(Bloomberg) -- General Electric Co. warned that its wind-turbine division is unlikely to be profitable by the company’s 2022 target, as possible policy changes in the U.S. crimp short-term sales of clean energy gear.
The company sees demand for onshore wind turbines declining next year in the U.S., its largest market, as lawmakers consider extending a tax credit that’s meant to spur installations.
“We’re fighting like hell to get to break-even next year,” Chief Executive Officer Larry Culp said in an interview Tuesday. “But I think that that’s a lower probability outcome today than I thought it would be at the beginning of this year.”
It’s a setback for a key business in Culp’s push to revitalize the Boston-based maker of jet engines, power equipment and medical-imaging machines. GE Renewable Energy had been a consistent money loser, but operating improvements and rising demand led GE earlier this year to forecast that the business would reach positive profit margins in 2022.
The situation has changed in recent months as lawmakers consider extending the Production Tax Credit for onshore wind projects. While the credit supports clean energy projects in the long term, the possibility that it will be extended saps the urgency of moving ahead on projects in short order.
GE now expects U.S. installations of onshore wind turbines to decline next year, largely because of the tax credit situation.
Read more: Takeaways From GE, 3M, UPS, Raytheon Third-Quarter Earnings
“There’s a lot of progress being made in the businesses. Unfortunately, the effect of the PTC really does camouflage that nearer term performance,” Culp said, after the company posted third-quarter earnings.
GE rose 2.7% to $108.13 at 11:15 a.m. The stock had advanced 26% this year through Monday while the S&P 500 Industrials index gained 19%.
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