GE eyes January battery output

PHOTOGRAPHER: Michael Lamendola

General Electric will begin shipping the first storage batteries from its new $100 million manufacturing facility in Schenectady in January and will invest an additional $60 million to bring the factory to full capacity by 2015, the general manager of GE’s Energy Storage Technologies said Wednesday.

Prescott Logan was the keynote speaker at Union College’s annual Business Campaign breakfast. The campaign raises money from businesses to support scholarships for Union students from the Capital Region.

“This is the first time we have publicly talked about the project. We tried to keep a low profile. What we are working on is hard, and we have had to stay focused,” he said.

When GE officials announced the project at the company’s Schenectady/Rotterdam campus three years ago, they said it would cost $100 million. Logan said the additional $60 million represents installation of equipment to bring the plant to full capacity. The plant will employ 300 production workers by 2015, plus additional support personnel, bringing employment there to 350 or higher.

The plant is part of GE’s Transportation Division, although the Schenectady campus is home to GE Energy’s headquarters, a different division. GE is converting Building 66, a former steam turbine manufacturing site, to be the battery factory.

New York state has pledged $15 million in incentives toward the GE battery plant, and the Metroplex Development Authority has pledged $5 million in assistance, along with granting tax breaks.

The 220,000-square-foot battery factory will build the Durathon, a next-generation device that uses sodium halide chemistry to store energy. Traditional batteries use lead and acid chemistry. GE said the new battery will last up to 10 times longer than traditional backup storage systems, require no maintenance, produce no toxic chemicals and be fully recyclable. The battery also can operate in any temperature or climate.

“We really feel like we have something that can change the game,” Logan said.

The Schenectady plant is expected to produce 1 million batteries in 2012 and 10 million when at full capacity in 2015. GE officials said the market for the batteries could reach $500 million in sales by 2015 and $1 billion shortly thereafter.

Logan said the factory is up and running but only to test the production line and “work out any bugs.” When the factory goes online after Jan. 1, the first batteries will be shipped to customers in South Africa whom he would not name. He said GE expects to sell half the batteries to “emerging markets” in countries overseas without reliable electrical grids, such as Southeast Asia, Africa, China, India and Latin America.

Logan said GE will focus initially on the telecommunications market with three models of batteries, and then branch into the electrical generation and distribution industry and the data communications industry. Eventually, the company will build batteries for hybrid locomotives — the original focus of the product.

“We really see a lot of interesting applications, but we need to stay focused and get some scale into the operation,” he said.

The battery plant represents a major investment and commitment by GE into a new business venture, Logan said. “We are actually building a factory and a business. The factory is one-third of the business,” he said. “So this is more than a factory.”

The venture involves concurrently building the factory, developing the battery manufacturing technology and finding customers. “It is like landing three planes while we are still building the landing gear,” Logan said. “We have made many mistakes along the way. We had to work through a lot of unknowns. It has been a learning experience.”

Logan said GE is breaking new ground as an entrepreneur with the construction of the factory. “We have never done this before. This is not natural for a company like GE,” he said. “This will be a story the community will be proud of. This community took a bet with GE.”

GE has invested billions into research and development to support products it already has and for customers whom it knows. “Success for us is to turn this into GE’s next billion-dollar business,” he said. “But for the long term, GE needs to learn how to build a company from scratch.”