NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Clean Energy Manufacturing: U.S. Competitiveness and 

State Policy Strategies

NGA Policy Academy: Economic Development 

in the Clean Energy Sector 

Eric Lantz (NREL)

National Governors Association

December 9, 2013

NREL/PR-6A20-61265
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Disclaimer and Acknowledgements

DISCLAIMER AGREEMENT

These manufacturing cost model results (“Data”) are provided by the National Renewable Energy Laboratory (“NREL”), which is 

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It is recognized that disclosure of these Data is provided under the following conditions and warnings: (1) these Data have 

been prepared for reference purposes only; (2) these Data consist of forecasts, estimates or assumptions made on a best- efforts basis, based upon present expectations; and (3) these Data were prepared with existing information and are 

subject to change without notice.

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Support for this work has been provided by the U.S. DOE Office of Energy Efficiency 

and Renewable Energy

Thanks to colleagues Ted James, Alan Goodrich, Derek Berry, Jason Cotrell, Suzanne 

Tegen, and Liz Doris for contributions to this work.
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Presentation Overview

• Background: Clean Energy Economic 

Development Drivers

• Case study: U.S. Competitiveness in Wind 

Turbine Blade Manufacturing

• Snapshot: U.S. Competitiveness in Solar PV 

Manufacturing

• Other Considerations and Observations
Background
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Economic Development is Driven by the Capture of 

New Investment

Initial CapEx + 

Ongoing 

Operations 

Expenditures

Local 

Expenditures

State 

Expenditures

National or 

International 

Expenditures

Initial 

Investment + 

Multiplier 

Effect

Economic 

“Leakage”

Increasing economic development begins with simply pulling a 

greater share of industry expenditures into a given region or locality
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Economic Development Can Accrue from Various 

Activities

Manufacturing 

& Equipment 

Production

Development 

& Installation

Operations & 

Maintenance

Direct Effects/Impacts Manufacturing & 

Supply Chain Effects

Functionally the activities that drive economic development from 

Clean Energy investment are not unique to Clean Energy
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Attention is Often Focused on Manufacturing for Clean Energy 

Due to the Capital Intensive Nature of the Technologies

Source: NREL 2012

Offshore Wind Project Costs as a Share of Total Capital Expenditures
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Coupling a Robust Supply Chain with Local Demand Can 

Fundamentally Alter the Economic Development Outlook

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

0% IA Manufacturing 13% IA Manufacturing 35% IA Manufacturing

Lifecycle Econoimc Ouptut 

(Millions of $2007)

Landowner Payments

Property tax payments

Operations Period

Construction Period

• Scenarios consider 2,400 MW of new wind in Iowa

• Manufacturing levels were based on historical trends, OEMs selected for proposed projects, and 

Iowa’s total manufacturing capacity at the time

• In-state manufacturing boosts Iowa’s economic development potential by as much as 24% to 70%

Source: Lantz and Tegen 2008
Case Study: 

U.S. Wind Turbine Blade Manufacturing

The following slides have been selected from the NREL report, 

“Supply Chain and Blade Manufacturing Considerations in the 

Global Wind Industry,” for access to the full report please see: 

http://www.nrel.gov/docs/fy14osti/60063.pdf
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Domestic Manufacturing Growth has been Stimulated by 

Demand Over the Past 5-7 years

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063.

Status of the U.S. Market:

• Production: About 550 U.S.-

based manufacturers sold into 

the wind industry in 2012; 

more than 60 of these are 

Tier 1 facilities.

• Demand: Annual average 

installed capacity was 8.7 GW 

from 2007-2012.

• Location: Wind power 

deployment areas may 

influence some factory 

location decisions.

U.S. Wind Manufacturing
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Potential Supply Routes to Project Sites in Iowa and Texas

Project sites in the Central Plains tend to disadvantage some imports

U.S. Case Studies: Deployment Sites in Iowa and Texas

$9k/blade

TX to IA 

via rail

$8k/blade

$2k/blade 

via trucking

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063. 
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For Most Midwest Deployment Locations and Today’s Blades, Shipping 

Costs Exceed the Benefits of Manufacturing in Lower Cost Labor Regions

December 2013

Long-term scenario

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063. 
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At Sites More Proximate to Ports, Imported Blades May 

Out Compete Domestic Manufacturers

Long-term scenario

December 2013

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063. 
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Larger Blades May Increase U.S. Manufacturing Opportunities; Labor 

Becomes Less Significant as Blade Sizes Increase

...as blade sizes increase, labor 

costs become less significant

Today’s U.S. Factory Gate Prices Cost Proportions Change with Blade Size

Labor costs account for about 

1/5 of factory gate prices, but...

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063. 
Snapshot: U.S. PV Manufacturing 

Competitiveness
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• China’s advantage appears not to be derived from indigenous factors (e.g., low cost labor)

• Scale and resulting supply-chain advantages (material & equipment discounts) enabled, in 

part by enhanced access to capital for domestic firms.

Source: Goodrich, A.; Powell, D.; James, T.; Woodhouse, M.; Buonassisi, T. (2013). “Assessing the Drivers of Regional Trends in Solar Photovoltaic 

Manufacturing.” Energy and Environmental Science, Published on September 5, 2013.

Cost Drivers in Solar PV Manufacturing
Other Considerations and Observations
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Factory Location Decisions are Also Influenced by a Range 

of Less Quantitative Considerations

Top qualitative factors influencing wind blade manufacturing:

Stable market and energy policy outlook is essential to maintaining and growing a U.S. industry. 

 - Consensus among industry leaders (NREL’s Executive Workshop and industry reports)

Proximity to suppliers, supply chain maturity, and quality standards sway some decisions.

 - Industry executive interviews (NREL)

“Ease of doing business” factors, which assess a range of risks, can override cost considerations.

 - Surveys of manufacturing executives (Harvard; The World Bank)

Other insights from NREL wind industry interviews:

• Proximity to end markets lowers distribution risks (i.e., lowers risks associated with 

shipping products to assembly facilities and/or wind power project sites).

• Access to quality manufacturing tradesmen is essential.

• Availability of infrastructure is important (particularly large buildings and transportation 

networks).

• Proximity to R&D facilities and engineering universities can be leveraged in some regions.

Source: James, T. and Goodrich, A. (2013). “Supply Chain and Blade Manufacturing Considerations in the Global Wind Industry.” NREL Technical Report. PR-6A20-60063. 
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• OEMs may want to establish assembly facilities 

proximate to final demand to reduce transport costs

• Lower tier suppliers who serve multiple industries 

may be more interested in minimizing operating 

costs or leveraging a workforce with existing skills

• Example from Wind:

– OEMs have situated their facilities proximate to high 

quality resource areas while suppliers are distributed in 

manufacturing hubs around the country

Prioritization of Facility Siting Criteria Varies By 

Position in the Supply Chain
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Evidence is Mixed with Respect to the Typical State 

Policy Strategies

• Policy tools have historically emphasized financial incentives 

o Property tax rebates, income tax credits, grants, loans, and sales tax exemptions 

o Local infrastructure improvements are often part of a broader package. 

o States with a robust clean energy manufacturing sector (i.e., Iowa, Colorado, 

Arkansas, Oregon, Michigan, and New Mexico) have provided individualized 

incentive packages to firms

• Empirical evidence on the impact of financial incentives is mixed

o Econometric analysis often finds little correlation between explicit financial 

packages and long-term impacts on economic growth

Research and the experiences of some states (e.g., Colorado, Iowa) 

suggest that packaging financial incentives with a more broadbased policy strategy can be effective
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• Regional demand allows the opportunity for economic development from 

construction, operations, and manufacturing, and may play a role in 

supporting clean energy clusters

• Economic development through export is principally – though not 

exclusively – in manufacturing of modular or lower tier components that 

can be easily shipped

o Labor intensity and costs as well as scale factor heavily into export viability

• Clean energy industries are dynamic and require policymakers to stay 

abreast of industry trends and regularly re-evaluate their economic 

development strategies

• Although characterized by their societal attributes clean energy businesses 

are in the end still driven by business priorities – they do not necessarily 

require a uniquely clean energy policy approach

• A broad-based policy strategy is often useful and may include:

o Leveraging existing strengths

o Investing in durable assets

o Minimizing barriers to entry

o Developing a suite of complementary policies

Observations