Building a ProfitableWind Business

Vic AbateJuly 26, 2006

GEEnergy

“This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.”

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GE Energy … Global Power Generation

• Nuclear•ABWR – ESBWR•Advanced Fuels

• Gas turbines• Aeroderivative• CC Systems

• Wind• Solar• Hydrogen

• Hydro• Biomass

• Coal – IGCC• Steam Turbines• Generators

Thermal RenewablesNuclear

• 2005 revenue $16.5B

• Over 34,000 employees

• 700 locations … over 100 countries

• ~$1.5B new technology spend ’04-’06

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• Renewables only 3% of electricity production today

• But, strong historical and projected growth … ~25% CAGR (’95 – ’13)

• Driving 39% global power sector capital spending

Global Renewable Installed Capacity (GWs)

Growing Demand for Renewables …

World Requiring Renewable Energy Solutions

179160 Wind 12GW

>50% of Growth

• US … 20 % Wind ‘20

• UK … 20% Renewables ‘20

• Germany … 20% Renewables ‘15

• EU … 12% Renewables ‘10

• China … 30 GW Wind ‘20

• Spain … 20 GW Wind ‘11

• India … 12 GW Wind ‘12 ‘05‘04

WindSolar

Biopower

Small Hydro

Geothermal

Aggressive Global Targets

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Wind … Most Viable Solution

• 20 year ‘fixed cost’electricity

• Energy security

• Domestic solution

• Carbon-free generationSource: EER - 02/’06

ROWAsia - 19%

8.1

11.8

~15.317% CAGR

Europe 4%

North America 77%

’04 ’05 ’08E

IndustryInstallation Forecast

(GWs)

Gas Coal Nuclear Wind Biomass Solar

¢ per kWhr

Capital costsFuelO&M

~4.5 ~4.0~7

~10

~36

Cost of Electricity 20 year levelized

~7

Basis: $8.00/MMBtu NG

• COE nearing mainstream

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GE TransportationGearbox and power converter technologies

GE Global Research CentersChina, India, US and Europe

GE Advanced MaterialsResins, plastics, metals…

GE Oil & GasOffshore platforms/experience

GE Energy Controls, materials, technology

Fulfillment & logistics capability

Efficient supply chain management

GE and Wind … Combining Our Strengths

GE AviationAerodynamic and aero-acoustic modeling expertise

GE Energy FinancialServicesEnergy investing and financing

Wind Product Strategy1. Highest Reliability2. Capacity Factor Leadership … Most Efficient3. Advanced Logistics

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Technology Differentiation … Core Advantage

Pitch ControlAvailability

Gearbox & Drivetrain Reliability &

efficiency

Blades Power ElectronicsGrid

operability

Utilizing GE Technology Availability

‘02 Today

97%+

85%

CoE(¢/kWh)

Technology Impact

$250MM R&D Since Acquisition

‘85 ‘90 ‘95 ‘00 ‘05 ‘100

4

8

12

Increasing wind capture

7

Creating the Industry Workhorse … GE 1.5 MW

Creating customer value: $450MM since ’02 …Additional $350MM by ‘08

$450MM

97%

47

82.5

‘06

Today

97%+85%Availability %

$800MM_Additional Customer Value ($MM/GW)

>5038Capacity factor (%)

~8577Rotor Diameter (m)

‘08

Future

‘02

Acquisition

1.5 Workhorse

+12 Pts

+9 Pts

Installed Base 1000 10,000+ 55% CAGR

85 m

100

m

110

m

5000

Technology Infusion …• Reliability• High Capacity factor• Advanced Logistics

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Land Turbines Service Owner

Industry : ~70% Vertical Integration

Rotor/Blade

Gearbox ControlsGenerator TowerWTGMfg

Dev

elop

men

t

Wind Farm

Assets

War

rant

y

Part

s /

O&

M

Syst

em D

es.

Logi

stic

s

GE : ~10% Vertical Integration

High ROTC Model

Capital Efficient Growth ModelGE - Shared FacilityGE - Wind Only FacilityKey Suppliers

’04-’06Volume up 3x

P&E Flat

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Fulfillment … Changing the IndustryLean Execution

Driving quality• First piece qualifications• 20 year gearboxes• Build to print critical components

Applying Gas Turbine Operational Rigor to Wind

Expanding Supply Base

MajorSuppliers

Suppliers per Key Component

0 14 30 days 0 5 days

Mean: 14 Days

Mean: 1.6 Days

Leveraging GT tools• 2 day manufacturing cycle • Inventory turns• 90% local content in China

80%Tripled

89%

~300 in ‘06

~1 /Hour

Ensuring fulfillment• Integrated supplier LOBs• On-site audits• Global blade production

Lean commissioning

• Cycle reduction - 14 to 1.6 days

70

111

5

11‘02‘06

10

Advanced Logistics

$50MM/Year Savings Opportunity

Customer Value• Predictive cost / supplier allocation model• Firm price quote capabilities (cost & schedule)• Strategic global sourcing & production locations

Logistics Friendly 1.5 Workhorse• Rail capability ~$10-25k/unit cost out• Lowest site prep cost ~$20k/unit customer savings• Reusable double blade fixtures ~30%/unit savings

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Units ~+20%Revenue ~+30%OP Rate ~+3ptsROTC ~30%+

2.3

~3.4

0.5

'02 '05 '06E

Wind Strategy … Driving Growth & Margin

Acquired & Integrated Industry Leading Driving Value

Sales ($B)

Creating Value for Customers & Shareholders

’07Dynamics

Up 50 %

• Technology differentiation

• Operational excellence

• GE’s broad expertise

Units 440 1,580 ~2,000 Driving Growth &Op Margin Expansion

~$0.2B Margin Increase

Penetration 9% 18% ~24%

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Growth & Margin Expansion

Analyst MeetingJuly 26, 2006