Environmentally friendly wind power is an increasingly important part of the U.S. energy mix. While that's largely because of newly installed wind turbines, General Electric (NYSE:GE) has a simple fix to increase the efficiency of older installations that were hampered by technological and supply constraints. And the numbers this industrial giant is touting are pretty big, with the solution increasing output by as much as 20% a year!
Harnessing the wind
Charles Norz, an electrical engineer, explains, "The amount of energy extracted from the wind is directly proportional to the swept surface area. Large wind turbines leverage economies of scale with an increased blade diameter." In other words, bigger blades are better.
But technology isn't always up to meeting the physics of a situation right away. For example, in the 1970s blade diameters were in the 40 meter space. Today, that number is 90 meters. Bigger blade, more power. And that's where General Electric's easy fix comes into play.
Making it bigger
In 2007 and 2008, General Electric installed around 9,000 wind turbines in the United States. The average diameter of blades at that time was 77 meters. GE had to take what it could get based on the best technology available at the time. However, now that longer blades are the standard, those 9,000 turbines are industry laggards.
But the cost of the turbine is the single largest expense when installing wind power, accounting for up to 70% of a wind project's budget. So, you don't just replace old turbines when better ones become available. That's why General Electric's little fix is such an easy win for everyone involved, since it turns those 77 meter blades into 90 meter blades without having to trash a massive capital investment.
Essentially, GE is just cutting the old blade in half and adding in a seven meter extension. That doesn't sound high-tech, and it really isn't, but it obviously isn't something that just anyone can make happen. And the benefit is pretty big.
GE's fix increases the sweep area, which is a key factor in how much power is harnessed from the blowing wind by roughly 40%. The company believes that can increase the power generated by as much as 20% a year.
A big business
If General Electric's fix is applied to all of those windmills, it could make the U.S. Energy Information Administration's (EIA) projections for wind power look conservative at best. For example, in 2014, the EIA expects U.S. wind power capacity to increase nearly 8%. Next year, it's projecting an over 15% increase. That all comes from adding more turbines. But if the installed base of power gets more efficient, those numbers will go up.
And then there are more complex improvements GE is pushing, including software that makes wind farms with 20 or more turbines operate as a single unit. According to GE, getting turbines to talk to each other and cooperate can help reduce wake loss. That's when a turbine disrupts the wind flow hitting the turbines behind it, an increasingly important factor as wind farms get bigger. This computerized fix can can reduce wake loss by 5% to 10%, according to GE.
Five percent and beyond
Today, wind power is a relatively small player in the U.S. energy market, projected to provide just 4.6% of the country's power in 2015. However, as the technology behind this ancient power source improves with the help of industrial giants like General Electric, look for that number to keep going up. And innovations like the ones above will, of course, help results at GE's energy business along the way.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.