UPDATE 2-GE, Itochu tie up on wind power projects

* GE, Itochu form alliance for U.S. wind power projects

* Itochu shares rise 4.7 pct vs 2 pct rise in broader market

* Profit contribution for Itochu seems small -analyst
(Adds Itochu comment, details)

By Yuko Inoue

TOKYO, June 3 (BestGrowthStock) – General Electric (GE.N: ) and
Japanese trading house Itochu Corp (8001.T: ) have agreed to
cooperate on investment in large wind and other renewable energy
projects, Itochu said, boosting Itochu’s share price by nearly 5
percent.

GE, the largest U.S. conglomerate and a top maker of wind
power generators, and Itochu will jointly take a majority stake
in a 30 billion yen ($326 million) wind power project in
Oklahoma, Itochu said.

The two firms also plan to cooperate in another large wind
energy project being planned in the United States, Itochu said.

“We’ll share information to explore business as investment
opportunities for large-scale renewable energy projects are
expanding on the global market,” Minoru Kihara, general manager
at Itochu’s plant and project development, told reporters.

GE aims to expand its portfolio of renewable energy projects
to $6 billion by the end of this year from the current $4
billion, he said.

The agreement also covers geothermal and biomass power
generation and is scheduled to initially last five years.

The U.S. wind industry has grown nearly 40 percent on average
in each of the past five years on new state demands for renewable
energy sources, strong support from the federal government and
the looming threat of carbon restrictions.

It has been a fast-growing business for GE, but Chief
Executive Jeff Immelt has said he expects it to slow.

Shares in Itochu, which is Japan’s fourth-largest trading
house but has lagged rivals in the power generation business,
rose 4.7 percent to 753 yen in morning trade, outperforming a 2.1
percent rise in the Nikkei average (.N225: ).

The contribution to its earnings could be small, however.

“Profit generated from such projects is usually small,” said
Jiro Iokibe, a senior analyst at Daiwa Securities Capital
Markets.

“But the agreement could plant the seeds for future business
and will brighten Itochu’s mid-term business outlook.”

The U.S. group is currently involved in patent disputes over
wind turbine technology with Japan’s Mitsubishi Heavy Industry Co
(7011.T: ), which is also keen to tap U.S. demand.

Itochu has a large global business network and is strong in
the Chinese market.

Stock Investing

($1=92.05 Yen)
(Editing by Michael Watson)

UPDATE 2-GE, Itochu tie up on wind power projects