The American Wind Energy Association held a press conference today (4/21/08) to discuss the present and future of their industry in the United States. Representatives from Siemens, Vestas, GE and Gamesa were there to share their perspectives and answer questions. What they revealed was an industry both optimistic and tenuous; their products are in high demand, but they are reliant on tax credits for large-scale expansion. Given the increasing popularity and regulatory necessity of sustainable power generation, both American and international turbine producers are eying the practically limitless growth potential in the United States. All they need is stability in policy to dramatically expand their manufacturing and R&D capabilities, simultaneously creating thousands of jobs and a competitive American industry.
The United States has a natural edge when it comes to wind energy. Unlike Europe, we have a lot of land with which to harness wind, including across sparsely populated areas. If NIMBY isn’t a problem, the potential for sustainable energy generation is even greater.
According to Roby Roberts, V.P. of Government Relations for Vestas, you need about 8,000 components to make a wind turbine, some of which are really big. Apparently the trick with so many bits and pieces is bringing them together; it doesn’t make sense to transport them over vast distances. Consider the iconic wind turbine propeller blades. Some of the largest blades are 80 meters long – over 260 feet! – which no doubt require special handling, licensing, and lots of money to transport. Instead of building or assembling many of these parts overseas, it makes much more economic sense to manufacture and assemble them locally. That means jobs, lots of them, for communities and regions where wind turbines can be built.
All of the industry leaders agreed that each of their companies was eager to build and expand their manufacturing and Research & Development capabilities across the United States, which would produce thousands of stable jobs. Julius Steiner, CEO of Gamesa USA, commented that if the supply chain could be built in the USA, it would be internationally competitive. That’s part of why, despite policy difficulties, international companies like Gamesa (founded in Spain) have jumped into the US market without any guarantee of a production tax credit (PTC) extensions.
“The PTC provides an incentive of two cents per kilowatt-hour generated to facilities that produce electricity from renewable energy resources…The credit can be claimed for 10 years, beginning on the date the qualified facility is placed in service. The facility must begin operation before the credit expires.” – AWEA newsroom
It’s not that the wind industry needs tax credits to exist, but they do need the PTC to expand and build a supply chain. Without these tax credits, building the manufacturing infrastructure for large-scale wind turbine projects would be nearly impossible. The key to investment in manufacturing is a long-term outlook.
Randall Swisher, Executive Director of the AWEA, said the industry needed five years minimum of policy stability to expand the existing infrastructure foundation. Roby Roberts of Vesta claimed that once the supply chain is in place, prices should drop, making the industry even more competitive. If Congress extends the PTC for even a year, these companies will continue to expand their manufacturing capabilities. Fortunately all of these companies have already built the first links of a solid supply chain, all of them are optimistic that the tax credits will come, and all are commited to the US market.
The importance of the PTC can be gleaned if you take a step back. Internationally, the markets with the most lucrative potential for the wind industry are the USA, Europe, China and India. Europe has a lucrative policy system in place, and China recently announced their own policy to spur the development of wind power. That leaves the United States as a kind of uncertain frontier where, like the Wild West, fortunes could be made or lost. The fortune at stake is not just local jobs, but leadership in a lucrative technology which these industry leaders agree is “limitless”.
Wind power is already booming, but because energy demand is always rising and wind is renewable, this industry could grow for decades without slowing down. All they need is enough time to build, which relies upon the PTC. Julius Steiner characterized this moment as, “the middle of the beginning for the renewable energy industry.” He compared potential renewable energy policy to the laws that made the Interstate Highway system possible, hoping for a similar national push towards a nationally beneficial energy infrastructure. They were all unanimous in a sense of urgency: the time to expand the PTC was now. If the tax credits are allowed to expire, opportunities could be lost and manufacturing jobs will be the first to suffer.
I left with a firm impression that these industry leaders are optimistic about the future. Having survived previous boom-and-bust cycles, they felt that they had passed a critical phase in their industry development, and that a foundation had been built on their end. But, I agree with Julius Steiner when he said that we needed to get the “fundamentals right in our country” by setting a policy foundation for renewable energy to launch from.
Several states have already begun to move in that direction, but the wind and sun know no political boundaries. Even a minimum national policy would help us diversify the power grid, move towards energy independence, and build manufacturing jobs at home instead of exporting them overseas. On top of it all, we would have cleaner air and contribute less to climate change. Wind power is already a leader among renewable energy technologies, and its future is bright – that is not in question. The question instead is whether or not we, as a nation, will support it now and reap the economic and ecological benefits later, or delay it another year while our competition forges ahead.
See a video of highlights from the press conference here.
(AP Photo/The Rosen Group, Kevin Wolf via AWEA’s Flickr)
(Many thanks to Kate Marshall for a copy of the graph.)