Posts Tagged ‘Susman’
Tuesday, January 4th, 2011
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.
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.
Friday, November 13th, 2009
President Obama recently announced that Washington will spend $3.4 billion dollars of federal stimulus funds to modernize the nation’s power grid, indentifying 100 projects to make the grid smarter and more efficient. “The aim of the projects, officials said, includes placing ‘smart’ electric meters in homes, automating utility substations, and installing thousands of digital transformers and grid sensors,” The New York Times reports.
According to Smeal’s Gerald Susman, executive director of the college’s Sustainability Council, the nation’s power grid is in need of a major upgrade so that consumers can fully utilize alternative sources of electricity and do so more efficiently:
A new, smarter U.S. power grid is necessary if the country is serious about moving toward reliance on alternative, renewable energy sources like solar and wind.
Intermittency is one of the biggest obstacles facing solar and wind energy. If there is no wind, then there is no electricity. Likewise, it’s impossible to create solar energy at night and it’s less efficient on cloudy days. To bring more solar and wind power into the fold, better technologies must be developed to enable the grid to store this green electricity for later use. In the meantime, a smart grid will be able to anticipate disruptions in wind and solar energy and automatically bring other sources of energy online.
Another important component of this plan is that it gives consumers the information to make smarter energy choices at home. The expansion of time-of-use meters and variable rates will allow consumers to use electricity in ways that make economic and environmental sense. If it costs 15 cents per kilowatt-hour to run a clothes dryer during peak times when energy use is at its highest, but costs half of that to run it at night, consumers will inevitably start making better consumption decisions.
Ultimately, the current grid must be improved to eliminate the disruptions between where and how energy is created and used. Given the scope and complexities of the national grid, it would be nearly impossible to rely solely on individual companies and grid owners to undertake such a modernization on their own. When you consider these complexities along with the economic and environmental boons of a smart grid, it makes sense for the government to subsidize this truly public project.
Thursday, June 11th, 2009
With Michigan’s unemployment rate growing right alongside the constricting U.S. auto industry, the state is looking to reinvent its economy in industries other than auto manufacturing. The state is wooing Hollywood film crews and venturing into wind and solar energy manufacturing. In fact, a new report from the Pew Charitable Trusts finds that Michigan gained 23,000 jobs in clean energy between 1998 and 2007.
Smeal’s Gerald Susman, associate dean for research and director of Center for the Management of Technological and Organizational Change, studies the economic impact of the clean energy industry and says that Michigan is well suited to excel in the green economy:
Michigan already has some very good alternative energy companies that are growing rapidly. One is Hemlock Semiconductor Corp. (HSC), a Dow Corning joint venture that makes polysilicon for use by solar cell manufacturers. Also, Dow Corning Corp. is building a facility to manufacture monosilane gas next to HSC. This specialty gas is used in making thin-film solar cells. Another company is United Solar Ovonic, which manufactures solar cells. These examples suggest that Michigan has a good base upon which the solar industry can grow. Growth may not be dramatic, however, as a typical expansion creates 500 to 600 permanent jobs (excluding construction jobs) and Michigan’s unemployment rate is the highest in the nation.
Another area that could result in job growth is solar energy installation. Although more service than manufacturing, the solar installation business is labor intensive and market entry into it is easy. Job growth prospects may be higher here than in manufacturing.
Additionally, Michigan is well placed to transfer existing technology and skills in metal fabrication from the auto industry to the wind industry. Gear boxes and generators used in wind turbines are similar to those used to make auto transmissions, for example.
One problem is that most of the major turbine manufacturers are foreign owned (mostly European) and have developed their supply chain relationships with European suppliers, especially for high-value added components. Currently, they would rather source from Europe, even with high transportation costs, than develop new relationships with American suppliers. The exceptions are for low-value added items like engine mounts or nacelles. These products contain little intellectual property and low risk of IP leakage to new and untested vendors. Also, towers and blades are too large and bulky to import so they tend to be manufactured close to where they will be installed.
One prominent study estimates that every 1,000 MW of additional installed capacity would create 3,000 manufacturing jobs, 700 installation jobs, and 600 operations and maintenance jobs. More than 8,500 MW of wind capacity was added last year, which should have created about 36,500 new jobs. Before 2008, this rate of job growth would have been considered highly optimistic. However, recent data from the American Wind Energy Association suggest that such projections are becoming realistic. A recently released study by the Pew Charitable Trusts indicates that California, Texas, Pennsylvania, Ohio, New York, and Florida (in that order) created the highest number of green jobs from all renewable energy sources in 2007. Michigan should look to those states as examples of how to grow its green energy sector.