GE wind chief Abate's recipe for a blockbuster deal: 'Scale, quality and the IRA'

Abate said: “The Inflation Reduction Act is really enabling the investments we think the wind industry and technology providers like GE Vernova needs, as we continue to invest and expand our domestic manufacturing to be able to produce as cost effectively as we can.”

Signed by President Joe Biden in August 2022, the law provides at least $369bn of funding for climate-related spending and long-term federal tax credits to supercharge supply and demand for clean electricity, clean fuels, and electric vehicles, and promote energy efficiency.

The IRA puts wind and other renewable energy tax incentives in place for at least a decade, ending Congress’ cycle of short-term extensions – often after their expiration. Not only are the credits more valuable than previously for power generation projects, if certain conditions are met, clean energy manufacturing was a major beneficiary of the legislation.

GE and its suppliers can now benefit from new credits for both factory construction and upgrades, and production of each individual component.

“Having been in this industry for a while, I give a tremendous amount of credit to this administration for the IRA. That longer time horizon makes it so I can put together a business case that works not only for our customers and the market, but also GE Vernova,” said Abate.

The OEM is investing $30m to add “lean” production lines at its Pensacola, Florida, nacelle factory, a move that will help enable it to fulfil the SunZia turbine order on schedule. It also continues to hire skilled workers and train plant personnel.

“You don’t go to bed Monday and wake up Tuesday and there is a [2.4GW] order,” Abate said, noting GE Vernova was working with Pattern over the past several years on SunZia.

Lean manufacturing is a production method that cuts waste, creates customer value, and seeks continuous improvement. Anything that doesn’t add value that customers are willing to pay for is waste, according to the lean concept.

At the end of 2023, Abate was in Pensacola at a conference with more than 200 GE suppliers. The focus of conversation wasn’t about price, although price and competitiveness are very important, he said.

“We were talking about quality, talking about ideas to make the supply chain more efficient,” said Abate. “How do we get more efficient? That is what lean is about.”

The vendor is also investing $50m in a New York State plant to manufacture a new 6.1MW onshore wind turbine.

“We continue to invest in our Vernova facilities and in particular the chapter we’re in with the IRA and the benefits of domestic content, what that means for our customers and their ability to compete,” said Abate.

'Systematic march'

After GE took a $500m charge in third quarter 2022 partly related to resolving availability issues involving its onshore wind turbine fleet, Abate, the parent company’s chief technology officer, was brought in to enforce rigorous quality control and improve performance metrics at Pensacola, which he says has been achieved, and get onshore wind on the road to profitability.

Post-Covid, the wind turbine supply chain is becoming more stable. While there are still challenges, the OEM has positioned itself to be more robust through strategic planning and sourcing with multiple suppliers, increasingly those at home.

Abate sees a developing US onshore wind market where customers are concerned about project economics but also turbine technology, robustness, quality, and in order fulfillment.

“Customers are now thinking, ‘How do I get X number of turbines a week through 2030?’ It’s less about just the transaction or one-off project, it’s really a systematic march to begin building out the energy transition,” he said.

“A big part of this especially as we look at the scale of where the country is going for renewables is going to be is can you provide a domestic supply chain that can deliver at scale with quality?” said Abate.