US wind supply chain hopes 'dimmed'

Even as wind PPAs in the US hit record lows, an expected drop in mid-term demand for new capacity is squeezing the industry – with a significantly negative impact on jobs, according to a new Department of Energy report.

The US wind market is expected to rally strongly this year and next, after last year’s terrible performance when just 1.1GW of new capacity was installed across the country.

Projections for new capacity additions in 2014 range from 4.4GW-6.4GW, depending on the analyst making the call, and between 6GW-9.1GW for 2015.

Yet even the most optimistic prognosticators agree there is little chance of the US coming close to the record 13.2GW it installed in 2012 any time in the foreseeable future. The reasons for this include ongoing low natural gas prices, an uncertain policy landscape and modest electricity demand growth.

The result is a relatively bleak picture for growth in US wind industry employment, and particularly in manufacturing, according to the latest annual installment of the US Department of Energy’s Wind Technologies Market Report.

Only one new manufacturer opened its doors in the US last year – a Marmen Inc. tower plant in South Dakota that may one day employ 250 workers – compared to seven plants the previous year.

At the same time, at least four manufacturing facilities closed their doors or stopped serving the wind industry.

And unlike in previous years, no major new announcements were made in 2013 regarding prospective future wind-related factories.

“With uncertain medium- to long-term demand expectations, and with growing global competition, prospects for further supply-chain expansion have dimmed,” the report says.

At the end of 2013, half of the 10 wind turbine makers with the largest shares of the US market had at least one manufacturing facility in the US – GE, Vestas, Siemens, Gamesa and Acciona.

Yet several were “largely if not entirely dormant” last year due to the abysmal market, and in early 2014 Spain’s Gamesa announced it would close its blade plant in Pennsylvania.

Another player – Germany’s Nordex – ceased US manufacturing altogether last year, following several others that had done so in previous years, including Clipper and Suzlon.

Altogether, total nacelle capacity in the US dropped to 10GW last year, down from 12GW the previous year, the report claims.

The US wind industry employed 50,500 full-time workers at the end of 2013, a painful drop on the 80,700 it employed a year earlier. Manufacturing jobs fell to 17,400, from 25,500 the year prior.

The report does not, however, take note of the 800 jobs Vestas intends to add this year at its four Colorado plants, as recently reported by Recharge.

While the US wind market is expected to boom again this year and next even in the absence of an extension of the Production Tax Credit, market projections for 2016 and beyond are hazy at best, the report concludes.

“Expectations for continued low natural gas prices, modest electricity demand growth, and limited near-term renewable energy demand from state RPS policies … put a damper on growth expectations, as do inadequate transmission infrastructure and growth competition from solar energy in certain regions of the country.”

The report does, however, give several reasons for optimism.

For starters, the power-sales price for wind in the US is in many cases at an all-time low, even as wholesale power prices have rebounded – making it more competitive than ever.

The PTC may yet be extended by a lame-duck Congress later this year, and other regulations – most notably the Environmental Protection Agency’s recent clamping down on fossil plants, both existing and future – “may create new markets for wind energy" in the US, the report notes.

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