The Birth of a U.S. Wind Power Manufacturing Industry

As the U.S. wind industry's installed capacity went from 6.7 megawatts to 35,000 megawatts between 2004 and 2009, its manufacturing sector expanded from a few dozen facilities to more than 240. By 2009, over 60% of wind's U.S. capacity was sourced domestically. This is a growing ecosystem supporting U.S. middle-class labor as well as capacity to generate emissions-free electricity.

"For wind turbines, which have large components like towers, nacelles and blades," according an American Wind Energy Association (AWEA) spokesperson, "transportation is a big part of the cost."

In fact, according to the recent report Harnessing the Potential of Open Trade...in the Wind Energy Industry from the World Resources Institute, off-shoring wind industry manufacturing to places where labor is cheap has no significant cost benefit over domestic manufacturing because of transport costs. The U.S. wind manufacturing base can, therefore, be expected to grow as long as the industry does.

California-based Clipper Windpower, for instance, opened a manufacturing facility in 2006, captured one percent of the turbine market in 2007, moved up to six percent in 2008 and, in 2009, exported its first turbines, to Mexico.

According to the just-released 2009 Wind Market Report from Lawrence Berkeley National Laboratory, a contemporary wind turbine averages about two megawatts in capacity, or enough power for almost 500 U.S. homes. According to Winds of Change; A Manufacturing Blueprint for the Wind Industry from AWEA, the Blue-Green Alliance and the United Steelworkers, the average turbine weighs 200 to 400 short tons, 90 percent of that in steel and most of the rest in fiberglass, copper, concrete, aluminum and adhesives. It has about 8,000 components, many already manufactured domestically in smaller versions for aerospace, defense, energy and mining.

The five U.S. turbine manufacturers in operation in 2005 grew to fifteen in 2009. Nine of 2009's top ten original equipment manufacturers (OEMs) -- Acciona, Clipper, GE, Gamesa, Mitsubishi, Nordex, Siemens, Suzlon, Vestas -- have current or announced U.S. facilities for towers, blade manufacturing, or nacelle assembly.

At least three factors, according to the manufacturing report, are driving the growth of domestic manufacturing. First, eliminating the expense of transporting very large turbine parts offsets the higher cost of domestic labor. Second, imports that require dealing with currency fluctuations can often disadvantage the U.S. dollar. Third, the high cost of inventory and rapidly developing technology makes just-in-time manufacturing necessary -- and proximity preferences domestic manufacturers.

Due to transport costs, the biggest, heaviest components were the first to be made domestically. Twenty U.S. facilities presently manufacture utility-scale turbine towers. Fourteen have come online since 2005 and eight more have recently been announced. Thirteen U.S. facilities presently make turbine blades, nine of which came online since 2005. Three are announced.

The second wave of expansion was in the assembly of the nacelle, the heart and brain of a wind turbine. The majority of U.S. nacelles are assembled at eight domestic facilities. There are eight more such facilities in planning stages.

Most recently, an expansion in the manufacture of the highly engineered mechanical and electrical nacelle internals has begun.

Each wave of expansion swept in a supply chain of nuts, bolts, grease and adhesives makers. By 2009, component manufacturing had become the biggest growth sub-sector.

The three major nacelle internals are gearboxes, generators, and drives. The first U.S. facility dedicated to such manufacturing, Winergy Drive Systems in Elgin, IL, came online in 2009. Among the many facilities in planning stages, Germany's internationally recognized mechanical system maker ZF announced a contract with Vestas, the world's biggest turbine manufacturer, to provide gearboxes from a Gainesville, GA, facility now under construction.

The U.S.'s wind manufacturing ecosystem extends from coast to coast and border to border. There are online or planned facilities in rust belt states like Michigan and Ohio, Midwest states like Kansas and Iowa, where youthful rural populations now have an alternative to moving to urban centers for opportunity, and in Southern states like Texas and Arkansas, where manual labor now has an alternative to unemployment.

An example of the potential to revitalize U.S. manufacturing is the urgent need to develop new domestic foundry capacity for casting utility-scale turbine parts. Few existing foundries are up to the demands of casting mainframes, hubs, rotor shafts and other parts that can weigh 30 tons or more. This is expected to be a huge investment opportunity.

But no such foundry capacity expansion has so far been undertaken, according to AWEA, because federal policy has failed to provide a long-term signal warranting the needed substantial investment. AWEA has, for many years and particularly since President Obama came to office, pushed hard for such a long-term policy signal in the form of a national Renewable Electricity Standard (RES) that would require regulated U.S. utilities to obtain a significant portion of their power from renewable sources by 2020 or 2025.

The $2.3 billion in Advanced Energy Manufacturing Tax Credits (48C credits) in the 2009 Recovery Act benefited 183 projects and leveraged $5.4 billion in private investment but was expended. The Obama administration requested that Congress budget $5 billion to extend the program but there has been no action on the measure.

"It's a strong incentive," an AWEA spokesperson pointed out, but "to be effective manufacturing incentives need to be coupled with a stable, long-term market and even strong programs like 48C can't revitalize the sector if we don't create a market. That is where the RES comes in, as it drives the market and creates certainty."