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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach

School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies

Cornell University

16 East 34th Street, 4th floor---------------------- Stuart Basefsky

New York, NY 10016 -------------------------------Director, IWS News Bureau

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Congressional Research Service (CRS)

 

U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry

Michaela D. Platzer, Specialist in Industrial Organization and Business

December 18, 2012

http://www.fas.org/sgp/crs/misc/R42023.pdf

[full-text, 38 pages]

 

Summary

Increasing U.S. energy supply diversity has been the goal of many Presidents and Congresses.

This commitment has been prompted by concerns about national security, the environment, and

the U.S. balance of payments. Investments in new energy sources also have been seen as a way to

expand domestic manufacturing. For all of these reasons, the federal government has a variety of

policies to promote wind power.

 

Expanding the use of wind energy requires installation of wind turbines. These are complex

machines composed of some 8,000 components, created from basic industrial materials such as

steel, aluminum, concrete, and fiberglass. Major components in a wind turbine include the rotor

blades, a nacelle and controls (the heart and brain of a wind turbine), a tower, and other parts such

as large bearings, transformers, gearboxes, and generators. Turbine manufacturing involves an

extensive supply chain. Until recently, Europe has been the hub for turbine production, supported

by national renewable energy deployment policies in countries such as Denmark, Germany, and

Spain. However, support for renewable energy including wind power has begun to wane across

Europe as governments there reduce or remove some subsidies. Competitive wind turbine

manufacturing sectors are also located in India and Japan and are emerging in China and South

Korea.

 

U.S. and foreign manufacturers have expanded their capacity in the United States to assemble and

produce wind turbines and components. About 470 U.S. manufacturing facilities produced wind

turbines and components in 2011, up from as few as 30 in 2004. An estimated 30,000 U.S.

workers were employed in the manufacturing of wind turbines in 2011. Because turbine blades,

towers, and certain other components are large and difficult to transport, manufacturing clusters

have developed in certain states, notably Colorado, Iowa, and Texas, which offer proximity to the

best locations for wind energy production. The U.S. wind turbine manufacturing industry also

depends on imports, with the majority coming from European countries, where the technical

ability to produce large wind turbines was developed. Although turbine manufacturers’ supply

chains are global, recent investments are estimated to have raised the share of parts manufactured

in the United States to 67% in 2011, up from 35% in 2005-2006.

 

The outlook for wind turbine manufacturing in the United States is more uncertain now than in

recent years. For the past two decades, a variety of federal laws and state policies have

encouraged both wind energy production and the use of U.S.-made equipment to generate that

energy. One apparent challenge for the industry is the scheduled expiration at year-end 2012 of

the production tax credit (PTC), which the industry claims could reduce domestic turbine sales to

zero in 2013. In anticipation, at least a dozen wind turbine manufacturers announced layoffs or

hiring freezes at their U.S. facilities in 2012, citing uncertainty around the renewal of the PTC as

one reason. Other factors affecting the health of the U.S. wind industry are intense price

competition from natural gas, an oversupply in wind turbines, and softening demand for

renewable electricity.

 

 

Contents

Introduction ...................................................................................................................................... 1

Wind Turbine Manufacturing .......................................................................................................... 2

Historical Overview ................................................................................................................... 3

Demand for Wind Turbines and Components ........................................................................... 4

Wind Turbine Suppliers ............................................................................................................. 6

International Manufacturers Dominate Wind Turbine Manufacturing ................................ 6

U.S. Market Attracts More Foreign Wind Turbine Manufacturers ..................................... 7

Wind Turbine Components, Raw Materials, Global Supply Chain, and U.S.

Manufacturing Capacity ............................................................................................................... 8

Wind Turbine Components ........................................................................................................ 8

Global Wind Turbine Assembly Supply Chain ........................................................................ 11

Tier 1 and Tier 2 Wind Turbine Component Suppliers ..................................................... 12

Manufacturing Strategies .................................................................................................. 12

U.S. Wind Turbine Manufacturing Facilities ........................................................................... 14

Towers and Blades ............................................................................................................ 14

Turbine Nacelle Assembly ................................................................................................ 15

Other Wind Turbine Components...................................................................................... 15

Outlook .............................................................................................................................. 16

An Emerging U.S. Wind Manufacturing Corridor .................................................................. 16

U.S. Wind Turbine Manufacturing Employment ..................................................................... 17

Wind Turbine Equipment Trade ..................................................................................................... 19

U.S. Imports............................................................................................................................. 19

Domestic Content .................................................................................................................... 21

U.S. Exports............................................................................................................................. 22

Federal Support for the U.S. Wind Power Industry ....................................................................... 24

Production Tax Credit (PTC)/Investment Tax Credit (ITC) .................................................... 26

Advanced Energy Manufacturing Tax Credit (MTC) .............................................................. 27

Other Wind-Related Programs................................................................................................. 28

State Renewable Portfolio Standards ....................................................................................... 29

Conclusion ..................................................................................................................................... 29

 

Figures

Figure 1. Wind Turbine Overview ................................................................................................... 9

Figure 2. Wind Turbine Components ............................................................................................. 10

Figure 3. Wind Turbine Manufacturing Facilities in the United States ......................................... 17

Figure 4. Wind Energy Employment Trends ................................................................................. 18

Figure 5. U.S. Imports of Wind-Powered Generating Sets, Select Countries ................................ 20

Figure 6. U.S. Exports of Wind-Powered Generating Sets ............................................................ 23

 

Tables

Table 1. Largest U.S. Wind Power Projects ..................................................................................... 5

Table 2. Annual Wind Turbine Installations in the United States .................................................... 8

Table 3. Raw Materials Requirements for Wind Turbines ............................................................. 11

Table 4. Selected Wind Turbine Components ................................................................................ 13

Table 5. Selected Energy Programs Affecting the U.S. Wind Industry ......................................... 26

Table A-1. Global Wind Turbine Manufacturers by Original Equipment Manufacturers (OEMs) ................................................ 31

Table B-1. Examples: U.S. Turbine Production Facilities ............................................................. 32

Table C-1. Selected Wind Manufacturers Receiving Section 48C Manufacturing TaxCredit ..................................... 33

 

Appendixes

Appendix A. Global Wind Turbine Manufacturers ........................................................................ 31

Appendix B. Selected Examples of U.S. Wind Turbine Production Facilities .............................. 32

Appendix C. 48C Manufacturing Tax Credit ................................................................................. 33

Contacts

Author Contact Information........................................................................................................... 34

Acknowledgments ......................................................................................................................... 34

 

 

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