer with a doctorate from Virginia Tech who supervises 220 scientists and engineers. "It's growing 30% a year in the U.S. and Europe."

Experts expect that as much as 20% of the U.S.'s total energy will someday be derived from wind, vs. 1% to 2% today. At 5 cents per kilowatt-hour (including a federal production-tax credit), wind-powered electricity has become competitive in cost with gas-turbine generators. "Everything in the energy industry is driven by cost," says Vlatkovic. "Once you hit 5 cents an hour, you're going to sell megawatts of electricity." By comparison, power produced by coal, nuclear, oil, gas, and hydro costs 6 to 7 cents per hour. A GE analysis shows that strong winds blowing off the eastern slopes of the Rockies could supply all of America's electricity--if only transmitting it thousands of miles to population centers were economical.

GE is also quietly harvesting low-hanging alternative-energy ideas, such as its hybrid diesel-electric locomotive. Vlatkovic and his engineers see an opportunity to cut both fuel consumption and the emission of noxious gases by capturing the energy thrown off during braking. GE's standard 6,000-horsepower locomotive gobbles 200 gallons of diesel fuel per hour. Now running on a looping eight-mile test track at GE's huge plant in Erie, Pa., is a hybrid prototype that uses 15% less fuel and emits almost 50% less carbon dioxide and noxious gases while generating 2,000 additional horsepower. A few hybrid locomotives will be sold to customers in 2007, and they are scheduled to go into full production in 2008.

What has speeded the development of the green locomotive and other energy products at GE is the portfolio of skills possessed by its research scientists and engineers. GE energy researchers are easily able to draw on colleagues' knowledge when they need, say, sturdy new materials for those huge wind-turbine rotor blades. All they have to do is walk down the hall or over to the next building at the Schenectady center, or communicate with one of several GE research centers outside the U.S.: near Munich, where work is proceeding on biofuels and other energy sources; in Bangalore, India, where researchers are shaping wind-rotor designs; or in Shanghai, where scientists are devising electronic control circuits.

Practicality and commercialization have long set GE's R&D effort apart from the more academic pursuits at some other great industrial labs, such as the old Bell Laboratories or IBM Research. Both of them actually kept astrophysicists on their staffs to delve into such nonindustrial subjects as the distribution of galaxies in the universe. In contrast, GE measures the success of its research by how many products it delivers to the market.

Many energy and environmental experts view hydrogen as the ultimate fuel. It produces no carbon dioxide when burned--just energy, water vapor, and tiny amounts of smog-causing nitrogen oxides. John K. Reinker, who runs a team of about 60 scientists at the Global Research Center, is looking into no fewer than 12 hydrogen fuel applications. Among them is a major effort in stationary fuel cells. The company expects these big installations to emerge as an important power source in the next ten years, long before hydrogen makes its way on a commercial scale into automobiles.

Back in the early 1960s, GE developed fuel cells known as proton-exchange membrane cells for the Gemini space program. The units were highly efficient, but what stopped them from catching on was cost: They depended on an expensive platinum component called an electrolyte, a kind of sieve that conducts atomic particles. Now GE has shifted to less expensive solid oxide cells that use ceramic electrolytes, and it expects big fuel cells both to provide reliable power in remote locations and to work in tandem with gas turbines in power plants in more populated areas. The fuel cell would convert hydrogen, synthetic gas, or biofuel into electricity.

Fuel cells for motor vehicles are still in their infancy. That was the conclusion of a report last year by the National Academy of Engineering and the National Research Council, and GE does not expect to see them on the market anytime soon. Instead it is supporting an alternate approach in which internal-combustion engines are modified to burn hydrogen instead of gasoline. The company has formed a joint project with the Bavarian state government to develop the engine-conversion technology.

Gas stations will eventually have to be converted to hydrogen, and GE is developing compact electrolysis units that will produce hydrogen on the spot. "There will be tens of thousands of hydrogen stations, so the market will be pretty good at equipping them with electrolysis units and maintaining them," Reinker says. "We see this as a very good business. But it won't be tomorrow, unless a breakthrough happens in fuel cells or in storage materials." Safety is another issue he and his researchers are grappling with. Hydrogen is 20 times easier to ignite than gasoline and burns with an invisible flame that is difficult to detect. Reinker hopes the public can be sufficiently educated to fuel their cars safely.

Still another unanswered question about hydrogen-powered cars is how they will hold the fuel. The lightest of gases, hydrogen is very difficult to compress; standard practice is to store it under high pressure in heavy, artillery-shell-shaped steel containers, not very well suited for cars. GE is experimenting with a different method. It is trying to store hydrogen with minimal pressure in man-made nanoparticles or the pores of crushed particles of metals called hydrides, including nickel, titanium, and ferro-vanadium. The use of hydrides or nanoparticles should allow the development of smaller hydrogen tanks that can be fabricated in car-friendly shapes.

GE is also advancing the state of the art in hydrogen extraction. Though hydrogen is the most abundant substance in the universe, on earth it's bound with molecules of natural gas, water, coal, and other substances. Extracting it requires some form of energy, preferably one that doesn't release carbon dioxide. That helps explain a recent revival of interest in nuclear power. GE has been building advanced reactors in Europe and Asia. The new models operate at temperatures as high as 1,500? F, about three times as hot as today's reactors, and might be adapted to produce electricity in daytime and hydrogen at night. One thermochemical method would use the great heat generated by the reactors to decompose water into hydrogen and oxygen through a series of chemical reactions. Of course, no nuclear power plants have been built in the U.S. since the partial meltdown of a reactor core in 1979 at Three Mile Island. But lately both energy executives and politicians have started pushing for new nukes; GE is a partner in three U.S. industry consortiums that have applied for safety certification of the new reactors. Construction could start by 2010, though spent-fuel disposal remains a largely unsolved problem.

Extracting hydrogen from coal is another GE goal--U.S. coal reserves are estimated to contain a 200-year supply of the gas. Unfortunately, getting the hydrogen out releases vast amounts of carbon dioxide that have to be kept from rising into the atmosphere. To solve that problem, GE has teamed with Exxon Mobil and Schlumberger to study how to store, or "sequester," vast amounts of carbon dioxide in underground aquifers, even perhaps in cracks on the ocean bottom. A different way to cleanly extract hydrogen from coal involves coal gasification, in which coal is exposed to oxygen and steam under high temperature and elevated pressure. The result is a synthetic gas that consists of carbon dioxide, carbon monoxide, and hydrogen. Hydrogen is then extracted from the gas while a stream of carbon dioxide is isolated for disposal. This so-called integrated gasification combined cycle reduces plant emissions of mercury, particulates, and sulfur as well as nitrogen oxides. This makes the process significantly cleaner than traditional coal burning.

Now that GE can supply gasifiers in addition to its conventional gas turbines, the company can offer a complete clean coal plant. A small GE pilot plant in Santa Ana, Calif., already produces 50 pounds of hydrogen a day from coal. GE and Bechtel have started feasibility studies to build a 630-megawatt commercial plant in Ohio that could eventually turn out hundreds of millions of pounds of hydrogen a day. GE says the new technology could generate $200 million in annual sales in the next few years and $1 billion annually by the end of the decade. As today's coal-fired plants are replaced, the business could soar to $25 billion a year, a figure that equals GE's current gas-turbine market.

Further out in time is the production of hydrogen from sunlight using solar cells. GE researchers are pursuing three different methods. Although GE already sells some photovoltaic cells, mainly in California, they are only 20% efficient in converting sunlight to power. While that is an improvement from 12% a decade ago, GE plans to bring the efficiency up to 40%. Vlatkovic says it will take another ten years to develop sufficiently inexpensive materials to make the cells economical.

Solar cell skeptics will say they have been hearing the same promise for decades. Silicon materials currently used have too many structural defects and impurities that trap electrons inside the cells. But GE may also be able to overcome that using nanodiodes, which allow smoother passage of electrons. To speed the work, GE has assigned 50 nanoscientists to work on the materials. Another route from sunlight to hydrogen is via an electrochemical cell, which would convert sunlight directly into hydrogen. Those cells are in an early stage of development at GE in collaboration with Caltech.

In a third attack on the problem, GE scientists aim to reduce the size of thermal solar farms--which use arrays of mirrors to concentrate sunlight on solar cells, increasing their efficiency--from hundreds of acres to tens of acres. They hope to accomplish that by solving a longstanding problem: improving the quality of cell materials. "We're not looking at this as a solution for New York City and suburbia," says Vlatkovic. "But it could be a real game changer for the developing nations, as the handheld phone was. Having a reliable source of hydrogen could change their lives."

Of the 12 technologies related to hydrogen that GE is investigating, Reinker says, not all will reach the market. "But if four or five of these come out to be the first products in the world, that will be a great success." He's excited about the sheer scope of GE's energy R&D. "I don't think there is any other company in the world that is looking at so many energy technologies and as a result is able to understand which have the most probability of success." Thomas Edison, GE's original research scientist, would be proud.