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

CRS Report for Congress
Prepared for Members and Committees of Congress
U.S. Wind Turbine Manufacturing:
Federal Support for an Emerging Industry
Michaela D. Platzer
Specialist in Industrial Organization and Business
December 18, 2012
Congressional Research Service
7-5700
www.crs.gov
R42023
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service
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.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service
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
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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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 Tax
Credit .......................................................................................................................................... 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
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service 1
Introduction
This report discusses the U.S. wind turbine manufacturing industry, its supply chain, employment
and international trade trends, major federal policy efforts aimed at supporting the industry, and
issues affecting its future. The wind industry’s national trade group, the American Wind Energy
Association (AWEA), reported an estimated 30,000 Americans were employed directly and
indirectly in wind turbine manufacturing in 2011, compared to 2,500 in 2004. Another 45,000
U.S. workers reportedly were employed in other parts of the wind industry in 2011, including
construction and services.1 Wind turbine equipment and component manufacturing jobs range in
pay from about $30,000 to around $90,000, according to the Bureau of Labor Statistics.2
Following an unprecedented period of growth in the U.S. wind power market between 2005 and
2009, about half as many new wind turbines were installed in 2011 (some 3,500) as in 2009.
Aside from GE Energy and Clipper Windpower, most of the manufacturers that sell, assemble, or
manufacture turbines and wind-related components in the U.S. market are headquartered outside
the United States. Vestas, Gamesa, and Siemens are among the European manufacturers that have
responded to government regulations that mandate the use of renewables, including wind power.
Other firms manufacturing wind turbines for the U.S. wind market include Japanese and Indian
companies such as Mitsubishi and Suzlon. Manufacturers from South Korea and China are also
expanding production capacity and entering the U.S. market.
Federal interest in the U.S. wind turbine manufacturing industry is based on (1) increasing the
role of clean energy technology in energy production; (2) encouraging advanced manufacturing
and the creation of skilled manufacturing jobs; and (3) enhancing the diversity of U.S. energy
sources.3
Wind energy, like many energy technologies, benefits from government incentives.4 Without
them, it does not appear likely that there would be a U.S. wind turbine industry. To a large extent,
the federal government sets the framework and influences the pace of domestic wind power
development.
One of the main federal policy tools to encourage wind generation is a tax credit, known as the
production tax credit (PTC), which is slated to expire at the end of 2012.5 Other policy drivers
include state renewable portfolio standards, which have been adopted by more than half the states
to mandate production of electricity from “clean” sources.6 No nationwide renewable electricity
1 Employment data for the U.S. wind energy sector is currently only reported by the American Wind Energy
Association (AWEA). Recent statistics can be found in AWEA’s annual report, U.S. Wind Industry Annual Market
Report Year Ending 2011, p. 49.
2 BLS does not publish earnings data specific to the wind power industry, but it estimates that earnings for engineers in
wind power are comparable to earnings for engineers in general. James Hamilton and Drew Liming, Careers in Wind
Energy, Bureau of Labor Statistics, September 2010, pp. 10-11, http://www.bls.gov/green/wind_energy/
wind_energy.pdf.
3 The U.S. Energy Information Administration (EIA) reports wind energy represented about 4% of U.S. power
generating capacity, and 3% of total U.S. electricity generation in 2011.
4 EIA, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2010, July 2011,
http://docs.wind-watch.org/US-subsidy-2010.pdf.
5 For a detailed discussion on energy tax incentives see CRS Report R41953, Energy Tax Incentives: Measuring Value
Across Different Types of Energy Resources, by Molly F. Sherlock.
6 EIA, Renewable and Alternative Fuels, Renewable Portfolio Standards and State Mandates by State, August 2011,
(continued...)
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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standard currently exists, but the Obama Administration and some Members of Congress have
endorsed the concept.7 These policies do not directly address manufacturing, but greater wind
power adoption supports the development of a U.S. wind energy manufacturing base. In addition,
the federal government and some state governments have maintained programs that provide
financial incentives for manufacturing of wind power equipment.
Many international wind turbine manufacturers and component suppliers have opened
manufacturing facilities in the United States since 2005. In 2011, there were more than 470 U.S.-
based wind turbine manufacturing facilities—a 10-fold increase in five years—ranging from wind
turbine assembly plants to factories producing various wind-related components including large
bearings, castings, electrical wiring, fasteners, hydraulics, and power electronics. Only a small
number of these factories are dedicated exclusively to building turbine parts (blades, towers, and
nacelles); the others manufacture components for various industrial uses, including wind-specific
products. Given the interest in wind power around the world, manufacturers with U.S. production
facilities may be able to increase exports of advanced wind-energy components. Around $250
million in fully assembled wind turbines were exported from the United States in 2011.
The industry’s future in the absence of government support, however, is open to question. While
the cost of electricity from land-based wind turbines is less than the cost of power from other
alternative sources, such as concentrated solar plants and geothermal installations, it is still, in
general, somewhat higher than the cost of power from new gas-fired generators. This means that
without government support, electricity suppliers’ demand for wind turbines would be relatively
limited. It is possible that, if existing policy tools are allowed to expire, wind industry
manufacturing will face a difficult future. On the other hand, it is imaginable that technological
improvements in wind generation and higher costs for construction of fossil-fuel power plants
could at some point make wind cost-competitive with coal and gas as a source of electricity,
creating a brighter outlook for wind turbine manufacturing.
Wind Turbine Manufacturing
Wind turbine manufacturing is at the core of the multifaceted wind power industry. Because of
the use of castings, forgings, and machining, turbine manufacturing is a significant contributor to
U.S. heavy manufacturing. By the end of 2011, more than 38,000 wind turbines were installed in
the United States.8 Procurement of wind turbines accounts for an estimated 60% to 70% of
overall expenses for wind energy developers.9
The market potential of offshore wind power is not covered in this report. No offshore projects
have been installed in the United States to date, and the industry faces difficulties with permitting,
financing, and infrastructure availability.10 So far, Cape Wind, off the coast of Nantucket in
(...continued)
http://www.eia.gov/cneaf/solar.renewables/page/trends/table28.html.
7 The Clean Energy Standard Framework announced by the White House in 2011 is discussed in CRS Report, R41720,
Clean Energy Standard: Design Elements, State Baseline Compliance and Policy Considerations, by Phillip Brown.
8 AWEA, U.S. Wind Industry Annual Market Report 2011, p. 40.
9 Worldwatch Institute, Made in China, or Made by China? Chinese Wind Turbine Manufacturers Struggle to Enter
Own Market, http://www.worldwatch.org/node/3931.
10 U.S. Department of Energy, A National Offshore Wind Strategy: Creating an Offshore Wind Energy Industry in the
(continued...)
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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Massachusetts, is the only project that has a commercial wind energy development lease with the
U.S. government. AWEA reports that at the end of 2011, there were 15 different proposed
offshore wind projects in the United States, and a proposed offshore transmission line.11 Also, this
report does not cover small wind turbine manufacturing, which AWEA defines as turbines with
rated capacities of 100 kilowatts (kW) or less. This segment of the wind turbine market appears to
be growing. According to the World Wind Energy Association, worldwide more than 330
manufacturers offer small wind turbines.12 AWEA’s most recent data indicate that 95
manufacturers of small wind turbines were based in the United States in 2009.13
Historical Overview
The use of a wind turbine to generate electricity is an American invention of the late 19th
century.14 The development of U.S. commercial wind turbine manufacturing can be traced back to
the 1970s, when the U.S. government advanced the technology in response to the oil crises of
1973 and 1979 as an alternative to power generation from fossil fuels.
The first U.S. wind farms were developed in California, an early adopter of policies favorable to
wind energy, and the state dominated worldwide wind development in the early 1980s.15 This
created a market for wind turbine manufacturers. Enertech, U.S. Windpower (renamed Kenetech
in 1988), and Zond were among the American suppliers. Other U.S. manufacturers included
technology and aerospace firms such as Westinghouse and Boeing. In 1986, 60 U.S. firms
produced turbines for the California market.16 Foreign suppliers from Denmark, Germany, Japan,
and the Netherlands, among other countries, also sold their wind turbines in California.17 The
California “wind rush” became the training ground for several firms, including the Danish
manufacturer Vestas, now the world’s largest manufacturer of utility-scale wind turbines.18
(...continued)
United States, February 2011, http://www1.eere.energy.gov/windandhydro/pdfs/national_offshore_wind_strategy.pdf.
11 AWEA, U.S. Wind Industry Annual Market Report 2011, p. 57.
12 AWEA, 2011 U.S. Small Wind Turbine Market Report, June 2012, p. 22, http://www.awea.org/learnabout/
smallwind/upload/AWEA_SmallWindReport-YE-2011.pdf.
13 AWEA, 2010 Small Wind Turbine Global Market Study, Year Ending 2009, p. 18, http://www.awea.org/learnabout/
smallwind/upload/2010_AWEA_Small_Wind_Turbine_Global_Market_Study.pdf.
14 Charles F. Brush, an American inventor, constructed the first modern wind turbine in 1888, in Cleveland, OH, for the
purpose of electricity generation. He used it to power his home. Thereafter, other Americans such as Palmer C. Putman
built wind turbine generators, mostly for farm use, at a time when electricity distribution systems had not yet been
installed. U.S. manufacturers of early wind turbine generators included Jacobs Wind and Parris-Dunn. The rural
electrification project of 1936 effectively killed the wind-generated power market in the United States until the early
1970s. For more information, see Windsector, The First Wind Turbine in the United States, April 17, 2011,
http://windsector.tumblr.com/post/4711554356/the-first-wind-turbine-in-america.
15 Janet Swain, “The Role of Government in the Development and Diffusion of Renewable Energy Technologies: Wind
Power in the United States, California, Denmark, and Germany,” (Ph.D. dissertation, Fletcher School of Law and
Diplomacy, 2001), pp. 200-203. This dissertation notes that by 1991 77% of the world’s wind capacity was installed in
California.
16 Geoffrey Jones and Loubna Bouamane, “Historical Trajectories and Corporate Competences in Wind Energy,”
(Working Paper 11-112, Harvard Business School, 2011), p. 32. http://www.hbs.edu/research/pdf/11-112.pdf.
17 Over 15,000 medium-sized wind turbines were installed in California between 1981 and 1986. See Union of
Concerned Scientists, Briefing on How Wind Energy Works, http://www.ucsusa.org/clean_energy/coalvswind/
brief_wind.html.
18 Large wind turbines are often called utility-scale because they generate enough power for utilities, or electric
(continued...)
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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However, a drop in oil prices, along with reductions in government tax credits, caused a near total
collapse of this market in the mid-1980s.19 By the end of the decade, many wind turbine
manufacturers went bankrupt as the industry adjusted to a much smaller market.
For the next two decades fuel prices were low and U.S. incentives spotty. In the United States,
annual installed wind power capacity slowed from 1987 to 2000. The entire U.S. wind fleet
exceeded 1,000 megawatts (MW) for the first time in 1986, but then took 13 years to reach
approximately 2,400 MW.20
In the 1990s a more sustained market for wind power and wind turbine manufacturing evolved
overseas. Strong, consistent government incentives and policies, which have included a policy
mix of direct government investment, tax breaks, loans, regulations and laws that cap or tax
emissions, supported the development of manufacturers abroad, particularly in Europe.21 This
allowed wind turbine manufacturers to establish themselves in countries such as Denmark, Spain,
and Germany, where many wind turbine manufacturers are now based.22
Demand for Wind Turbines and Components
Demand for wind turbines and components is driven by growth in wind power capacity. More
consistent U.S. policies have resulted in a substantial increase in cumulative utility-scale wind
power capacity, from 9,000 MW in 2005 to more than 46,000 MW in 2011.23 The United States
was second to China in cumulative and new installed wind power capacity in 2011.24 China and
the United States accounted for more than 45% of total installed worldwide wind power capacity
at the end of 2011.25 The size of the U.S. market has made the United States an attractive
(...continued)
companies, to sell.
19 Jens Vestergaard, Lotte Brandstrup, and Robert Goddard, Industry Formation and State Intervention: The Case of
the Wind Turbine Industry in Denmark and the United States, Published in the Academy of International Business
Conference Proceedings, p. 16-18, http://pure.au.dk/portal/files/2552/windmill_paper2.pdf.
20 Lester Brown, World on the Edge: How to Prevent Environmental and Economic Collapse, Earth Policy Institute,
Supporting Data Showing Cumulative Installed Wind Power Capacity and Annual Additions to the United States,
1980-2009, 2011, http://www.earth-policy.org/books/wote/wote_data_topic.
21 An overview of policy instruments used by various governments to promote renewables, including wind power, can
be found on the Renewable Energy Policy Network website at http://www.ren21.net/RenewablesPolicy/
PolicyInstruments/tabid/5608/Default.aspx.
22 The wind turbine industry advanced in Europe, specifically in Denmark, beginning in the early 20th century based
largely on the wind turbines constructed by Poul la Cour. For background, see Jens Vestergaard, Lotte Brandstrup, and
Robert Goddard, “A Brief History of the Wind Turbine Industries in Denmark and the United States,” (Academy of
International Business, 2004), http://www.hha.dk/man/cmsdocs/publications/windmill_paper1.pdf.
23 AWEA, U.S. Wind Industry Annual Market Report 2011, p. 4. Utility-scale wind turbines as defined by AWEA are
large turbines with generating capacity of 100 kW and larger.
24 China faces major challenges with grid connection of installed wind turbines, as some projects in China have to wait
several months before being connected to the national grid. Thus, the United States continues to exceed China in grid
connected wind power capacity. China issues two figures when it reports its wind power data. By year-end 2011, China
reported that it installed 62.4 gigawatts (GW) of onshore wind power, but only 45 GW was operational and connected
to the grid. In other markets, it is common practice to count all turbines as soon as they are grid connected and
producing electricity. For more information see REN21, Renewables 2011 Global Status Report, Table R8, p. 104,
http://www.ren21.net/Portals/97/documents/GSR/GSR2012_low%20res_FINAL.pdf.
25 Global Wind Energy Council (GWEC) Global Wind 2011 Report, March 2012, p. 11, http://www.gwec.net/
fileadmin/documents/Publications/Global_Wind_2007_report/
(continued...)
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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investment location for wind turbine and wind component manufacturers. However, the prospects
for 2013 and beyond are clouded owing to several factors, including the fate of the PTC, low-cost
natural gas, and manufacturing overcapacity in the wind turbine sector.26
Major customers for wind turbine manufacturers are large independent power producers (IPPs)
and utilities such as Iberdrola Renewables, NextEra Energy Resources, Horizon-EDPR, Terra-
Gen, Duke Energy, or Xcel Energy, which purchase wind turbines for commercial electricity
generation.27 Other wind turbine customers include universities and military bases, but these
customers account for a very small share of the market.
Commercial utility-scale onshore wind turbines are installed at wind farms, which are clusters of
wind turbines grouped together to produce large amounts of electricity. Currently, there are some
975 wind farms in the United States.28 The largest is located in California, and there are several
huge wind farms in Texas (see Table 1), which is by far the leading state in wind energy output,
with over 10,000 MW of installed capacity at year-end 2011. Other large wind-power projects are
in Indiana, Oregon, and Iowa. Several large U.S. wind farms are owned and managed by overseas
companies. For example, the Roscoe, TX, wind farm is owned and operated by Germany-based
E.ON Climate and Renewables. It consists of more than 600 wind turbines purchased from three
different manufacturers: Mitsubishi, General Electric (GE), and Siemens.
Table 1. Largest U.S. Wind Power Projects
Project
Name State
Installed
Capacity
(MW) Year Online Owner
Number of
Turbines/Manufacturer(s)
Alta Wind
Project
California 981.0 2010, 2011 Terra-Gen Power 377/Vestas
Roscoe Texas 781.5 2008 E.On Climate &
Renewables
627/Mitsubishi, Siemens, GE
Horse
Hollow
Texas 735.5 2006, 2006 NextEra Energy
Resources
421,GE/Siemens
Capricorn
Ridge
Texas 662.5 2007, 2008 NextEra Energy
Resources
407,Mitsubishi/Siemens
Sweetwater Texas 585.3 2003, 2005,
2007
Babcock & Brown
Wind, Catamount
392/Vestas,GE/Siemens
Source: American Wind Energy Association (AWEA), U.S. Wind Industry Annual Market Report, 2011, p. 32.
(...continued)
GWEC%20Global%20Wind%20Report%202010%20low%20res.pdf.
26 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
August 2012, p. 19, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
27 Independent power producers are companies that produce power that they sell to electric utilities.
28 A list of some 975 wind farms in the United States can be accessed at Windpower’s wind turbine and wind farms
database, http://www.thewindpower.net/country-datasheet-windfarms-4-usa.php.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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Wind Turbine Suppliers
International Manufacturers Dominate Wind Turbine Manufacturing
In 2011, 10 wind turbine manufacturers accounted for 85% of the global market measured by
newly installed capacity. The three largest manufacturers were:
• Vestas at 12.9% (Denmark);
• Goldwind at 9.4% (China); and
• GE at 8.8% (U.S.).29
Other leading manufacturers are listed in Appendix A. These firms are headquartered in Europe,
the United States, India, and China. GE Energy30 and UTC/Clipper Windpower31 are the only
U.S.-headquartered utility-scale wind turbine manufacturers.
Some manufacturers, including Gamesa, Vestas, and Suzlon, focus exclusively on wind turbines.
Others are part of larger diversified companies. All pursue a global business strategy, which
means selling outside their home markets. Many operate manufacturing facilities throughout the
world, including the United States, Europe, and China.
Recently, several Chinese companies have begun producing wind turbines, selling mainly in the
large and growing China market.32 China, which had virtually no wind turbine manufacturing
capabilities in 2005, is now home to over 270 producers,33 some of them capable of producing
complete wind turbine systems with locally made products.34 Four of the top 10 manufacturers
worldwide in 2011 were headquartered in China (see Appendix A), where, by some estimates,
turbines can be manufactured for 30% less than in Europe, the United States, or Japan.35 Some
Chinese firms apparently are looking for overseas markets,36 but concerns about the quality of
29 Ekopolitan, “World Turbine Market Shares, 2008-2011, Installed Capacity” BTM Estimates,
http://www.ekopolitan.com/tech/global-wind-turbine-market-shares.
30 Zond was purchased by Enron Wind in 1997. In 2002, GE, which had long produced turbines for power generation,
acquired Enron Wind’s fully integrated wind power capacity including its line of wind turbine generators.
31 Clipper Windpower does not rank among the top 10 global wind turbine manufacturers and it has found itself
squeezed in the United States, its main market, by larger competitors. In December 2010, United Technologies
Corporation purchased Clipper, which it sold in August 2012 to a private equity firm, Platinum Equity. Clipper has
downsized its operations and reduced its staff to fewer than 100 employees.
32 GWEC reports China’s wind market doubled every year between 2006 and 2009, and it has been the largest annual
market by installed capacity in the world since 2009. GWEC, Global Wind 2011 Report, March 2012, p. 12,
http://gwec.net/wp-content/uploads/2012/06/Annual_report_2011_lowres.pdf.
33 Joshua Meltzer, The United States and China: The Next Five Years, The Brookings Institution, May 19, 2011, p. 17,
http://www.brookings.edu/~/media/Files/events/2011/0519_us_china/20110519_us_china_panel4.pdf.
34 Geoffrey Jones and Loubna Bouamane, Historical Trajectories and Corporate Competences in Wind Energy,
(Working Paper 11-112, Harvard Business School, 2011), p. 55.
35 Joanna Lewis, Why China is acting on Clean Energy: Successes, Challenges, and Implications, Georgetown
University, October 12, 2012, p. 12, http://files.eesi.org/Lewis101212.pdf.
36 John McDonald, Wind Power Market Opportunity Profile, China, British Columbia Trade and Investment, 2009, pp.
2-3, https://trade.britishcolumbia.ca/Export/Markets/Documents/China_WindPower.pdf.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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Chinese turbines are one factor that might limit foreign sales since Chinese-made turbines are not
yet seen as being as high in quality as European and American ones.37
South Korean companies are also making huge investments in wind turbine production. Two
large South Korean shipbuilders, Hyundai Heavy Industries and Samsung Heavy Industries, have
announced their intention to manufacture wind turbines. Other Korean firms undertaking wind
turbine technology development include Daewoo, Hanjin, STX, Rotem, and Unisom.
Additionally, South Korean wind turbine component manufacturers like Doosan, Hanjin,
Taewoong, Hyosung, CS Wind, and Korea Tech are becoming important suppliers of towers,
blades, generators, transformers, gearboxes, nacelle control systems, and cables.38
U.S. Market Attracts More Foreign Wind Turbine Manufacturers
The leading manufacturers of utility-scale wind turbines in the United States are shown in Table
2. In 2011, nearly two dozen wind turbine manufacturers—a five-fold increase in six years—
installed nearly 3,500 new turbines nationwide, generating 6,800 MW of new capacity. 39 This
was down from the 2009 peak, when some 5,700 new wind turbines were installed, adding nearly
10,000 MW of new utility-scale wind capacity.40 Since the inception of utility-scale wind energy
production, U.S. electric generators have installed more than 40,000 turbines with approximately
52,000 MW of capacity. In 2011, GE continued to lead in the number of new wind turbine
installations, although its market share has declined over time.41
37 Joanna Lewis, Can Green Sunrise Industries Lead the Drive into Recovery? The Case of the Wind Power Industry in
China and India, United Nations Industrial Development Organization, 2010, p. 7, http://www.unido.org/fileadmin/
user_media/Publications/RSF_DPR/WP202009_Ebook.pdf.
38 Joanna I. Lewis, Building a National Wind Turbine Industry: Experiences from China, India, and South Korea,
Georgetown University, Int. J. Technology and Globalization, Vol 5, Nos. 3/4, 2011, pp. 290-293, http://www.china.tuberlin.
de/fileadmin/fg57/SS_2012/Umwelt/Lewis_windenery.pdf. For more information on the major players in the
South Korean wind industry, see a report by the Maine International Trade Center, “Opportunities for Maine
Companies in Korean New and Renewable Energy (NRE) Markets,” pp, 7-9, November 2010. http://www.mitc.com/
PDFs/RenewableEnergyinKorea_Report.pdf.
39 AWEA, U.S. Wind Industry Annual Market Report 2011, p. 7.
40 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
August 2012, p. 15, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
41 AWEA’s 3nd Quarter 2012 Market Report found that total installations through the first nine months of 2012 reached
4,728 MW, compared to 3,370 for the same period in 2011.
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Table 2. Annual Wind Turbine Installations in the United States
Top 10 Manufacturers by Selected Years, Ranked by Number Installed in 2011
Original Equipment
Manufacturer
(OEM)/Assemblera
Location of
Headquarters
2005 (# of
Turbines)
2009 (# of
Turbines)
2010 (# of
Turbines)
2011 (# of
Turbines)
GE Energy United States 954 2,663 1,679 1,252
Vestas Denmark 403 830 75 952
Siemens Germany 0 505 360 534
Suzlonb India 8 344 201 159
Mitsubishi Japan 190 491 146 133
Nordex Germany 0 25 8 115
Clipper United States 1 242 28 103
REpower Germany 0 165 34 84
Gamesa Spain 25 300 282 77
Alstom France 0 0 0 25
All Others 33 200 129 30
Total 1,614 5,765 2,942 3,464
Source: AWEA, U.S. Wind Industry Annual Market Report, 2009, 2010, and 2011. The number of turbines is
based on data compiled by AWEA and is accurate as of December 17, 2012, but is subject to revision.
a. An OEM designs the turbine, typically assembles the nacelle, and sells the completed unit to developers.
b. Suzlon acquired 100% of REpower during 2011. The two firms jointly had 243 installations in 2011.
Wind Turbine Components, Raw Materials, Global
Supply Chain, and U.S. Manufacturing Capacity
Wind Turbine Components
A wind turbine is a collection of operating systems that convert energy from wind to produce
electricity. Utility-scale wind turbines are massive, complex pieces of machinery which come in
many sizes and configurations. Wind turbine blades range in size from 34 to 55 meters, the hub
can weigh 8 to 10 tons, and towers are usually 80-100 meters tall and weigh 55 to 70 tons.
According to AWEA, the installation of over 5,700 turbines in the United States in 2009 required
industrial manufacturers to supply 17,000 blades and tower sections, approximately 3.2 million
bolts, 36,000 miles of rebar, and 1.7 million cubic yards of concrete.42
42 AWEA, Anatomy of a Wind Turbine, http://www.awea.org/issues/supply_chain/Anatomy-of-a-Wind-Turbine.cfm.
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In simple terms, as shown in Figure
1, the major components in a wind
turbine consist of:
• a rotor comprising four
principal components—the
blade, the blade extender, the
hub, and the pitch drive
system;
• a nacelle, the external shell or
structure resting atop the
tower containing and housing
the controller, gearbox,
generator, large bearings,
connecting shafts, and
electronic components that
allow the turbine to monitor
changes in wind speed and
direction;
• a tower, normally made of rolled steel tube sections that are bolted together to
provide the support system for the blades and nacelle; and,
• other components, including transformers, circuit breakers, fiber optic cables,
and ground-mounted electrical equipment.43
Beyond the major components, there are many subcomponents in a wind turbine. The percentages
shown in Figure 2 indicate the costs of the components relative to the overall cost of a turbine.
The tower, for example, is over 26% of the total cost of a wind turbine, rotor blades 22%, the
gearbox 13%, and the other components 5% or less.
43 A detailed description of the components in a wind turbine can be found in Wind Turbine Development: Location of
Manufacturing Activity, by George Sterzinger and Matt Svrcek, Renewable Energy Policy Project, September 2004.
http://www.repp.org/articles/static/1/binaries/WindLocator.pdf.
Figure 1. Wind Turbine Overview
Source: Wind Directions, “Supply Chain: The Race to Meet
Demand,” January/February 2007
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
CRS-10
Figure 2. Wind Turbine Components
Contribution of main parts as a percentage of overall costs based on a
REpower MM92 Turbine
Source: Wind Directions, “Supply Chain: The Race to Meet Demand,” January/February 2007.
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Wind turbines vary greatly in size and are getting larger as technology advances. They have
grown from dozens of kilowatts in the early 1980s to as large as 7 MW.44 Most land-based wind
turbines are in the 1.5 MW to 3 MW range.45 Components also change as technology improves.
European and U.S. wind turbine manufacturers have invested heavily over the decades in
developing their respective turbine technologies, leading to improvements in the efficiency of
wind blades and turbines and longer turbine life. New wind turbine manufacturers, especially
from China, are not yet globally competitive. According to recent research, they generally lack
state-of-the-art technology, focus mainly on producing smaller turbines, and experience
significant quality control problems.46 Raw materials availability and changing commodity prices
of raw materials used in wind turbines affect production costs.47 A typical wind turbine is made
primarily of steel (about 90% by weight) (see Table 3). Aluminum and other light-weight
composites are also important, particularly for blade manufacturing. Other core materials include
pre-stressed concrete, copper, and fiberglass. Turbines also utilize permanent magnets, cast iron,
carbon fiber, rubber, epoxy, ferrite, brass, ceramics, and Teflon.48
Table 3. Raw Materials Requirements for Wind Turbines
based on a 1.5MW Wind Turbine by % of Weight, including blades and towers
Steel Fiberglass Copper Concrete Adhesive Aluminum
Core
Materials
Weight % 89.1% 5.8% 1.6% 1.3% 1.1% 0.8% 0.4%
Source: U.S. Department of Energy, 20% Wind Energy by 2030, p. 63, July 2008
Global Wind Turbine Assembly Supply Chain
Wind turbines are manufactured by original equipment manufacturers, or OEMs, which design,
assemble, and brand their products. Similar to automobile assemblers that make a car or truck,
OEMs are mostly system integrators. Assemblers must bring together an estimated 8,000
precision parts and components to produce a wind turbine.49 One supplier might roll large plates
of steel into the towers that support the turbine. A second company might make the turbine blades
from special carbon fiber materials, and a third might manufacture the electronic computerized
44 The German manufacturer Enercon has built the world’s largest turbine model to date, the Enercon E-126, which can
generate up to 7 MW of power.
45 Economic and Workforce Development Program California Community Colleges, Wind Turbine Technicians,
September 2009, p. 35, http://www.coeccc.net/Environmental_Scans/wind_scan_sw_09.pdf.
46 Chi-Jen Yang, Eric Williams, and Jonas Monast, Wind Power: Barriers and Policy Solutions, Nicholas School of the
Environment at Duke University, November 2008, pp. 14-15. http://nicholasinstitute.duke.edu/climate/electricity/windpower-
barriers-and-policy-solutions.
47 Jacob Funk Kirkegaard, Thilo Hanemann, and Lutz Weischer, It Should Be a Breeze: Harnessing the Potential of
Open Trade and Investment Flows in the Wind Energy Industry, Peterson Institute for International Economics,
December 2010, p. 41, http://www.iie.com/publications/wp/wp09-14.pdf.
48 David Wilburn, Wind Energy in the United States and Materials Required for the Land-Based Wind Turbine Industry
From 2010 through 2030, U.S. Geological Survey, Scientific Investigations Report 2011-5036, 2011, pp. 7-8,
http://pubs.usgs.gov/sir/2011/5036/sir2011-5036.pdf.
49 Gloria Ayee, Marcy Lowe, and Gary Gereffi, et al., Manufacturing Climate Solutions Carbon Reducing
Technologies and U.S. Jobs, Center on Globalization Governance and Competitiveness, Wind Power, September 22,
2009, p. 10, http://www.cggc.duke.edu/environment/climatesolutions/greeneconomy_Ch11_WindPower.pdf.
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Congressional Research Service 12
control systems. Each of these components might be produced domestically, might be assembled
domestically from imported inputs, or might be imported as an assembled product.50
Tier 1 and Tier 2 Wind Turbine Component Suppliers
Many suppliers and specialty firms are part of this complex global supply chain. Tier 1 suppliers
make large components such as towers, hubs, blades, or gearboxes. They include firms such as
LM Wind (blades), SKF (bearings), and Winergy (gearboxes). Tier 2 suppliers produce
subassemblies such as ladders, fiberglass, control systems, hydraulics, power electronics,
fasteners, resin, machine parts, or motors. They include companies such as American Roller
Bearings (power transmission bearings), Cardinal Fasteners (structural fasteners), and Timken
(power transmission bearings).
Manufacturing Strategies
A wind turbine is a significant investment. Researchers at the Lawrence Berkeley National
Laboratory reported that wind turbine transaction price quotes can range from as low as
$900/kilowatt (kW) to a high of $1,400/kW,51 meaning that an average 2 MW turbine would cost
between $1.8 million and $2.8 million, plus installation costs.
Each wind turbine assembler uses different sourcing strategies and levels of vertical integration.
Some produce almost all major components internally or through subsidiaries, while others
outsource many of their critical components.52 For instance, some manufacturers produce blades,
generators, or gearboxes in-house, while others opt for outside suppliers. Hundreds of smaller
companies make specialized parts such as clutches, rotor bearings, fasteners, sensors, and gears
for the wind industry.53 Illustrative examples of some of the thousands of components in a
modern wind turbine are shown in Table 4.
Very high levels of expertise and specialization are required of wind turbine suppliers, with the
level of precision similar to that of the aerospace industry. Turbine manufacturers often establish
relationships with suppliers in the interest of quality, as a failure in a turbine part can be very
expensive to fix. Wind turbines are expected to survive largely unattended in extreme climactic
50 BlueGreen Alliance, Clean Energy Economy Report 2009, June 15, 2009, p. 3, http://www.repp.org/articles/
BGA_Repp.pdf.
51 U.S. Department of Energy, 2011 Wind Technologies Market Report, August 2012, p. 33.
52 One analysis of vertical integration among wind OEMs indicates that Suzlon and Enercon have significant in-house
production and high or very high levels of vertical integration; Siemens and Vestas fall in the middle; and GE is less
vertically integrated than many other manufacturers, relying on outside suppliers for blades, gearboxes, generators,
castings and forgings, and towers. Josh Lutton, Wind Turbine Manufacturer Recommendations (Round 2), Woodlawn
Associates, April 27, 2010, p. 6, http://www.woodlawnassociates.com/uploads/Woodlawn_Associates_WT_Recs_-
_R2_100427.pdf.
53 Dan Ancona and Jim McVeigh, Wind Turbine—Materials and Manufacturing Fact Sheet, Office of Industrial
Technologies, U.S. Department of Energy. August 29, 2001. http://www.perihq.com/documents/WindTurbine-
MaterialsandManufacturing_FactSheet.pdf.
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conditions for a design life of as much as 20 years.54 Product quality is also of concern to wind
farm operators, as a malfunctioning turbine can reduce operating revenue.55
Table 4. Selected Wind Turbine Components
Towers:
• Towers
• Ladders
• Lifts
Rotor:
• Hub
• Nose Cone
• Blades
• Pitch Mechanisms
• Drives
• Bakes
• Rotary Union
Nacelle:
• Nacelle Cover
• Nacelle Base
• Heat exchanger
• Controllers
• Generator
• Power Electronics
• Lubricants
• Filtration
• Insulation
• Gearbox
• Pump
• Drivetrain
• Ceramics
• Shaft
Foundation:
• Rebar
• Concrete
• Casings
Other:
• Transformers
• Bolts/Fasteners
• Wire
• Paints and Coatings
• Lighting Protection
• Steelworking/Machining
• Communication Devices
• Control and Condition
Monitoring Equipment
• Electrical Interface and
Connections
• Batteries
• Bearings
• Brakes
Source: AWEA, Manufacturing Supplier Handbook for the Wind Energy Industry, 2011, p. 29. http://www.awea.org/
issues/supply_chain/upload/Supplier-Handbook.pdf
54 Michelle Avis and Preben Maegaard, Worldwide Wind Turbine Market and Manufacturing Trends, Xmire, January
2008, p. 21, http://www.folkecenter.net/mediafiles/folkecenter/pdf/Market_and_Manufacturer_Trends.pdf.
55 Manufacturers like Suzlon have experienced recent failures of their turbines. Reliability and performance are critical
factors affecting shareholder value, the reputation, and future growth of any wind OEM.
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U.S. Wind Turbine Manufacturing Facilities
At the end of 2011, the American Wind Energy Association reported that more than 470 wind
turbine manufacturing facilities were located in the United States, up substantially from the 30-40
wind-related manufacturing facilities nationwide in 2004. Over that period, the number of tower
plants increased from 6 to 18; blade facilities rose from 4 to 12; and, nacelle assembly facilities
grew from 3 to 14.56 Total investment in facilities to manufacture for the wind industry in the
United States has exceeded $1.5 billion.57
Greater demand for wind turbines, cost
savings related to transportation, and concern
about the risks associated with currency
fluctuations are among the reasons wind
turbine and component manufacturers have
opened new production facilities in the United
States since 2005.58 Even with increased
domestic production capacity, wind turbine
assemblers source parts and components on a
worldwide basis, reflecting the industry’s
global supply chain. Many wind
manufacturers with production facilities in the
United States also produce elsewhere,
typically in Europe and Asia.
Towers and Blades
Towers and blades were among the first wind products manufactured in the United States because
they are large, expensive, and difficult to transport.59 Thus, manufacturers find it easier and less
costly to fabricate near their installation point. Many tower manufacturers in the United States are
American companies and include firms such as Ameron, Trinity Structural Towers, DMI
Industries, and Broadwind Towers. Foreign manufacturers, such as Gamesa and Vestas, also have
located tower manufacturing facilities in the United States. In 2012, several major tower
producers, including Otter Tail Corporation, Katana Summit, and DMI Industries, exited the
sector or announced plans to scale back production. Suppliers of blades have increased their U.S.
manufacturing capacity, with three times as many facilities in 2011 as in 2005. For example, LM
Wind Power, headquartered in Denmark, is the largest supplier of blades in the world; it now
56 AWEA provided these statistics to CRS via email on December 5, 2012.
57 AWEA, Policy and Manufacturing: Demand-Side Policies Will Fuel Growth in the Wind Manufacturing Sector,
2011, p. 3, http://www.thenewnorth.com/resources/mwgpolicypaper.pdf.
58 Andrew David, Impact of Wind Energy Installations on Domestic Manufacturing and Trade, U.S. International
Trade Commission, July 2010, p. 7, http://www.usitc.gov/publications/332/working_papers/ID-25.pdf.
59 Transporting wind turbines, which requires special trucks, railroad carriages, and cranes, is difficult because of their
unusual weight, length, and shape. For example, a typical nacelle weighs between 50 and 70 tons. Blades can run from
110 feet to 145 feet. Towers can weigh 70 tons. According to some estimates, transportation costs can account for up to
20% of the installed cost of a wind turbine. Estimates from AWEA suggest that per-turbine transportation and logistics
costs range from $100,000 to $150,000. For more information see, The Logistics of Transporting Wind Turbines:
Reducing Inefficiencies, Costs, and Community Impact by Streamlining the Supply Chain, CN White Paper 2009,
http://www.cn.ca/documents/WhitePapers/Transporting-Wind-Turbines-White-Paper-en.pdf.
U.S. Wind-Related Manufacturing
Facilities, Number of Facilities by
Selected Categories, December 2011
Towers 18
Blades 12
Nacelle Assembly 14
Fasteners 21
Bearings 21
Castings 14
Gearboxes 7
Generators 1
Source: AWEA.
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produces blades at two U.S. manufacturing facilities.60 Other blade manufacturers with U.S.
production facilities include two American companies, TPI Composites and Molded Fiberglass.
Both make blades for GE.
Turbine Nacelle Assembly
European OEMs, including Gamesa, Nordex, Siemens, and Vestas, have opened nacelle assembly
plants in the United States in recent years.61 Some started investing in the United States heavily
after the American Recovery and Reinvestment Act (P.L. 111-5) passed in 2009.62 Siemens and
Nordex also opened their first U.S. nacelle assembly facilities in 2009. GE has three nacelle
assembly facilities in the United States, all established prior to 2005, and also operates turbine
component plants in China, Vietnam, and Europe. With the exception of DeWind, which was a
German-owned manufacturer acquired by South Korea’s Daewoo Shipbuilding & Marine
Engineering Company in 2009, Asian manufacturers lag in establishing a U.S. nacelle
manufacturing presence. Japanese-headquartered Mitsubishi had expected to open its first U.S.
nacelle assembly plant in 2012, but has delayed the opening of that facility.63 Other
manufacturers, such as Suzlon, which idled its turbine rotor blade plant in Minnesota, have
reduced their U.S. manufacturing presence.64 Appendix B provides an overview of the varied
investment strategies pursued by foreign-based wind turbine assemblers in the United States.
Other Wind Turbine Components
A more robust domestic manufacturing base for wind turbine components such as bearings,
gearboxes, and power transmissions is also being established in the United States, albeit more
slowly than for towers, blades, and nacelle assembly. Gearboxes and bearings are among the most
critical components for any wind turbine manufacturer because failures in either of these parts
mean the wind turbine will fail. Bearings for wind turbines are made by a few manufacturers,
such as German-headquartered FAG65 and U.S.-headquartered Timken.66 Both have production
capacity in the United States and operate factories in Europe and Asia. Gearboxes are also made
by a relatively small number of companies, such as Winergy (now part of Siemens), which
established U.S. production capacity in Illinois in 2009.67 Winergy also makes gearboxes in
60 LM Wind Power, LM Wind Power Group—Facts, http://www.lmwindpower.com/upload/
lmwp_factsheet_groupuk_020511.pdf.
61 AWEA, U.S. Wind Industry Annual Market Report, 2011, 2012, p. 38.
62 The American Recovery and Reinvestment Act (ARRA) of 2009 included grants, loans, and tax credits.
63 Chisaki Watanabe, “Mitsubishi Heavy to Suspend U.S. Wind Factory on Sluggish Demand,” April 2, 2012.
64 Suzlon, which once employed more than 500 U.S. workers who made rotor blades used in wind turbines in
Pipestone, MN, now has about 30 employees there, engaged primarily in blade repair work and customer service.
Debra Fitzgerald, “Suzlon Shifts Focus of Pipestone Plant,” Pipestone County StarOnline, February 15, 2012.
65 FAG, a unit of the Schaeffler Group, has produced bearings for wind turbines for over 30 years. It has a U.S. factory
in Joplin, MO. See FAG, “Expertise in Bearing Technology and Service for Wind Turbines,” March 2010,
http://www.schaeffler.com/remotemedien/media/_shared_media/library/schaeffler_2/brochure/downloads_1/
pwe_de_en.pdf.
66 Timken, headquartered in Ohio, is a global supplier of bearings with a full line for the wind industry. Timken
produces ultra-large bore bearings for wind turbines in South Carolina and also operates wind-bearing production
manufacturing facilities in Brazil, China, and Romania. It also provides clean steel for wind energy from its facilities in
Canton, OH. See http://www.timken.com/en-us/about/Pages/Locations.aspx.
67 “Siemens & Winergy Open Wind Turbine Manufacturing Plant,” Renewable Energy World.com, August 31, 2009.
http://www.renewableenergyworld.com/rea/news/article/2009/08/siemens-winergy-open-turbine-manufacturing-plant.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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Europe, China, and India.68 Manufacturers of power transmissions, power converters, composite
coatings, and sensors have also located wind-related production facilities in the United States.
Outlook
There is now increasing evidence that falling natural gas prices, and uncertainty over the future of
the PTC, has diminished manufacturers’ interest in establishing more wind-related production
facilities in the United States. An analysis by the National Renewable Energy Laboratory (NREL)
reported that in 2011, 16 new turbine and component manufacturing facilities opened across the
nation, compared to 13 in 2010.69 In 2012, some manufacturers delayed implementing announced
plans for new factories or expansion of existing ones, and several companies reduced their U.S.
workforce.
An Emerging U.S. Wind Manufacturing Corridor
A concentration of tower, blade, and nacelle assembly plants is found in the central part of the
United States, as shown in Figure 3. Texas, Iowa, Colorado, Arkansas, and Kansas are positioned
near sites that are favorable for wind power generation, enabling manufacturers there to minimize
transportation challenges and costs. In addition, wind turbine assemblers and tower and blade
manufacturers have been attracted to these states by incentive packages including property tax
abatements, sales tax reductions, low-interest loans, and support for worker training. Other windrelated
manufacturing facilities are located in Pennsylvania, Michigan, and Ohio, where the
decline of automotive and heavy industrial manufacturing has left behind a workforce with prior
experience with steel, assembly lines, robotics, and other aspects of heavy manufacturing.70
68 Winergy, Production Locations, http://www.winergy-group.com/cms/website.php?id=/en/about-winergy/
locations.htm.
69 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, National Renewable Energy Laboratory,
August 2012, p. 16, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
70 AWEA reports at least 30 facilities in Michigan, more than 50 companies in Ohio, and about 15 factories in
Pennsylvania now manufacture components for the wind industry. AWEA, State-specific wind energy fact sheets,
updated through the 3rd Quarter 2012, http://www.awea.org/learnabout/publications/factsheets/factsheets_state.cfm.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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Figure 3. Wind Turbine Manufacturing Facilities in the United States
By Tower, Blade, and Turbine Nacelle Assembly, 2011
Source: CRS based on data from AWEA. The map shows 44 online tower, blade, and turbine nacelle assembly
facilities at year-end 2011. It does not show the more than 400 facilities that produce wind components such as
power transmissions, generators, gearboxes, or bearings.
U.S. Wind Turbine Manufacturing Employment
In 2011, the wind turbine manufacturing sector supported an estimated 30,000 manufacturing
jobs nationwide. This was only about one-fourth of U.S. employment related to wind energy
manufacturing. The majority (some 60%) of the 75,000 full-time workers employed directly and
indirectly in the wind power industry at the end of 2011 worked in finance and consulting
services, contracting and engineering services, project development, and transportation and
logistics.71 About 4,200 jobs were in construction and 4,000 were in operations and maintenance.
The number of manufacturing jobs has been relatively flat over the past three years, even as total
employment in wind energy declined, according to figures from AWEA (see Figure 4).72
71 AWEA employment data were provided to CRS via email on December 4, 2012, and are based on surveys and
modeling.
72 AWEA, U.S. Wind Industry Annual Market Report, 2011, 2011, p. 45. AWEA is the only source of nationwide
employment statistics, as the U.S. government does not currently track employment in the wind industry. Measurement
of employment in wind turbine manufacturing is complicated by the fact that no single industry codes exist to isolate
wind power establishments or wind turbine and wind components establishments. The North American Industry
Classification System (NAICS) places wind turbine manufacturers within the Turbine and Turbine Generator Set Units
(continued...)
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service 18
Wind turbine manufacturing is responsible for a very small share of the 11.7 million domestic
manufacturing jobs in 2011, well under 1%. It seems unlikely, even if there were a substantial
increase in U.S. manufacturing capacity, that wind turbine manufacturing will become a major
source of manufacturing employment. In 2008, the U.S. Department of Energy forecast that if
wind power were to provide 20% of the nation’s electrical supply in 2030, U.S. turbine assembly
and component plants could support roughly 32,000 full-time manufacturing workers in 2026.73
AWEA’s more optimistic projection is that the wind industry could support three to four times as
many manufacturing workers as it does now if a long-term stable policy environment were in
place, which implies a total of 80,000 jobs.74 Further employment growth in the sector is likely to
depend not only upon future demand for wind energy, but also on corporate decisions about
where to produce towers, blades, nacelles, and their most sophisticated components, such as
gearboxes, bearings, and generators.
Figure 4. Wind Energy Employment Trends
2007-2011
Source: AWEA, U.S. Wind Industry Annual Market Report, 2011.
Note: Other jobs include financial and consultant services, developers and development services, contracting
and engineering services, and transportation and logistics. Project development employment is only available
beginning in 2011.
(...continued)
manufacturing industry (NAICS 333611), which comprises “establishments primarily engaged in manufacturing
turbines (except aircraft) and complete turbine generator set units, such as steam, hydraulic, gas, and wind.” BLS
reports 29,070 total jobs in this industry in 2011, with employment increasing every year since 2005, when it had
19,500 employees.
73 U.S. Department of Energy, 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity
Supply, July 2008, p. 207, http://www.20percentwind.org/20percent_wind_energy_report_revOct08.pdf. DOE
estimates are based on major component assumptions that by 2030 80% of blades, 50% of towers, and 42% of turbines
installed in the United States would be manufactured domestically.
74 AWEA, Policy and Manufacturing: Demand-Side Policies Will Fuel Growth in the Wind Manufacturing Sector,
2011, p. 9, http://www.thenewnorth.com/resources/mwgpolicypaper.pdf.
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Wind Turbine Equipment Trade
U.S. Imports
As part of their global business strategies, wind turbine manufacturers continue to source a
significant share of components outside the United States.75 Imports of wind-powered generating
sets, the main wind category covering fully assembled wind turbines and including other
components such as blades and hubs when they are imported with the nacelle, grew from $482.5
million in 2005 to a peak of $2.5 billion in 2008. In 2009, imports of wind-powered generating
sets dropped to $2.3 billion, then fell by another 46% to $1.2 billion, before rising by 1% in 2011
(see Figure 5).76 An analysis of U.S. wind equipment trade by the U.S. International Trade
Commission identified several explanations for the recent decline in U.S. imports of windpowered
generating sets, which include fewer wind turbine installations; decreasing prices; and
the opening of new production facilities in the United States.77
The overwhelming majority (95%) of imported wind-powered generating sets come from Europe.
In 2011, Denmark was the leading source of wind-powered generating sets, making up more than
half (55%) of all imports into the United States. Italy, Germany, and Spain combined accounted
for another 40% (see Figure 5). China and India accounted for 2% and 1% of imports,
respectively, in 2011.
It appears that South Korean wind turbine manufacturers like Samsung, Hyosung, and Unison
have ambitions to become leading exporters to the U.S. market and other global markets.78 Even
though China is home to 60 wind energy manufacturers, including several ranked among the
largest in the world, it has exported only a small number of wind turbines, $351 million by value
worldwide in 2011. However, Chinese manufacturers such as Goldwind, Sinovel, United Power,
and Mingyang are actively seeking to expand their foreign sales. Between 2008 and 2011, 11
Chinese OEMs exported 194 wind turbines, based on one estimate, with the United States
accounting for 59% of the installations.79 Also, European turbine assemblers such as Vestas are
75 Gerald Susman and Amy Glasmeier, “Industry Structure and Company Strategies of Major Domestic and Foreign
Wind and Solar Energy Manufacturers: Opportunities for Supply Chain Development in Appalachia,” Smeal College
of Business, November 20, 2009, p. 38, http://www.arc.gov/assets/research_reports/WindandSolarEnergy.pdf.
76 Precisely tracking trade flows in the wind industry is complicated because the standard Harmonized Commodity
Coding and Classification System (HS) does not have separate harmonized trade categories for all wind turbines and
their components. Wind turbines and components are classified under several HS codes. Wind-powered generating sets
(HS 8502.31) is the main category, which includes fully assembled wind turbines, but may also cover components such
as blades and hubs when they are imported with the nacelle. However, when imported separately other individual
turbine components (e.g., generators (HS 8501.64), towers (7308.20), and blades and other components (8412.90 and
8503.00) may be traded under other HS headings. Importantly, goods that are not used in wind turbines are also
included in these categories. But, the ITC reports, wind accounts for a significant portion of trade in each dual use
category and appears to be a major driver of import growth in those HS headings. For a complete discussion see,
USITC, “Wind Turbines: Industry and Trade Summary,” by Andrew David, June 2009.
77 Andrew David, Shifts in U.S. Wind Turbine Equipment Trade in 2010, U.S. International Trade Commission, USITC
Executive Briefing on Trade, June 2011, http://www.usitc.gov/publications/332/executive_briefings/
wind_EBOT_commission_review_final2.pdf.
78 Dr. Rimtalg Lee, Status and Forecast of Wind Energy In Korea, San Francisco, CA, March 2, 2009, pp. 7-9,
http://www.asiapacificpartnership.org/pdf/PGTTF/wind-event/March_2/StatusnForecastofWindEnrgyKorea.pdf.
79 Ginger Gardiner, “Windpower 2012 Report,” Composites Technology, August 1, 2012,
http://www.compositesworld.com/articles/windpower-2012-report. BTM Consult reports total capacity of Chinese
(continued...)
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Congressional Research Service 20
now looking to open plants in China to supply the Chinese market, and possibly global markets.80
Concerns about the quality of Chinese-made turbines and parts have prevented more rapid
adoption of Chinese components. This may change as Chinese wind turbine products improve
and as more foreign manufacturers establish operations in China.
Figure 5. U.S. Imports of Wind-Powered Generating Sets, Select Countries
2005-2011
Source: Global Trade Atlas. These statistics only cover wind-powered generating sets (HS 8502.31), not
components such as blades, towers or gearboxes imported separately.
Note: The import statistics are shown on a domestic consumption basis.
China’s efforts to foster wind turbine manufacturing have been an irritant in the bilateral
relationship. The United Steelworkers (USW) filed a claim in September 2010 that China’s green
technology policies are direct violations of China’s World Trade Organization (WTO)
obligations.81 In June 2011, after the World Trade Organization panel upheld a U.S. complaint,
the Office of the U.S. Trade Representative (USTR) announced that China will end a program of
wind power equipment grants that required Chinese wind turbine manufacturers that received
them to use domestic parts and components instead of foreign-made parts and components.82
(...continued)
wind turbine exports increased to 222 MW in 2011 from almost 17 MW in 2008.
80 Vestas, Company Structure, Vestas China, http://www.vestas.com/en/about-vestas/company-structure/vestaschina.
aspx.
81 United Steelworkers, United Steelworkers’ Section 301 Petition Demonstrates China’s Green Technology Practices
Violate WTO Rules, http://assets.usw.org/releases/misc/section-301.pdf.
82 China’s Special Fund for Wind Power Equipment Manufacturing provided individual grants ranging from $6.7
million to $22.5 million to Chinese wind turbine manufacturers in exchange for using domestic parts and components
instead of imported ones. For more information on China’s Special Fund see USTR’s June 7, 2011 press release,
“China Ends Wind Power Equipment Subsidies Challenged by the United States in WTO Dispute,”
http://insidetrade.com/iwpfile.html?file=jun2011%2Fwto2011_1868a.pdf.
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Besides the USW complaint, the U.S. wind tower industry has been involved in an ongoing trade
case. In December 2011, the Wind Tower Trade Coalition, representing four U.S. manufacturers
of steel towers for wind turbines,83 filed anti-dumping and countervailing duty (CVD) petitions
with the U.S. Department of Commerce (DOC) and the International Trade Commission (ITC),
alleging that Chinese and Vietnamese makers of wind towers have injured U.S. producers by
selling their products in the United States at below-market prices. In May 2012, DOC ruled that
Chinese exporters of utility scale wind towers are being unfairly subsided and announced
preliminary CVD rates ranging from 13.74% to 26%.84 In July 2012, DOC issued an affirmative
preliminary anti-dumping ruling that could impose additional duties as high as 73% on Chinese
towers imported into the United States.85 Final determinations are scheduled for early 2013. If the
dumping and subsidy cases lead to significant tariffs, the rulings may impact the magnitude and
source countries of tower imports from China to the United States in future years.
U.S. imports of other wind-related equipment, such as towers and blades, followed a similar
pattern to wind-powered generating sets, with increases from 2005 to 2008 followed by a drop in
2009, then again in 2010, with a rise in 2011. But although more of these large components are
being produced domestically, imports remain significant. China, Mexico, Vietnam, and South
Korea were the main sources of imported towers and lattice masts in 2011.86 China, Mexico, and
Canada led in blade imports in 2011.87 Some turbine components, such as bearings and
gearboxes, are relatively easier to transport, and wind turbine assemblers might be more likely to
continue to use global sourcing strategies for these less bulky components.
Domestic Content
Estimates indicate that U.S. content in recent years has increased to nearly 70% of the value of
the average wind turbine installed in the United States.88 In an August 2012 report, analysts at the
Lawrence Berkeley National Laboratory calculated that the share of parts manufactured
domestically nearly doubled from around 35% in 2005-2006 to 67% in 2011.89
83 The Wind Tower Trade Coalition comprises Broadwind Towers of Manitowoc, WI; DMI Industries of Fargo, ND;
Katana Summit LLC of Columbus, NE; and, Trinity Structural Towers of Dallas, TX.
84 In the countervailing duty case, DOC found that Chinese wind tower manufacturers, including CS Wind and Titan
Wind, benefited from Chinese subsidy programs. See Commerce Preliminarily Finds Countervailable Subsidization of
Imports of Utility Scale Wind Towers from the People’s Republic of China (China), May 30, 2012, http://ia.ita.doc.gov/
download/factsheets/factsheet-prc-towers-cvd-prelim-20120530.pdf.
85 The DOC preliminarily assessed duties include 30.93% on Chengxi Shipyard, 20.85% on Titan Wind Energy,
26.25% on CS Wind Corporation, Guodian United Power Technology Baoding, and Sinovel, and a China-wide rate of
72.69%. For a DOC anti-dumping fact sheet, see U.S. Department of Commerce, International Trade Administration,
Commerce Preliminarily Finds Dumping of Imports of Utility Scale Wind Towers, July 27, 2012, http://ia.ita.doc.gov/
download/factsheets/factsheet-china-vietnam-uswt-ad-prelim-20120727.pdf.
86 The Harmonized Tariff Schedule classifies wind towers under towers and lattice masts (HS 7308.20). Not all the
towers in this category are wind towers.
87 Wind blades are classified under the tariff lines for parts of other engines and motor (HS 8412.90) and parts of
generators (HS 8503.00). Not all shipments in this category are wind-related.
88 Precisely how many wind turbine components are made in the United States and how many are imported is a
debatable issue. U.S. content need only be disclosed on a few products, namely automobiles, textiles, wool, and fur
products. For most other products, no law requires disclosure of domestic content. In the case of automobiles, the
American Automobile Labeling Act (AALA) requires automobile assemblers to include labels that specify the
percentage value of the U.S./Canadian parts content of each vehicle sold in the United States.
89 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
(continued...)
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Congressional Research Service 22
Public statements by major wind turbine assemblers appear to support the view that U.S.-made
turbines now contain a larger share of domestic content than in previous years. For example,
Gamesa reports that its domestic content on U.S.-made wind turbines is upwards of 65% and it
has a local supply goal of 75%.90 Vestas has stated domestic content in one class of its wind
turbines has grown to 80%, and it expects to increase the overall percentage to 90%, including
components and suppliers.91 The 2011 Wind Technologies Market Report notes “a growing
amount of the equipment used in wind power projects has been sourced domestically in recent
years. Whether that trend continues in the future may depend on the size and stability of the U.S.
wind power market as well as the manufacturing strategies of emerging wind turbine
manufacturers from Asia and elsewhere. ”92
U.S. Exports
Future growth of the U.S. wind turbine industry also depends on foreign markets. A goal of the
Obama Administration is to demonstrably increase renewable energy and energy efficiency
exports like wind turbines.93 Exports of wind-powered generating sets from the United States to
the world remain relatively small, especially in comparison to imports, at only $255 million in
2011, up from $3.6 million in 2005 (see Figure 6).94
(...continued)
August 2012, p. 23, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
90 Michael A. Peck, Briefing by Michael A. Peck to the Maryland Commission on Oversight of Public-Private
Partnerships, MAPA Group, September 28, 2011, p. 9, http://www.docstoc.com/docs/99871353/Briefing-by-Michael-
A-Peck-to-the-Maryland-Commission-on-.
91 U.S. Congress, House Committee on Ways and Means, Subcommittee on Select Revenue Measures, Written
Comments for the Record: Hearing for Certain Expiring Tax Credits, 112th Cong., 2nd sess., April 26, 2012, p. 3,
http://waysandmeans.house.gov/uploadedfiles/vestas_american_wind_tech._inc._fc42612.pdf.
92 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
August 2012, p. 24, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
93 National Export Initiative, Renewable Energy and Energy Efficiency Export Initiative, December 2010,
http://export.gov/reee/eg_main_023036.asp.
94 GTIS, Global Trade Atlas database (accessed December 11, 2012).
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Congressional Research Service 23
Figure 6. U.S. Exports of Wind-Powered Generating Sets
in millions of U.S. dollars, 2005-2011
$3.6
$83.3
$14.2 $22.1
$117.0
$142.1
$255.0
$0
$50
$100
$150
$200
$250
$300
2005 2006 2007 2008 2009 2010 2011
Source: Global Trade Atlas (accessed December 12, 2012).
Notes: These statistics only cover wind-powered generating sets, which refer to the complete nacelle and any
items imported with the nacelle (HS 8502.31).
U.S. producers may turn to foreign markets to offset falling domestic demand because of
increasing market uncertainty and overcapacity in U.S. wind turbine equipment manufacturing.95
The Western Hemisphere may be especially attractive to U.S.-based exporters of wind turbine
equipment. For instance, the expansion of the Canadian and Mexican wind turbine markets could
increase export opportunities for companies with manufacturing operations in the United States,
including GE, Siemens, Gamesa, and Vestas. 96 Brazil is the largest market in Latin America for
wind power, which could provide U.S.-producers of nacelles and wind subcomponents with fresh
export opportunities. A counter-trend is that wind turbine assemblers also are localizing
production in the large Brazilian market, including manufacturers like GE and Gamesa.97
Although considerably smaller, there are other growing markets in Central and South America
that could buy more U.S. wind products, including Honduras, Uruguay, and Chile.
95 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
August 2012, p. 17, http://www1.eere.energy.gov/wind/pdfs/2011_wind_technologies_market_report.pdf.
96 Andrew S. David and Dennis Fravel, U.S. Wind Turbine Export Opportunities in Canada and Latin America, United
States International Trade Commission, No ID—032, July 2012, p. 11-26, http://www.usitc.gov/publications/332/
working_papers/ID-032_final.pdf.
97 Ibid, pp. 23-32.
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If U.S. manufacturers begin to export more wind turbine equipment, they will have to contend
with import tariffs, non-tariff barriers, and domestic industry subsidies. Tariff rates in some major
markets are disproportionately higher than U.S. tariffs. For instance, the U.S. duty rate for windpowered
generating sets is 2.5%, compared to 14% in Brazil, 8% in China, 7.5% in India, and
2.7% in the European Union.98 Subsidies and non-tariff barriers in major overseas markets like
China are another potential constraint on U.S. exports.99
Several U.S. government programs are designed to encourage the export of renewable energy
products, such as direct loans provided to wind manufacturers by the Export-Import Bank of the
United States.100 Owing to the Ex-Im Banks’s environmental export financing program, for
example, Clipper Windpower exported 27 wind turbines to Mexico in 2010 based on a direct loan
from the Ex-Im Bank of $80.7 million.101 In 2011 and 2012, Ex-Im also extended loans of $22
million for 55 Northern Power wind turbines to Italy,102 $159 million for 51 Gamesa wind
turbines to Honduras,103 and $32 million for 55 LM Wind Power wind blades to Brazil.104
Federal Support for the U.S. Wind Power Industry
Worldwide the wind power industry is driven by various types of government support, which
range from tax credits to incentive policies like feed-in tariffs.105 These incentives have been
much larger in several foreign countries than in the United States, which has helped to spur the
manufacturing of wind turbines in Europe and Asia. More recently, however, many countries—
especially in Europe—have begun to reduce subsidies for renewables, including wind.106
98 World Trade Organization, Tariff Analysis Online, http://www.wto.org/english/tratop_e/tariffs_e/tariff_data_e.htm.
99 Clean energy policies in China, Japan, and South Korea are detailed in a November 2009 study by the Breakthrough
Institute and the Information Technology & Innovation Foundation, “Rising Tigers Sleeping Giant: Asian Nations Set
to Dominate the Clean Energy Race by Out-Investing the United States” http://thebreakthrough.org/blog/
Rising_Tigers.pdf.
100 More information about the Export-Import Bank’s Environmental Exports Program can be accessed at
http://www.exim.gov/products/policies/environment/success.cfm.
101 Export-Import Bank of the United States, “Clipper Windpower Transaction is Named Ex-Im Bank Deal of the
Year,” press release, March 11, 2010, http://www.exim.gov/pressrelease.cfm/4EB6A01A-B9E1-FABFD9409670AEB9668D/.
102 Export-Import Bank of the United States, “Vermont Manufacturer Makes Largest U.S. Export Of Distributed Wind
Turbines, Ex-Im Bank Guarantees Financing ,” press release, May 26, 2011, http://www.exim.gov/newsandevents/
releases/2011/vermont-manufacturer-makes-largest-u-s-export-of-distributed-wind-turbines-ex-im-bank-guaranteesfinancing.
cfm.
103 Craig O'Connor, Financing Cleantech Exports: The Role of Ex-Im Bank, Export-Import Bank of the United States,
December 14, 2011, p. 15. The Ex-Im Bank reported that the wind turbines would be manufactured at its facility in
Pennsylvania and generators would be supplied by ABB Power T&D Company (Bland, VA), blades by LM Glassfiber
Inc. (Grand Forks, ND), and associated equipment and services from other U.S. suppliers.
104 Export-Import Bank of the United States, “Ex-Im Approves $32.1 Million in Financing For Export of U.S. Wind
Blades to Brazil ,” press release, August 3, 2012, http://www.exim.gov/newsandevents/releases/2012/ex-im-approves-
32-1-million-in-financing-for-export-of-u-s-wind-blades-to-brazil.cfm.
105 KPMG International, Taxes and Incentives for Renewable Energy, June 2012, http://www.kpmg.com/Global/en/
IssuesAndInsights/ArticlesPublications/Documents/taxes-incentives-renewable-energy-2012v3.pdf.
106 Siemens, Current Trends in Renewable Energy Markets, p. 3, April 2012, http://www.iea.org/media/weowebsite/
ebc/meetings/ebcmeeting-12-13june2012/SiemensTrendsinRenewableEnergyMarkets.pdf.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
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In Europe, feed-in tariffs107 are among the policy tools that have been used to promote wind
power, and have been credited by industry advocates like the European Wind Energy
Association108 with driving renewable energy growth, particularly in Denmark, Spain, and
Germany. However, faced with a difficult fiscal and economic situation, some European countries
have reduced their wind power feed-in tariffs and are taking a more critical look at their
renewable energy policies.109 For instance, in 2010, Spain announced it would reduce its wind
subsidies by 35% from January 1, 2011, to January 1, 2013.110 Some of the leading global wind
turbine manufacturers, including Vestas and Gamesa, have downsized their operations to remain
competitive, while others may place even more emphasis on exporting.
China’s Renewable Energy Law, which took effect in 2006, is one measure that has driven growth
in the domestic market.111 China introduced a feed-in tariff for wind power generation in 2009.112
The Chinese government also implemented various policies to encourage the development of
local manufacturing and technology development.113
In the United States, various federal policies also have been instrumental in the development of a
domestically based wind power sector, including:
• the production tax credit (PTC)/Investment Tax Credit (ITC), which will expire
at the end of 2012;
• an advanced energy manufacturing tax credit (MTC), which reached its funding
cap in 2010 (no additional funds were allocated to continue with the MTC);
• the Section 1603 Treasury Cash Grant Program, which required that wind
projects begin construction by December 31, 2011, and be placed in service by
December 31, 2012; and
107 A feed-in tariff, or FIT, is a renewable energy policy that typically offers a guarantee of payments to project owners
for the total amount of renewable energy they produce; access to the grid; and stable, long-term contracts (15-20 years).
For more information see workshop presentation, Renewable Energy Feed-in Tariffs: An Analytical View, by Toby
Couture, May 28, 2009. http://www.energy.ca.gov/2009_energypolicy/documents/2009-05-28_workshop/
presentations/01_Couture_Feed-in_Tariff_Wkshop_May_28_09.pdf.
108 European Wind Energy Association, Support Schemes for Renewable Energy, A Comparative Analysis of Payment
Mechanisms in the EU, 2002, p. 31, http://www.ewea.org/fileadmin/ewea_documents/documents/projects/rexpansion/
050620_ewea_report.pdf.
109 At least three studies have raised questions about the costs associated with Europe’s support of its renewable energy
sectors. A report by a Spanish academician, Dr. Gabriel Calzada, Study of the Effects on Employment of Public Aid to
Renewable Energy Sources, argued that Spain’s policies were an economic failure and cost many jobs. Another report
by a Danish think tank, CEPOS, Wind Energy: The Cost for Denmark, also pointed to the costs of subsidizing
Denmark’s wind power industry. A third report by the German think tank, Rheinisch-Westfälisches Institut for
Wirtschaftsforschung (RWI), Economic Impacts from the Promotion of Renewable Energies: The German Experience,
argues that aid by the German government for wind power is now three times the cost of conventional electricity.
110 Ben Backwell, “Subsidies to be Cut for Spain’s Wind and Thermal Solar Sectors,” Recharge News, July 5, 2010.
111 For a detailed discussion of China’s green energy policies, see CRS Report R41748, China and the United States—A
Comparison of Green Energy Programs and Policies, by Richard J. Campbell
112 GWEC, Global Wind Report Annual Market Update 2010, April 2011, pp. 30-33, http://www.gwec.net/index.php?
id=180.
113 Eric Martinot, Renewable Power for China: Past, President and Future, 2010, p. 6, http://www.martinot.info/
Martinot_FEP4_prepub.pdf.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service 26
• the Section 1705 Loan Guarantee Program for commercial projects, which
includes manufacturing facilities that employ “new or significantly improved”
technologies.
The wind industry asserts that a national renewable electricity standard is needed to create longterm
stability and to attract investment in new turbine production facilities. Table 5 provides an
overview of selected federal programs affecting the U.S. wind power industry.
Table 5. Selected Energy Programs Affecting the U.S. Wind Industry
Program
Expiration Deadlines for Wind
Generation/Manufacturing Projects
Production Tax Credit December 31, 2012
Investment Tax Credita December 31, 2012
Advanced Manufacturing Tax Credit Capped at $2.3 billion; 100% Allocated
1603 Cash Grant in Lieu of Tax Creditb December 31, 2011 (begin construction)
December 31, 2012 (placed in service)
1705 Loan Guarantee Program September 30, 2011 (commence construction)
Bonus Depreciation Schedule December 31, 2011, for 100% first-year bonus depreciation
December 31, 2012, for 50% bonus
Source: Wind Energy Manufacturers Association, Supply Chain Issues from Tier 1 Suppliers and Component
Makers, http://www.slideshare.net/LeslieFeen/supply-chain-issues-from-tier-1-suppliers-and-component-makerswind-
power-manufacturing-amp-supply-cha
a. The taxpayer who presumably is the owner of the relevant wind power project placed in service prior to
December 31, 2012, can opt for a 30% ITC in lieu of the PTC. The 30% ITC for small commercial wind
energy property extends through December 31, 2016.
b. The taxpayer owning the relevant wind power project can opt for a 30% cash grant from the U.S.
Department of Treasury instead of a PTC, then select a one-time cash grant instead of tax credits.
Production Tax Credit (PTC)/Investment Tax Credit (ITC)
The PTC, the main policy tool in the deployment of U.S. wind power, was first adopted during
the Administration of President George H. W. Bush as part of the Energy Policy Act of 1992 (P.L.
102-486). It has been a significant driver of the recent growth of the U.S. wind industry, but it is
not a permanent part of the tax code and has lapsed on a number of occasions. In each of the
years during which the PTC lapsed (2000, 2002, and 2004), meaning that it expired prior to being
renewed, the level of additional deployed wind capacity slowed or collapsed when compared to
the previous year’s total: 93% in 2000, 73% in 2002, and 77% in 2004.114 Yet, when the PTC
incentive was extended in 2004, 2007, and 2009, the industry responded positively, increasing
wind power capacity compared to the previous year. 2010 was an exception to this trend with a
drop in wind capacity of nearly 50% from 2009, even with the PTC in place. In 2011, at 6,816
MW, annual installed wind capacity increased by 30% over the previous year. The annual cost of
the PTC is estimated at about $1 billion a year.115
114 AWEA, Production Tax Credit, What is the Production Tax Credit?, p. 1, http://www.awea.org/_cs_upload/issues/
federal_policy/7785_1.pdf.
115 U.S. Congress, House Committee on Science, Space, and Technology, Subcommittee on Investigations and
(continued...)
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Congress provided a three-year extension of the PTC through December 31, 2012, as part of the
American Recovery and Reinvestment Act. The PTC provides an inflation-adjusted per kilowatthour
(kWh) income tax benefit over the first 10 years of a wind project’s operations, which in
2010 was 2.2 cents per kWh, and is a critical factor in financing new wind farms. In order to
qualify, a wind farm must be completed and start generating power while the credit is in place,
which would be by the end of 2012.116 Wind project developers may elect to receive a 30%
investment tax credit (IRC §48) in place of the PTC if the projects are placed in service prior to
the end of 2012.117
AWEA advocates for a phase out of the PTC over six years, which it argues would encourage
continued investment in the industry and would allow for extended growth of domestic turbine
manufacturing.118 The Governors’ Wind Energy Coalition has called for a multi-year extension of
the PTC of at least four years.119 Given the uncertainty about the continuation of the PTC beyond
2012, along with the possible loss of other tax benefits, some in the industry have begun to refer
to 2013 as “the valley of death”120 in which industry support programs will end without any
replacement policies.
Advanced Energy Manufacturing Tax Credit (MTC)
The Advanced Energy Manufacturing Tax Credit, also referred to as Section 48C of the Internal
Revenue Code, was authorized in Section 1302 of the American Recovery and Reinvestment
Act.121 The MTC provided a 30% credit for companies for investments in new, expanded, or
reequipped clean energy domestic manufacturing facilities built in the United States. Wind, solar
panels, and electric vehicle batteries were among the 183 projects funded through the MTC
before reaching its cap of $2.3 billion in 2010. The Obama Administration has requested another
$5 billion for the 48C tax program. An extension of the MTC has been proposed through the
Security in Energy and Manufacturing Act of 2011 (S. 591), or SEAM Act. It includes one
(...continued)
Oversight, Impact of Tax Policies on the Commercial Application of Renewable Energy Technology, 112th Cong., 2nd
sess., April 19, 2012, p. 10, http://science.house.gov/sites/republicans.science.house.gov/files/documents/hearings/
HHRG-112-SY21-WState-LLinowes-20120419.pdf.
116 AWEA, Production Tax Credit, What is the Production Tax Credit?, p. 1, http://www.awea.org/_cs_upload/issues/
federal_policy/7785_1.pdf.
117 Internal Revenue Service Notice 2009-52, Election of Investment Tax Credit, Coordination with Department of
Treasury Grants for Specified Energy Property in Lieu of Tax Credits, http://www.irs.gov/pub/irs-drop/n-09-52.pdf.
118 In a December 12, 2012, letter to Congress, AWEA proposed a six-year reduction of the PTC between 2014 and
2018, with the tax credit starting at 100% of the current 2.2 cents a kilowatt-hour for projects started in 2013, followed
by 90%, 80%, 70%, 60%, and then 60% of the current project level for projects placed in service from 2014 through
2018, with no PTC in 2019 or thereafter. AWEA, Phase-Out of Wind Energy Production Tax Credit Would Enable
U.S. Industry To Become Full Cost-Competitive, December 12, 2012, http://www.awea.org/newsroom/pressreleases/
Analysisonphaseout.cfm.
119 Letter from Governor’s Wind Energy Coalition to Congress, November 15, 2011,
http://governorswindenergycoalition.org/wp-content/uploads/2011/03/GWC-PTC-Letter-Final2-11-15-
11.pdfhttp://www.governorswindenergycoalition.org/assets/files/President Obama Wind Energy Letter %28July 24,
2011%29.pdf.
120 Gloria Gonzalez, U.S. Renewables Industry Searches for More Tax Breaks as Grants End, Wind Energy
Manufacturers Association , June 20, 2011, http://wema.membershipsoftware.org/blog_home.asp?Display=98.
121 For more information see White House, Fact Sheet: $2.3 Billion in New Clean Energy Manufacturing Tax Credits,
January 8, 2010, http://www.whitehouse.gov/the-press-office/fact-sheet-23-billion-new-clean-energy-manufacturingtax-
credits.
U.S. Wind Turbine Manufacturing: Federal Support for an Emerging Industry
Congressional Research Service 28
significant change from the original MTC; higher priority would be given to facilities that
manufacture—rather than assemble—goods and components in the United States.122
Fifty-two wind manufacturing projects were awarded $364 million in tax credits under the MTC
program.123 Beneficiaries included many manufacturers that were already active, or that had
announced that they intend to open new facilities, in the United States. Selected manufacturers of
wind turbines, blades, towers, and gears that received tax credits under the 48C program are listed
in Appendix C.
Other Wind-Related Programs
Tax benefits for wind projects include accelerated tax depreciation and bonus depreciation; the
latter allowed wind farm owners to write off more than 50% of the capital costs of building a
wind farm in 2008, 2009, and 2010. The 2010 Tax Act124 increased the first-year bonus
depreciation to 100% for new qualified property acquired and placed in service between
September 8, 2010, and December 31, 2011, rather than 50% for the qualifying property. Bonus
depreciation dropped to the lower 50% rate in 2012.125
Another ARRA incentive is a grant system administered by the U.S. Treasury Department. In lieu
of tax credits, wind projects can receive a cash payment of up to 30% of the qualified capital
costs. The Section 1603 Treasury cash grant program allows developers to opt for a cash payment
instead of a tax break. To qualify, construction had to begin by December 31, 2011.126 Wind
projects under construction by year-end 2011 must be placed in service by December 31, 2012.
Many in the wind industry credited the grants for keeping the sector healthy during the 2008 and
2009 recession.127 A detailed discussion of the Section 1603 program can be found in CRS Report
R41635, ARRA Section 1603 Grants in Lieu of Tax Credits for Renewable Energy: Overview,
Analysis, and Policy Options, by Phillip Brown and Molly F. Sherlock.
The Section 1705 loan program, a temporary ARRA program administered by the Department of
Energy, authorized loan guarantees for certain renewable energy projects, including wind
projects. The program, which funded 26 projects, including four wind generation projects,
expired on September 30, 2011. The combined wind commitments totaled $1.7 billion, or 9% of
the $18.8 billion in 1705 program funding.128 The Caithness Shepherds Flat wind generation
122 “SEAM Act Will Build U.S. Wind Supply Chain Says Industry Group,” Industry Week, May 12, 2010.
http://www.industryweek.com/articles/seam_act__will_help_build_u-s-
_wind_supply_chain_says_industry_group_21813.aspx?SectionID=2.
123 White House, The Recovery Act: Transforming the American Economy Through Innovation, Promoting Clean,
Renewable Energy: Investments in Wind and Solar, http://www.whitehouse.gov/recovery/innovations/clean-renewableenergy.
124 The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (P.L. 111-312) was signed
by President Obama on December 17, 2010.
125 Ryan Wiser and Mark Bolinger, 2011 Wind Technologies Market Report, Lawrence Berkeley National Laboratory,
August 2012, p. 57.
126 Criteria for the start of construction are detailed in a U.S. Treasury guidance document, which can found on the
Treasury Department’s 1603 Grant Program website at http://www.treasury.gov/initiatives/recovery/Pages/1603.aspx.
127 Mark Bolinger, Ryan Wiser, and Naim Darghouth, Preliminary Evaluation of the Impact of the Section 1603
Treasury Grant Program on Renewable Energy Deployment in 2009, Ernest Orlando Lawrence Berkeley National
Laboratory, April 2010, p. ii, http://eetd.lbl.gov/ea/emp/reports/lbnl-3188e.pdf.
128 Solar generation or solar manufacturing comprised the overwhelming majority (85%) of the 1705 loan guarantee
(continued...)
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Congressional Research Service 29
project, said to be one of the largest onshore wind farms in the world, received a $1.3 billion
loan.129 GE manufactured the wind turbines. Loan guarantees were also extended to three other
wind generation projects: Kahuku Wind Power, Granite Reliable, and Record Hill Wind. No wind
turbine manufacturers were funded under the 1705 program.130
State Renewable Portfolio Standards
State renewable portfolio standards have encouraged the growth of the U.S. wind energy industry
by requiring companies that sell electricity to retail customers to obtain a specified share of their
electricity from renewable generation.131 As of June 2012, mandatory RPS programs existed in 29
states and the District of Columbia.132 The U.S. wind industry has long called for a national
standard to increase investor confidence in the sector’s long-term prospects. No such measure has
passed Congress, although bills to establish national renewable standards have been passed by the
Senate on three occasions and by the House of Representatives once.133
Conclusion
The expansion of the U.S. wind power manufacturing base will depend, at least in part, on
government policy decisions. The production costs of U.S. plants that make turbine components
appear to be competitive with those in other countries, and the difficulty and expense of
transporting very bulky products over long distances serves as an obstacle to import competition.
Nonetheless, there are several obstacles that may impede the expansion of wind energy
manufacturing in the United States. One is the history of policy-induced boom-and-bust cycles in
wind energy investment, which may lead wind turbine manufacturers and component suppliers to
conclude that future U.S. demand for their products is too uncertain. Another significant
challenge affecting the sector’s future is the availability of adequate transmission for power
generated by wind farms. Most wind farms are located at a distance from the urban areas where
most electricity is consumed, and a shortage of transmission capacity could hamper wind farm
creation or expansion. Congress may wish to evaluate the seriousness of transmission issues in
the context of other federal efforts to support wind generation.134
(...continued)
projects funded at $15.9 billion by the Department of Energy. A list of the 1705 Loan Program projects can be found at
https://lpo.energy.gov/?page_id=45.
129 Department of Energy, “DOE LPO Finalizes Deal on the World’s Largest Wind Project to Date,” press release,
December 17, 2010, https://lpo.energy.gov/?p=1955.
130 Nordic Windpower had received a conditional commitment of $16 million in 2009 for a wind turbine manufacturing
project in Kansas City, MO, but abandoned its application in 2011. The company filed for Chapter 7 bankruptcy
protection in October 2012.
131 CRS Report R42576, U.S. Renewable Electricity: How Does the Production Tax Credit (PTC) Impact Wind
Markets?, by Phillip Brown.
132 U.S. Department of Energy, 2010 Wind Technologies Market Report, August 2012, p. 58.
133 See CRS Report R41493, Options for a Federal Renewable Electricity Standard, by Richard J. Campbell.
134 CRS Report R42818, U.S. Renewable Electricity: How Does Wind Generation Impact Competitive Power Markets?,
by Phillip Brown.
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The structure of the wind manufacturing industry is also likely to undergo significant change. As
is typical in budding industries, a large number of companies now compete in wind
manufacturing. Mergers and failures are likely to lead to consolidation as the sector matures. As
this report describes, competition in the wind turbine sector from new Asian entrants will likely
become more significant in future years, but it is still unclear whether many of these companies
have the technological abilities and financial resources to become significant players in the U.S.
market.
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CRS-31
Appendix A. Global Wind Turbine Manufacturers
Table A-1. Global Wind Turbine Manufacturers by Original Equipment Manufacturers (OEMs)
Top 10 by Annual Market Share (installed capacity), 2009, 2010, 2011
Manufacturer
Location of
Headquarters 2009 Manufacturer
Location of
Headquarters 2010 Manufacturer
Location of
Headquarters 2011
Vestas Denmark 12.50% Vestas Denmark 14.80% Vestas Denmark 12.90%
GE U.S. 12.4 Sinovel China 11.1 Goldwind China 9.4
Sinovel China 9.2 GE U.S. 9.6 GE U.S. 8.8
Enercon Germany 8.5 Goldwind China 9.5 Gamesa Spain 8.2
Goldwind China 7.2 Enercon Germany 7.2 Enercon Germany 7.9
Gamesa Spain 6.7 Suzlon India 6.9 Suzlon India 7.7
Dongfang China 6.5 Dongfang China 6.7 Sinovel China 7.3
Suzlon India 6.4 Gamesa Spain 6.6 Guodian United
Power China 7.1
Siemens Germany 5.9 Siemens Germany 5.9 Siemens Germany 6.3
Repower Germany 3.4 United Power China 4.2 MingYang
WindPower China 2.9
Sources: Vestas Remains Top Wind Turbine Maker, Goldwind Is Second, BTM Consult, March 26, 2012.
Notes: Market share data is reported in MW terms and is based on installations in the year in question, not on turbine shipments or orders.
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Appendix B. Selected Examples of U.S. Wind Turbine Production Facilities
Table B-1. Examples: U.S. Turbine Production Facilities
Wind Turbine
Manufacturer/Headquarters
U.S.
Location Wind Turbine Production Facilities
Gamesa (Spain) PA Gamesa, the first foreign-based wind turbine manufacturer to set up full production facilities in the United
States, opened a plant at a former U.S. Steel factory in Ebensburg, PA, in 2005. Gamesa also operates a nacelle
manufacturing plant in Fairless Hills, PA. It invested over $175 million in these plants and received $15 million
in state subsidies and tax credits. In 2012, Gamesa reduced its workforce at the two plants by 160 workers,
citing lower demand and the possible expiration of the production tax credit.a
Suzlon (India) MN Suzlon opened a rotor blade manufacturing facility in Pipestone, MN, in 2006, with an investment of $8.5
million, its first manufacturing facility outside India. That factory, which once employed over 500 workers, was
idled in 2010 save for blade repair and customer service operations, and most of its workers have been laid
off.b Suzlon acquired the German manufacturer REpower in March 2012.
Siemens (Germany) IA/KN Siemens opened a wind turbine blade factory in Fort Madison, IA in 2007 and a nacelle factory in Hutchinson,
KS in 2010. In 2012, Siemens announced a reduction of its U.S. wind power workforce by more than 37%,
citing low natural-gas prices, a slow economic recovery, and the possible expiration of the PTC.c
Vestas (Denmark) CO Vestas opened a blade production plant in Windsor, CO, and an R&D center in Louisville, CO in 2010 and
another blade manufacturing plant in Brighton, CO in 2012. Vestas received an incentive package of
approximately $4 million to invest in Colorado, including grants, tax rebates, and job-training funds. In 2012,
employment at Vestas’s factories in Colorado fell to 1,200 from more than 1,700 at the start of the year.d
Nordex (Germany) AR Nordex opened a nacelle assembly plant in 2010, which represented a $40 million investment. It expected to
open a blade manufacturing plant in 2012 in Jonesboro, AR, but those plans have yet to be realized.
Mitsubishi (Japan) AR Mitsubishi in 2012 announced that it would indefinitely delay the opening of its nacelle assembly facility in Fort
Smith, AR. The company had stated that the facility would employ 400 workers.e
Source: Compiled by CRS from various sources including company annual reports, press releases, news reports, and information from AWEA.
a. Business News in Brief, July 6, 2012, Philadelphia Inquirer, http://articles.philly.com/2012-07-06/business/32566874_1_wind-turbines-reports-passenger-refinery.
b. David Shaffer, Pipestone Wind-Turbine Factory Idled; 110 Layoffs, StarTribune, November 1, 2010, http://www.startribune.com/business/106490454.html?refer=y.
c. Laura DiMugno, More PTC Fallout: Siemens Cuts 37% of its U.S. Wind Energy Workforce, North American WindPower, September 18, 2012, http://nawindpower.com/
e107_plugins/content/content.php?content.10418#.UMZJnXe3qVk.
d. Vestas Statement on Colorado Layoffs, Denver Business Journal, October 11, 2012, http://www.bizjournals.com/denver/news/2012/10/11/vestas-statement-on-coloradolayoffs.
html?page=all.
e. Rusty Garrett, Mitsubishi Mothballs Fort Smith Wind Turbine Plant, Times Record, April 2, 2012, http://swtimes.com/sections/news/mitsubishi-
%E2%80%9Cmothballs%E2%80%9D-fort-smith-wind-turbine-plant.html.
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Appendix C. 48C Manufacturing Tax Credit
Table C-1. Selected Wind Manufacturers Receiving Section 48C Manufacturing Tax Credit
Applicant Tax Credit Requested State
Siemens $28,328,379 IL
Nordex $22,153,500 AR
Merrill Technologies Group $22,021,500 MI
Vestas $21,600,000 CO
Vestas $21,589,200 CO
Tindall Corporation $16,750,500 SC
Winergy $12,786,000 IL
Brevini $12,750,000 IN
Vela Gear Systems $11,604,440 MI
Vestas $8,580,600 CO
Hexcel Corporation $8,139,510 CO
TPI Composites $5,135,241 NE
Mitsubishi Power Systems $5,100,000 AR
Siemens $4,331,700 KS
TPI Composites $3,902,921 IA
Siemens $3,450,900 IA
Nordic Windpower $3,000,000 ID
Alstom $2,725,800 TX
Source: Strategic Partnerships, Inc. http://www.spartnerships.com/reports/ARRA%20Energy%20Manufacturing%20Tax%20Credit%20Awards.pdf.
Notes: A tax credit is a “dollar for dollar” reduction in tax liability. As an example, if a manufacturer earns $10 million and owes $3.5 million in taxes, then a $1million tax
credit would reduce the company’s tax liability from $3.5 million to $2.5 million.
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Congressional Research Service 34

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