Chinese Wind Energy
January 4th, 2011 - 14 Comments
The New York Times recently reported on China’s entry into the U.S. wind energy market. “While proponents say the Chinese manufacturers should be welcomed as an engine for creating more green jobs and speeding the adoption of renewable energy in this country, others see a threat to workers and profits in the still-embryonic American wind industry,” The Times reports.
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There may be some benefits and drawbacks from the Chinese entry into the U.S. wind market. The Chinese heavily subsidize their domestic solar and wind industries via low-interest loans and make it difficult for foreign competitors to enter China. That allows them considerable scale to lower costs. They already have gained significant share in the U.S. solar market, and this may happen for wind too. The U.S. government has subsidized wind mainly through the Production Tax Credit, but low or zero profits have reduced its attractiveness. Wind demand in the United States is driven mainly by Renewable Energy Standards in the 30+ states that mandate renewable energy. Chinese entry won’t increase demand much via lower prices because coal is cheap and natural gas is especially cheap now.
The Times article points out that foreign firms already make up most of the wind market. GE and Clipper have relatively small shares compared to Siemens, Vestas, Suzlon, and Mitsubishi. These latter companies import most of their high-value-added, high intellectual property components because there is a limited skill-base in the United States to make these components. U.S. manufacturing focuses on towers, nacelle covers, engine mounts, and blades, which are either low-value-added components or too big and too heavy to import.
The best that we can hope for in the near term is increased jobs for people who manufacture the low-value-added components, assemble turbines from imported components, and construct towers and maintain them. That’s not insignificant growth, however.