May 12 (Bloomberg) -- General Electric Co., the world’s biggest maker of power-plant equipment and locomotives, will invest about $100 million to start a new battery business and create at least 350 jobs in northern New York.

The batteries will first be used in hybrid locomotives that will be available commercially in 2010, Fairfield, Connecticut- based GE said today in a statement. Governor David Paterson and Chief Executive Officer Jeffrey Immelt made the announcement at GE’s research and development center in Niskayuna, New York.

GE spent $150 million developing the sodium-based chemical technology in the batteries and will apply for stimulus funds from the U.S. Department of Energy. The project complements lithium batteries for plug-in hybrid vehicles made by closely held A123 Systems, of which GE owns more than 10 percent. A specific location for the business hasn’t been chosen.

“This type of public-private partnership is essential to rebuild America’s manufacturing base, create new jobs and to accelerate the pace at which new technology comes to market,” Immelt said in the statement. Sales may increase to $1 billion over the next decade and reach about $500 million a year by 2015, he said.

GE said it has initial customers for the battery technology in the telecommunications, utility and mining industries. Uses will include heavy-duty vehicles, backup power storage and devices that keep energy steady for utilities. At full capacity, the plant would produce about 10 million cells a year, enough energy storage to power 1,000 U.S. homes for a month, GE said.

GE fell 51 cents, or 3.6 percent, to $13.68 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 16 percent this year.

Transportation Unit

The new unit, part of GE’s Transportation division, should create thousands of supplier jobs and was supported by Paterson, U.S. Representative Paul Tonko and Dennis Mullen, Upstate president of the Empire State Development Corp., GE said.

About $15 million of the $100 million for the business is tied to state grants, Immelt and Paterson said in the presentation. Immelt said he began expanding the research center in 2002, spending about $200 million to develop new technologies and boosting employment 14 percent. The new jobs will be mostly skilled-trade and manufacturing-related, Immelt said.

The project “belies the notion that’s being circulated in the atmosphere that it’s going to take too long for these technologies to take hold in our society,” Paterson said at the event.

Mega-Hybrids

The sodium-based technology, developed at the Niskayuna center for “mega-hybrids,” was demonstrated a year ago as part of a tugboat system designed to lower emissions. It doesn’t conflict with GE’s investment in closely held A123, based in Watertown, Massachusetts, GE said. Mark Little, who heads GE’s global research and development, also sits on A123’s board.

GE is seeking to benefit from President Barack Obama’s efforts to increase U.S. supplies of clean energy. The $787 billion economic-stimulus package signed into law in February includes at least $59 billion in new spending and tax credits to develop and expand energy technology, including batteries that provide a steadier flow of electricity for the power grid used by utilities.

Tonko said it was key that the federal stimulus package’s definition of clean power include transportation and energy. GE’s expansion in the Albany area has bolstered such an argument, Tonko said.

“As you invest in invention and innovation it seems to inspire a clustering of groups that will then come into that hub of activity,” Tonko said in an interview. “We see this clustering happening where there’s a workforce developed.”

Doubling Renewable Energy

Obama has set a goal of doubling the use of renewable energy by 2012. GE’s clean energy products include wind turbines, appliances, smart meters and solar panels.

“These are the products that can be exported because they’re high-tech and they fit customers needs,” Immelt said in an interview today. “We’ve got to have some strong industries that are able to create exports.”

Immelt began targeting environmentally friendly products four years ago by doubling research to $1.5 billion. Since then, more than 80 products and $17 billion in annual sales are tied to the effort, dubbed “ecomagination,” according to his annual letter to shareowners.

The company, Cisco Systems Inc. and FPL Group Inc.’s Florida Power & Light Co. last month said they plan to create a “smart grid” system that will help Miami residents conserve electricity and create as many as 1,000 jobs.

GE Energy Infrastructure provided $38.6 billion of the parent company’s $182.5 billion in sales last year. GE Transportation, the locomotive division, provided $5.02 billion.

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net.

Last Updated: May 12, 2009 16:20 EDT