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John Deere Selling Wind Turbine Division to Nuclear Power Giant

Leon Kaye | Wednesday September 1st, 2010 | 0 Comments

Deere & Company‘s (known to most of us as John Deere) development of its wind turbine business unit is a compelling case study in corporate strategy.  Founded in 1837, the company had become an iconic business partner to millions of farmers.  Agriculture, however, has changed drastically over the past century, becoming more consolidated, and family farms have slowly disappeared.

Several years ago, the company’s executives brainstormed over how the company could reinvigorate its business as even more family farms closed.  Deere’s leadership realized that they had the manufacturing capacity, enjoyed a close relationship with many of its requirements, and in a nutshell, created a business unit focused on wind turbines—which in turn could be built on land owned by many of its customers.  John Deere Renewables was born, and includes projects stretching from the Columbia River in Oregon to the thumb on Michigan.  John Deere also had a huge role in the rebuilding of Greensburg, Kansas, which was devastated by a 2007 tornado—now it is home to a wind project that powers 4000 homes.  Yesterday Deere & Company announced the sales of the business unit to Exelon for almost US$900 million.

Like many large companies over time that bounce their strategies between diversification and consolidation of core businesses, Deere & Company has decided that it wants to focus on its equipment business.  Exelon, meanwhile, has watched any enthusiasm for nuclear power ebb in the US.  So the nation’s largest nuclear power generator figures John Deere Renewables can give it an anchor in the wind energy sector.  The US$17 billion dollar company will acquire about 730 megawatts of installed wind capacity, and has the potential to pursue an additional 1500 MW of new wind projects—or it can choose not to pursue deals that John Deere Renewables had already negotiated.

Exelon bills itself as committed to “responsive, low-carbon energy investment.”  The company claims that it will reduce its carbon footprint by 15 million metric tons of greenhouse gases by 2020, and extols its pursuit of sustainability throughout its web site.  Its CEO, John W. Rowe, testified to Congress on climate change issues back in 1992, and is 1 of the only 8 utilities that participates in the EPA’s Climate Leaders Program.  In a partnership with the Wildlife Habitat Council (WHC), Exelon has spearheaded plans to indentify rare and endangered plants and animals that make their habitat around the company’s facilities.

Exelon’s acquisition of John Deere Renewables is a peek into the future of renewable energy:  the reality is that if renewable technologies such as wind and solar will scale and succeed, large companies like Exelon that have the infrastructure and capital will be crucial for their success.


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