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United States

US domestic content of production rises

UNITED STATES: Domestically produced content in the production of US wind developments increased to nearly 70% in 2009 from just 40% in 2006, according to a government report.

This would appear to refute the rhetoric of some US politicians who, in the past year, have claimed that government subsidies to the wind industry go largely to foreign companies.

The US Department of Energy's annual wind energy market report was published through the Lawrence Berkeley National Laboratory (LBNL) in August. The report covers a broad spectrum of wind activity in 2009. Some key trends are particularly notable in its analysis. Domestic content is among the most positive of the report's findings. When considering wind turbines alone, 60% of the equipment used in the roughly 10GW installed in 2010 was domestically produced. This includes equipment used by US-owned companies such as GE Energy and Clipper Windpower, but also includes European manufacturers that have opened production facilities in the US, such as Siemens, Vestas, Suzlon and others.

The figure is partly derived from US International Trade Commission data. However, the Berkeley report notes that the domestic content figure is even higher if other costs besides wind turbine equipment are looked at. This is because the total capital cost of a wind project includes not only the wind turbine, blade and tower, but also the so-called balance of plant expenditures. These comprise the full suite of hardware and site preparation necessary to support the wind turbines, including foundations, electrical collection and grid interconnection systems, roads, project development costs and other non-turbine equipment.

According to the report, if it is assumed that imports are responsible for 20% of non-turbine-equipment balance of plant costs, then the percentage of total wind project installed expenditure that was domestically produced would have been around 40% in 2006, rising to 47% in 2007, 63% in 2008 and 68% in 2009. In the latter year, imports would therefore only have accounted for around 32% of total wind project installed expenditure (see chart).

"For those who continue to express concern about the imports of wind turbine equipment from abroad, these figures offer a strong counter," says the report's co-author Ryan Wiser of LBNL. "The domestic content of wind power installations in the US is now roughly equal to the domestic content of personal automobiles."

Seven of the ten turbine manufacturers with the largest share of the US market in 2009 now have one or more manufacturing facilities operating in the country, and two of the remaining three have announced specific plans to open facilities in the future.

The performance of the US wind turbine fleet also shows some interesting trends. One key measurement of wind plant performance is capacity factor, which is the average percentage of the year that a wind turbine is operating at its maximum output. It has gradually increased over time from around 24% in 1999 for wind plants built in the US to a high of 34% in 2008. Last year, however, the fleet-wide capacity factor dropped to 30%.

Two major factors are reported to be key culprits in the drop. First, annual wind speeds were above average in 2008 and below average last year. Separately, transmission constraints are beginning to have nationally recognised impacts. Lack of transmission not only prevents new projects from being connected, but increasingly results in the curtailment of existing wind plants. When there is more wind generation than there is demand or transmission to accommodate, wind projects are forced or economically coaxed into ramping down their output even when the wind is blowing strongly.

Curtailment has long been a problem in Texas, but the Berkeley report shows starkly by how much. About 17% of potential wind energy generation within the Texas electricity grid was curtailed in 2009, compared to 8% in 2008 and just 1% in 2007. Texas wind represented around 9.4GW of the US's cumulative end-2009 total of about 35GW, so this curtailment clearly has an impact on national averages.

"The curtailment in Texas is striking and may just be the tip of the iceberg, as other states are beginning to experience curtailment as well," says Wiser. "It strongly signals the need to invest in our nation's transmission infrastructure."

Turbine dimensions play a role in capacity factor as well. The average installed size of a wind turbine last year was 1.74MW, up from 1.66MW in 2008. Average hub heights remained largely steady at 78.8 metres for turbines installed in 2009, but rotor diameters increased to 81.6 metres for turbines installed in 2009, up from 79.4 metres in the previous year. The trend towards larger rotor diameters is partly a reflection of wind developers increasingly building projects at sites in the country with lower wind speeds but closer to existing transmission and energy demand centres. States that were ignored by the wind industry years ago because of modest winds, like Indiana, are now seeing rapid deployments.

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