GE Turbine Block a Setback, Not Death Knell, for New Wind Energy

An injunction against General Electric Co.'s massive Haliade-X wind turbine is set to raise offshore wind development costs, but the hurdle appears tailored to help the US meet its renewable energy goals.

Industry watchers said the injunction, granted Wednesday by a Massachusetts federal district court, represents a setback for a heavily consolidated, nascent industry. More than 2,000 turbines will be needed for the US to meet its goal of building 30 gigawatts of offshore wind generating capacity by 2030, said Kris Ohleth, executive director for the Special Initiative on Offshore Wind at the University of Delaware.

“It’s going to be challenging to keep costs down if the supply chain gets further constrained through issues like this,” Ohleth said.

The injunction, requested by Siemens Gamesa Renewable Energy SA, came after a jury in June found that GE’s design infringed a patent held by the Spanish manufacturer, capping a lengthy legal battle between the wind-power heavyweights.

It keeps GE’s marquee offshore wind turbine off the market in the US as the industry gains momentum toward building wind farms in the waters off both the East and West coasts.

‘Unusual Carve-Out’

US District Judge William Young, however, exempted a pair of projects underway in New Jersey and Massachusetts whose failure he said would contribute to the global clean-energy crisis.

That part of the order represents an interesting balance between strong patent protections and public environmental concerns, said Elizabeth Winston, a professor at the Columbus School of Law at the Catholic University of America.

When judges evaluate factors for an injunction, they usually find that enforcing patent rights is in the public interest, Winston said. In this case, Young struck a balance between upholding Siemens’ patent and letting a competitor uphold its contractual obligations.

The decision noted that GE’s Vineyard Wind I and Ocean Wind I projects are both well into the design and manufacturing stages.

“It’s really an unusual carve-out, and it’s absolutely fascinating to see how it’s going to play out,” Winston said. “This is going to have far-reaching implications.”

Supply Chain Concerns

The loss of GE as a major turbine manufacturer is poised to constrain the burgeoning offshore wind industry’s supply chain and drive up costs, both in the US and globally, Ohleth said.

“There’s only two suppliers left in the world—Vestas and Siemens—who could manufacture those turbines and deliver them to the US market,” she said. “That is potentially a real challenge in meeting the [Biden administration] 30 by 30 targets.”

In the current supply chain landscape, the US drive to get the lowest cost of energy all the time “perhaps isn’t reasonable,” she said.

The industry’s trade group, American Clean Power, declined to comment because the injunction involves two member companies, and the group said it doesn’t want to speculate about how the loss of GE’s turbine will affect the industry’s long-term expansion goals.

Siemens Gamesa said it welcomed the ruling and will continue to defend its intellectual property rights.

The injunction comes after a federal jury in June found that GE’s offshore wind turbine infringes Siemens’ U.S. Patent No. 9,279,413, covering a structural support arrangement for large turbines. Siemens is owed a running royalty of $30,000 per megawatt, the jury decided. Siemens had asked for the injunction to prevent one of its main competitors from continuing to undercut it.

Fostering Industry Progress

Despite the setback for GE’s turbines, observers at the nexus of intellectual property and energy expect the intense public interest and investment surrounding renewable energy to spur alternative designs and a healthy future for the industry.

Indeed, GE said in a statement that it has alternative design options it can and will explore to keep the Haliade-X on the market in the US. In the meantime, it’s authorized to install turbines in the Vineyard I and Ocean Wind I projects as long as it pays set royalties to Siemens.

A day before the injunction was issued, the state of New Jersey asked the court to allow its Ocean Wind project to move ahead, citing the $475 million in public funding it already poured into the infrastructure and the roughly 500,000 households it plans to serve with clean, renewable energy.

“The technology is in line with where the country is trying to move with more clean energy,” said Paul Morico, chair of the energy IP practice group at Baker Botts LLP in Houston. “The thing that will put a lot of pressure on everybody is that market forces are moving in this direction.”

This means that end customers and even the US government could push the companies to work out acceptable IP strategies.

“One thing is clear: There’s high demand. It’s important technology. There’s going to be a lot of motivated folks, certainly at GE and amongst both parties, to continue competing in this business,” Morico said.

The push to innovate in clean energy also will continue to go hand-in-hand with patent development and protection, said Catholic University’s Winston, who noted the two priorities aren’t mutually exclusive.

“This decision is going to draw more attention to patent law and to the importance of balancing out that progress,” Winston said. “We all benefit as a society from as many ways of accessing renewable energy sources as we can. Alternative designs are one way to increase our access.”

The case is Siemens Gamesa Renewable Energy A/S v. General Electric Co. et al, D. Mass., No. 21-cv-10216, judgment and injunction entered 9/7/22.

—With assistance from Christopher Yasiejko.