Coming to America-The Deepening Roots of the U.S. Wind Power Supply Chain

by Denise Bode and Tom Maves, American Wind Energy Association

The numbers turned in by the wind power industry the past few years are head-turning.

Since 2007, 35 percent of all new generating capacity came from wind–twice what coal and nuclear added combined.

With the 5,116 MW added in 2010, U.S. wind installations stand at 40,181 MW–enough to supply electricity for more than 10 million U.S. homes.

In a short time, the wind industry has shifted from an alternative energy source to a major player in the electricity industry.

Another story has emerged, and it’s closely connected to wind energy’s meteoric rise within the electric industry, but it might not be heard as often: the tremendous growth of wind power’s supply chain in the United States.

Wind turbine original equipment manufacturers (OEMs) have said it repeatedly: Setting up shop near their customers–wind projects and developers–makes good business sense.

They also have said it makes good business sense to source their components near assembly facilities.

In 2005, only one OEM assembled turbines in the U.S. By 2010, 10 companies were assembling nacelles–the rectangular boxes that sit atop towers and house most turbine components–here, with major OEMs Siemens, Vestas and Nordex all bringing facilities online in 2010.

Eight additional companies have announced plans to build turbines in the U.S.

A full 92 percent of the wind power capacity installations in 2010 feature turbines from manufacturers with online or announced nacelle assembly plants in the U.S.

Thanks in part to such new OEM facilities, the components sector has grown.

Ramping up to 20 Percent

The increase in domestic manufacturing has tracked with the growth in wind power deployment numbers during the past few years.

When the U.S. Department of Energy released its report a few years ago showing the feasibility of wind power’s contributing 20 percent of the nation’s electricity by 2030, the benchmark seemed high to some skeptics.

The industry today, however, is ahead of schedule to reach that benchmark.

Equally important to the growing manufacturing opportunities is the increase in domestic manufacturing of turbines and components.

The migration of the supply chain is evolutionary.

Tower production was the first major wind manufacturing segment that developed capacity in the U.S. for an obvious reason: The size of that component makes transport costly.

At the end of 2010 there were 22 online tower manufacturing facilities and an additional eight announced.

Blades, also extremely large components, were the second sector to develop U.S. capacity.

By the end of 2010, 11 blade plants were operating, and another five had been announced.

Lower-tier Supply Chain Follows

In addition to such large-component facilities continuing to come online and be announced, the domestic supply chain keeps maturing and evolving, with producers of smaller components now filling out the lower tiers of the supply chain in the U.S.

When the American Wind Energy Association (AWEA) launched its supply chain initiative several years ago, the intent was to grow the supply chain significantly.

Between 2005 and 2009, U.S.-deployed wind turbines’ domestic content doubled from 25 percent to 50 percent, even with the overall wind power market’s quadrupling.

This trend toward domestic sourcing has countered other trends such as the sluggish economy.

Even as the wind turbine market experiences ebbs and flows, domestic content is expected to continue to grow.

Further opportunities exist for suppliers to produce more of the 8,000-plus components in a wind turbine.

That trend is evident in the industry’s 2010 numbers, when wind project activity slowed, yet U.S. manufacturing plants continued to enter the industry supply chain.

Despite a comparatively slower year, the U.S. wind power industry grew 15 percent in 2010 and provided 26 percent of all new U.S. electric generating capacity.

This activity drives demand for local supply chains for turbine internals.

More than 400 U.S. facilities produce wind industry components.

In 2010, 14 new plants came online, and 19 more were announced.

Wind power project numbers are expected to rise again this year.

The U.S. wind market entered 2011 with 5,600 MW under construction–more than twice the megawatts under construction at the start of 2010.

New Areas of Focus

AWEA’s supply chain work keeps evolving with the continued growth of the industry’s domestic manufacturing base.

Now the association is focusing more on consolidating the past few years’ gains and continuing to grow domestic manufacturing and attendant jobs based in the U.S.

AWEA is narrowing its focus on components that continue to be imported in large quantities.

The wind power industry has a long way before it reaches the DOE’s 20 percent wind power benchmark.

An estimated 60,000 turbines must be installed between now and 2030 to achieve that penetration.

Long-term prospects for manufacturing, therefore, continue to show great promise.

Authors

Denise Bode is CEO and Tom Maves is deputy director for manufacturing and supply chain at the American Wind Energy Association.


AWEA

The American Wind Energy Association is the only organization that represents the U.S. wind energy industry and people who support clean energy in the legislative, regulatory, public relations and international arenas. AWEA, whose members include wind industry companies, utilities and other members of the electric industry, provides opportunities to get involved in the wind energy supply chain, including:

AWEA Manufacturing Working Group: The AWEA Manufacturing Working Group provides opportunities to address critical industry issues and network with customers and peers. The Manufacturing Working Group meets twice a year in person at AWEA’s Wind Energy Fall Symposium and at the WINDPOWER Conference & Exhibition. It also conducts events and webinars throughout the year. The Manufacturing Working Group is open only to AWEA business members. Email Tom Maves at tmaves@awea.org for more information.

AWEA Supply Chain Workshop: AWEA hosts supply chain events every year to help companies enter and grow their businesses in the wind industry. The supply chain workshops provide the training and knowledge people need to understand the industry, including information straight from OEMs about sourcing strategy, technical specifications and industry best practices. In addition to offering a comprehensive educational program, these events allow attendees to build relationships and network. The next AWEA Supply Chain Workshop will be Sept. 12 and 13 in Des Moines, Iowa. Learn more at http://awea.org/events.

Windpower Conference & Exhibition: The Windpower Conference & Exhibition is a snapshot of the industry’s supply chain and manufacturing base. Organized by AWEA as the only U.S. national conference devoted solely to wind energy, Windpower brings together thought leaders, industry experts, supply chain members and investors. Windpower combines education, exhibition and networking to capture the energy of the rapidly expanding wind market, fostering bold, forward-looking action and creating a venue to do business. Manufacturing and supply chain topics are covered in sessions each year at Windpower, including at the Turbine OEM forum. In addition, many companies manufacturing for the wind energy industry are among the more than 1,000 exhibitors in attendance each year.

Windpower 2012 will be June 3-6 in Atlanta. The Southeast is home to significant wind power manufacturing activity. More than 70 manufacturing facilities in the Southeast serve the wind industry. For example, ZF Friedrichshafen AG expects to begin producing gearboxes this year at a new plant in South Carolina. For more information, go to http://windpowerexpo.org.

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