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Incentives - US tax credits lure new names into wind supply chain

US: Release of US government funds for component manufacturing sees growth in firms signing up for wind-related projects.

Brevini's new turbine gearbox factory is under construction
Brevini's new turbine gearbox factory is under construction

New US government fundings designed to encourage the foundation or expansion of wind component manufacturing facilities have succeeded in bringing a host of additional firms into the market.

The Obama administration and the US Department of Energy have released $2.3 billion from its Advanced Manufacturing Tax Credit, a programme approved under February 2009's economic stimulus bill.

The tax credits, covering renewable energy and energy efficiency technologies, aim to offset roughly 30% of the capital cost of a new or expanded manufacturing facility. "Any company considering making an investment here within the next five years probably sees this credit as a big portion of their costs and it helps them make that investment decision sooner rather than later," says Matthew Kaplan, an analyst with advisory firm Emerging Energy Research.

Wind power secured around $340 million for 51 projects in the supply chain: from simple tower bolts from Cardinal Fastener; gearboxes from Brevini; to complete nacelles from Mitsubishi, Fuhrlander and Alstom. "We see a lot of wind manufacturing veterans like Kaydon Bearings, Vestas, Winergy, and Mitsubishi, but we also see a host of companies that are new entrants to the industry," says Kaplan. "There are a couple of tower manufacturers and smaller component suppliers that are taking their first step into wind and that's exciting to see."

Companies must place the new facility or expansion into service by the end of 2014, and only receive the funds if and when the facility becomes operational. Some facility construction is well under way or completed.

Tower manufacturing saw new companies entering the industry. Missouri's American Railcar Industries hopes it can adapt its skills from its core business of building train carriages to the wind tower industry. It will build two facilities, one in Iowa and one in Arkansas. New Mexico's Schuff Steel will build a tower factory in North Dakota and Eagle Claw Fabrication will build one in Oklahoma.

Despite the newcomers, however, most of the recipients are already established in the wind business. And many had committed to building their projects before the programme was set up.

"I think it certainly is a sweetener (but) I don't think we're seeing companies enter wind just because of this tax credit," says Kaplan. "No matter what, you're getting the jobs creation out of these facilities and, if anything, some of these companies are seeing this tax credit as a signal that the US wants a long-term industry in renewables."

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