Technical Report

NREL/TP-6A2-46672

February 2010

State Clean Energy Policies 

Analysis (SCEPA): State Policy 

and the Pursuit of Renewable 

Energy Manufacturing

Eric Lantz, Frank Oteri, Suzanne Tegen, and 

Elizabeth Doris
National Renewable Energy Laboratory

1617 Cole Boulevard, Golden, Colorado 80401-3393

303-275-3000 • www.nrel.gov

NREL is a national laboratory of the U.S. Department of Energy

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Operated by the Alliance for Sustainable Energy, LLC

Contract No. DE-AC36-08-GO28308

Technical Report

NREL/TP-6A2-46672

February 2010

State Clean Energy Policies 

Analysis (SCEPA): State Policy 

and the Pursuit of Renewable 

Energy Manufacturing

Eric Lantz, Frank Oteri, Suzanne Tegen, and 

Elizabeth Doris

Prepared under Task No. IGST.9000
NOTICE

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iii

Acknowledgements 

Many individuals contributed to this paper. Thanks go to each of the industry, NGO, and 

state economic development representatives who took time to relay their experiences and 

insights and review earlier versions of this paper. In addition, thanks go to Jessica Isaacs 

of the American Wind Energy Association (AWEA) and Justin Baca of the Solar Energy 

Industries Association (SEIA) for their reviews of earlier versions of this paper. Thanks 

also go to our NREL technical editor Mike Meshek. Finally, thanks to the Weatherization 

and Intergovernmental Program within the U.S. Department of Energy for funding this 

work. Of course, any remaining omissions or errors are the sole responsibility of the 

authors. 
iv

Executive Summary

Future manufacturing of renewable energy equipment in the United States provides 

economic development opportunities for state and local communities. Such opportunities 

are always valuable but become even more so in today’s economy where unemployment 

is high. As such, many states are considering new policy measures to enable them to 

capitalize on opportunities in renewable energy manufacturing. 

Effective policy development requires a broad understanding of the scale of the 

opportunity that renewable energy manufacturing offers and insights into the underlying 

factors that influence where new manufacturing facilities are located. This report uses 

existing deployment scenarios to estimate the potential scale of U.S. investment in 

renewable energy equipment through 2030 and highlights elements of successful 

recruitment strategies as elicited from interviews with state economic development 

officials, leading renewable energy equipment manufacturers, and NGOs engaged in 

bringing new business to state and local communities.

Assuming constant real-dollar, equipment costs and potential deployment as described in 

the U.S. Department of Energy’s report 20% Wind Energy by 2030, and under proposed 

national renewable energy standards (RES) debated in the U.S. Congress in the spring of 

2009 U.S. demand for renewable energy equipment is estimated to drive annual 

investments of $14 billion-$20 billion in renewable energy equipment through 2030.1

The current distribution of renewable energy equipment manufacturers suggests that state 

recruitment strategies are most successful when they are a part of a robust, broad-based, 

economic development strategy. Such strategies often rely on existing resources and 

economic development programs to develop and maintain a skilled workforce, ensure 

adequate transportation infrastructure, attract a diverse set of potential raw material and 

component suppliers, and generally reduce the cost of manufacturing operations. 

However, successful recruitment strategies also include financial and economic incentive 

packages that are competitive with those offered in other states and in line with public 

value of a new manufacturing facility. Under some circumstances, geography and 

transportation costs may place specific states at a distinct advantage. In addition, some 

If 

the majority of this equipment comes from U.S. manufacturers, this level of direct 

investment would place the industry on par with the construction machinery, farm 

machinery, or household appliance industries. 

 

1 The figure of $14 billion-$20 billion represent the authors’ estimate of equipment purchases based on the 

U.S. DOE (2008) study noted in the text and four domestic deployment scenarios outlined in Sullivan et al. 

(2009). None of these scenarios are based on explicit mandates or goals, nor do they consider the impact of 

any carbon or climate mitigation strategy. Equipment costs may actually decline in real dollar terms, which 

would reduce the average annual investment value noted here. However, significant cost declines may 

stimulate deployment at levels greater than estimated in the scenarios analyzed here. As well, to the extent 

that U.S.-based manufacturing capacity can serve export markets, global demand may increase the level of 

investment noted here. In spite of these caveats, the authors believe this value roughly reflects the order of 

magnitude level of direct investment in renewable energy equipment that could potentially flow to U.S. 

based manufacturers.
v 

manufacturers seek out large renewable energy markets and states with progressive 

renewable energy policies. 

These findings concur with broader academic literature, which indicates that the states 

and regions that are most able to attract direct investment and promote sustained 

economic development are able to leverage both durable assets—like highly trained 

human capital and a diverse economic base—and low barriers to entry (i.e., low costs to 

start up or establish a new facility) (Bobonis and Shatz 2007, Buch et al. 2005, Coughlin 

and Segev 2000, and Oman 2000). 

In this context, state marketing strategies for attracting renewable energy manufacturers

are likely best served by an approach that (1) is multi-faceted and long-term (i.e., 

decadal), (2) fits within existing broad-based economic development strategies, (3) 

includes industry-specific components (e.g., support for renewable energy markets and 

the ability to address specific renewable energy manufacturing needs), and (4) highlights 

existing assets to demonstrate critical location specific differences when applicable. Such 

an approach might include:2

• State and local infrastructure development

• Education and workforce training 

• Direct outreach and marketing 

• Community development and quality of life programs 

• A predictable regulatory and governing environment 

• Provision of fiscal and financial incentives 

• Detailed market and resource analysis

• Advancement of renewable energy markets. 

 

2 Policy best practices outlined in this report represent information elicited through the personal interviews 

conducted for this report (see the Appendix for details) as well as the results of published work by Bobonis 

and Shatz (2007), Buch et al. (2005), Coughlin and Segev (2000), and Oman (2000).
vi 

Table of Contents

List of Figures.............................................................................................................................................vi

List of Tables...............................................................................................................................................vi

1 SCEPA Project Background ................................................................................................................ 1

2 Introduction ........................................................................................................................................... 2

3 Renewable Energy Manufacturing in the United States ................................................................... 4

3.1 Wind Energy Manufacturing ...............................................................................................4

3.2 Solar Energy Manufacturing ................................................................................................6

3.3 Future Market Expectations .................................................................................................9

4 Siting Fundamentals...........................................................................................................................14

4.1 The Decision-making Process ............................................................................................14

4.2 Renewable Energy Siting Variables ..................................................................................16

5 The Role for Policy..............................................................................................................................17

5.1 Policy Impacts on Siting Locations and State Experiences ...............................................17

5.2 Applying Policy Tools .......................................................................................................18

6 Summary and Conclusions................................................................................................................20

References .................................................................................................................................................21

Appendix ....................................................................................................................................................23

List of Figures

Figure 1. Opened and announced firms involved in wind energy manufacturing by state .............5

Figure 2. Opened and announced firms involved in solar energy manufacturing by state .............8

Figure 3. Installed RE capacity under business-as-usual (BAU) and various proposed 

national RES policies ......................................................................................................11

Figure 4. First-order estimate of investment in renewable energy equipment installed in 

the domestic market as expected under BAU and proposed national RES 

policies in Sullivan et al. (2009) .....................................................................................12

List of Tables

Table 1: Cost Estimates Used to Approximate the Order of Magnitude of Investment in 

RE Equipment under Various National RES Scenarios through 2030. ..........................12

Table 2. Annual Investment in RE Equipment through 2030 Compared with the Value of 

Existing Industry Goods Produced in 2007 ....................................................................13
1 

1 SCEPA Project Background 

The State Clean Energy Policies Analysis (SCEPA) project seeks to quantify the impacts 

of existing state policies and identify crucial policy attributes and their potential 

applicability to other states. The project goal is to assist states in determining which clean 

energy policies or policy portfolios will best accomplish their environmental, economic, 

and security goals. Analysts from the National Renewable Energy Laboratory (NREL) 

are implementing the project. State officials and policy experts are providing input and 

review. For more information on the SCEPA project or to see additional reports from the 

SCEPA project, access NREL’s Applying Technologies Web site at http://www.nrel.gov/

analysis/scepa.html. The SCEPA project is supported by the Weatherization and 

Intergovernmental Program within the Department of Energy’s Office of Energy 

Efficiency and Renewable Energy. 

This report diverges slightly from other SCEPA analyses. Rather than evaluating impacts 

across the array of state clean energy goals, this report focuses on renewable energy 

manufacturing’s role in economic development and discusses policy best practices for 

pursuing renewable energy manufacturing facilities.
2 

2 Introduction

Renewable energy is frequently touted as a tool for stimulating economic development. 

Research confirms that renewable energy development leads to economic impacts at the 

local, state, and the national levels (US DOE 2008, Pollin et al. 2008, Reategui and Tegen 

2008).3

Where renewable energy equipment—wind turbines, solar photovoltaic (PV) panels,

solar hot water heaters, geothermal heat pumps, steam turbines, and associated 

hardware—is produced is a primary factor in determining the magnitude of economic 

development impacts.

 However, these impacts vary, sometimes widely, depending on how investments 

in clean energy are distributed within the particular state, national, and global economy. 

4 The Renewable Energy Policy Project (REPP) estimates that 

roughly 70% of the jobs generated by development of wind energy accrue in the 

manufacturing sector (Sterzinger and Svrcek 2004). Lantz and Tegen (2008) show that 

increasing the level of locally produced wind turbine equipment from 0% to 35% can 

increase the lifetime economic impacts of constructing wind projects in Iowa by more 

than 70%.5

Renewable energy manufacturing's impact on economic development is significant 

because renewable power production facilities are capital intensive—approximately

70-75% of the installed cost of a wind plant goes to purchasing wind turbines (Wiser and 

Bolinger 2009). Roughly three quarters of every dollar invested in a new wind energy 

facility is directed to the manufacturing sector. Wind energy is not alone in its capitalintensive nature; Stoddard et al., (2006) estimate that 68% of the total cost of 

concentrating solar power plants goes to equipment. Similarly, 60-64% of the cost of 

solar photovoltaics is in the cost of the modules and inverter (Wiser et al. 2009). 

As a result, a state that successfully secures a large clean energy 

manufacturing sector is expected to see the greatest economic development impact from 

continued deployment of renewable energy. 

States are beginning to recognize the attributes and potential of the clean energy 

manufacturing sector and to actively court potential renewable energy manufacturers. 

One example of this is the participation of state officials in the nation’s largest wind 

energy conference. Two years ago, the annual AWEA WINDPOWER conference had 

only one state with an economic development booth.6

 

3 The U.S. Department of Energy’s report 20% Wind Energy by 2030 (2008) places the total economic 

output from constructing and operating wind energy facilities that supply 20% of U.S. electricity needs at 

roughly $1.4 trillion between 2008 and 2030. The Political Economy Research Institute estimates that 

spending $100 billion over two years in six green infrastructure investment areas will create two million 

jobs throughout the economy (Pollin et al. 2008).

 In 2009, the conference had 17 

booths staffed by state representatives, each trying to market its potential as a future 

4 Additional critical variables include the amount of renewable energy that is installed (i.e. the size of the 

total investment), the size and structure of the economy in question, the distribution of project-level 

revenues, and the amount of local goods and services used by the project (Lantz and Tegen 2008). 5 For a scenario where 2,400 MW of wind power is added in Iowa, increasing the proportion of capacity 

made up of Iowa-built wind turbines from 0% to 35% increases the economic development impacts from 

$2.5 billion to nearly $4.5 billion (Lantz and Tegen 2008). 6 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.
3 

home for wind energy related business.7

 Moreover, states are beginning to use policies to 

enhance their ability to recruit renewable energy manufacturers.8

This report discusses the status of renewable energy manufacturing in the United States 

and uses deployment scenarios based on proposed national RES legislation in the spring 

of 2009 (Sullivan et al., 2009) and the U.S. DOE report 20% Wind Energy by 2030 to 

estimate the potential scale of expenditures for renewable energy equipment over the next 

10 to 20 years. In addition, the report discusses the types of variables that interest 

renewable energy manufacturers, and it provides guidance for developing clean energy 

manufacturing recruitment strategies in a manner that minimizes detrimental economic 

development competition between states and supports long-term economic development 

more broadly. 

 

The report focuses on wind and solar energy technologies because they are two of the 

fastest growing clean energy technologies in the United States–both industries are 

experiencing annual U.S. investments of billions of dollars.9 Furthermore, both industries 

are undergoing expansion of U.S.-based manufacturing capacity.10

 

7 Jessica Isaacs, American Wind Energy Association, personal communication, May 2009.

 

8 Kansas, Michigan, and New Jersey designed state policies to attract manufacturers. Kansas’ Solar and 

Wind Manufacturing Incentive provides up to $5 million in financing recovered through payroll tax 

withholding from the required number of new employees. Michigan’s Nonrefundable Business Activity 

Tax Credit provides manufacturers of renewable energy equipment a tax credit based on renewable energy 

related business activity. New Jersey’s Edison Innovation Clean Energy Manufacturing Fund provides up 

to $3.3 million in grants and loans for development of new facilities and/or site improvements. For more 

information on these programs and other state-level manufacturing incentives, see 

http://www.dsireusa.org/. 9 The U.S. wind energy industry invested approximately $16.4 billion in the development of more than 

8,500 MW of new wind capacity in 2008. This record-breaking year resulted in 60% more installed wind 

capacity than 2007, which held the previous single-year installation record of 5,329 MW (Wiser and 

Bolinger 2009). Also in 2008, the U.S. solar energy industry grew by an estimated 1,265 MW and added 

16% to the total installed solar capacity, according to the Solar Energy Industries Association (SEIA 2009).

10 Late 2008 and early 2009 were marked by slowing expansion, and many existing facilities cut output 

because of the recession, which has reduced near-term demand for renewable energy equipment. However, 

analysts generally consider this a short-term slowdown and expect wind and solar manufacturing expansion 

to resume as the broader economy recovers.
4 

3 Renewable Energy Manufacturing in the United States

Uncertainty about the magnitude and long-term stability of U.S. demand for renewable 

energy technology has historically discouraged investment in U.S.-based manufacturing 

facilities (Wiser et al. 2007), and renewable energy producers in the United States have 

generally imported renewable energy equipment.11

The Emergency Economic Stabilization Act of 2008 (EESA) and the American Recovery 

and Reinvestment Act of 2009 (ARRA), however, have created a more favorable long-term 

policy environment for renewables. Among the policy developments promulgated in 

these two pieces of legislation are: (1) an extension of the federal production tax credit 

(PTC) and the ability to convert the PTC into an investment tax credit, (2) an eight-year 

extension of the federal investment tax credit (ITC), (3) creation of the ARRA Section 

1603 cash grant in lieu of the ITC program, and (4) establishment of the ARRA Section 

48C manufacturing investment tax credit. Furthermore, the U.S. Congress continues to 

debate long-term policy measures, such as a National Renewable Energy Standard (RES) 

and schemes to limit carbon emissions that will impact renewable energy markets. Much 

of the debate is about how to best increase U.S. economic competitiveness, and this 

discussion often focuses on domestic manufacturing capabilities. Because of these 

developments, the long-term outlook for renewable energy is positive, and the wind and 

solar energy markets are seeing significant investment from clean energy manufacturers.

 

3.1 Wind Energy Manufacturing

Prior to 2006, only a few wind energy related manufacturers had facilities in the United 

States, and the single major original equipment manufacturer (OEM) of wind turbines 

with a U.S. manufacturing presence was GE (Wiser and Bolinger 2007).12

The operating and announced manufacturing facilities include the facilities of leading 

OEM manufacturers Acciona, Clipper, Gamesa, GE, Nordex, Siemens, and Vestas, as 

well as significant Tier I suppliers (e.g., blade and tower manufacturers).

 By late 2007, 

industry experts estimated that about 30% of the equipment and components used in wind 

turbines was produced at U.S. facilities (Wiser et al. 2007). As of year-end 2008, at least 

91 facilities in 27 states were producing wind turbine equipment and components. An 

additional 23 new facilities were announced in 2008, with expected production beginning 

in 2009 (Wiser and Bolinger 2009). 

13

 

11 Under high market uncertainty, states can generally do little to attract manufacturers. In some cases, 

states may be able to provide enough localized market certainty to justify a modest manufacturing 

investment or they may try to apply pressure on federal legislators to use policy to address underlying 

market conditions. Nevertheless, in the absence of an underlying market, states efforts to attract 

manufacturers are likely to be futile. 

These 

facilities generally are located in states near valuable wind resources, have access to welltrained labor forces, offer multiple modes of transportation, and engaged the wind energy 

12 GE maintains U.S.-based and international manufacturing facilities all of which serve the U.S. domestic 

market and international markets.

13 An OEM is the final assembler of all the individual components that constitute a completed product. 

Often, the OEM manufacturers also carry out the design and engineering of the final technology. OEM 

manufacturers are respectively served by Tier I component manufactures that are in turn served by Tier II 

and lower component manufacturers.
5 

industry early.14 Some states, including Arkansas, Colorado, Iowa, and Texas, already 

boast both an OEM presence and a Tier I presence. As well, states with historically 

strong manufacturing sectors, including Michigan, Indiana, Ohio, Pennsylvania, and 

Wisconsin, have started to see the impacts of wind energy manufacturing as the industry 

has begun to connect with domestic suppliers throughout the supply chain (Wind 

Powering America 2009). The distribution of open and announced facilities, as compiled 

by the American Wind Energy Association (AWEA) and the U.S. Department of 

Energy’s Wind Powering America program, is shown in Figure 1.15 

Figure 1. Opened and announced firms involved in wind energy manufacturing by state

(as of December 2008) 

The rapid ramp-up in U.S. manufacturing capacity has increased the domestic supply of 

wind energy components. AWEA now estimates that as much as 50% of the industry’s 

equipment, by cost, is manufactured in the United States (AWEA 2009).16

 

14 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

 The desire of 

15 Data represented in Figure 1 are based on reports by company press releases and local news reports. All 

data presented here have been confirmed with individual companies. Companies that have not publicly 

announced their participation in the wind industry are not included in this dataset. In addition, these data do 

not distinguish between individual firms for the number of employees supported by wind industry business 

nor do they distinguish between levels within the supply chain.

16 Towers and blades installed on U.S. wind projects are often manufactured domestically. AWEA 

estimates that 50% of turbine equipment, by cost, is manufactured domestically. Estimates based strictly on 

the number of components suggest that of individual pieces (there are more than 8,000 in a wind turbine) a 
6 

OEMs to be present in the rapidly growing U.S. market is likely one driver of much of 

this expansion.17

In the near-term, the U.S. wind manufacturing industry is working through a period of 

oversupply. The recent ramp-up in manufacturing capacity, coupled with the current 

recession and the financial crises, has resulted in some furloughs and layoffs. Still, over 

the long-term, U.S. wind energy manufacturing is expected to continue to expand as the 

industry matures. In spite of continued growth, the substantial advancement of wind 

energy manufacturing capacity over the past three years means that the opportunities to 

attract manufacturers of wind turbines or components are not as wide open as they once 

were. Many of the high-level strategic decisions of global OEM firms have already been 

made.

It has also been driven by the desire of OEMs to reduce transportation 

costs, ease logistical challenges, minimize the impacts of changes in currency valuation, 

and reduce import duties (USITC 2009). However, growth in wind power demand has 

also attracted existing manufacturing companies with the ability to easily transition into 

the wind energy industry (e.g., composite component manufacturers and precision gear 

producers) (Wind Powering America 2009).

18 Periodic expansions and the emergence of new market players will create 

opportunities for siting new OEM facilities, but these opportunities will be less frequent. 

Today, much of the opportunity for securing new wind energy manufacturing facilities in 

is in the lower-tier, component supplier levels.19

States that have been successful in securing OEM or Tier I wind energy manufacturing in 

recent years are well positioned to benefit from expansion of existing facilities. These 

states may have some advantages in attracting suppliers because of the efficiencies 

gained by clustering companies within an industry.20

3.2 Solar Energy Manufacturing

 States with a high concentration of 

manufacturing expertise, capital, experience, and low operations costs are also well 

positioned to participate in component supplier opportunities. States without these assets 

may find it more difficult to compete in the wind industry’s manufacturing sector. 

Like the wind energy industry, U.S. solar energy industries have expanded rapidly.21

 great deal more are procured from producers outside of the United States. Next Energy, a Michigan-based 

non-profit whose work includes linking potential component suppliers and renewable energy OEMs, 

estimates that when individual pieces−rather than cost−are considered, only 20% of the parts going into a 

wind turbine are manufactured domestically. 

Also similarly, the solar energy industry can expect increased long-term market certainty 

brought about by the federal policy changes noted above. 

17 Buch et al. 2005 note that market access is a primary driver of expansions by multinational corporations. 18 This conclusion was a consensus noted by the state economic development representatives interviewed 

for this work. Furthermore, it is verified by the fact that many major global wind energy OEMs (e.g., 

Acciona, Clipper, Gamesa, GE, Nordex, Siemens, and Vestas, and others) now have primary 

manufacturing facilities in the United States or have announced their locations in the United States.

19 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

20 The agglomeration economies, or clustering advantages, of firms locating in a similar geographic area 

are often real. Though this type of analysis has not been done for renewable energy manufacturing, 

clustering advantages are likely to the extent that analysis of other industries applies. 21 Installed photovoltaic (PV) capacity grew by 44% in 2008 and 36% in 2007 (Gelman and Hockett 2009). 
7 

However, solar energy technologies, which include solar PV, solar hot water heaters, and 

concentrating solar power (CSP), are more diverse than wind energy technologies. 

Further, a great deal of diversity exists within individual solar energy sectors. For 

example, solar PV includes traditional crystalline silicon, as well as a variety of thin-film 

PV technology. Each technology has its advantages and faces its own market barriers in 

terms of cost, market potential, and technological maturity. Moreover, each solar energy 

technology occupies its own position in the technology diffusion curve.22 The variability 

in the solar sector means that opportunities for manufacturing of solar energy 

technologies are more varied and open. However, because the consumer markets are less 

mature, solar manufacturing opportunities involve potentially higher risks.23

Despite its less mature consumer markets, recent growth has resulted in the 

announcement and establishment of a number of solar energy manufacturing facilities in 

the United States. A few examples of OEM facilities recently announced include those of 

First Solar in Ohio, Schott Solar and Signet in New Mexico, SolarWorld AG and Solaicx 

in Oregon, and United Solar Ovonics in Michigan. SEIA estimates that domestic growth 

in the production of PV cells grew by 53% and overall solar manufacturing capacity grew 

by 65% in 2008 (SEIA n.d.). 

 

Figure 2 highlights the distribution of firms involved in the production of solar energy 

equipment.24

 

22 At present, solar energy markets are geared towards distributed and small utility-scale energy markets. In 

2008, nearly 100% of installed capacity was in solar PV and solar water heating applications, and the 

largest utility-scale application was a 10 MW PV facility in Nevada. One 64 MW CSP project was 

completed in 2007, and a second 75 MW was under construction at year-end 2008. In addition, Ausra 

completed a 5 MW demonstration plant in 2008

These data suggest that there are more solar energy manufacturers than

wind energy manufacturers in the United States. However, Figures 1 and 2, which do not 

distinguish production, employment, and investment levels by individual firms, should 

not be interpreted to suggest that solar energy provides a larger opportunity for economic 

development. In addition, Figures 1 and 2 do not include the same level of detail with 

respect to lower-tier component manufacturers and are thus not direct comparisons. 

23 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

24 Solar energy equipment includes solar PV cells and modules, solar thermal technology components, as 

well as racking components, inverters, and batteries used in solar energy installations. These data were 

collected by the Solar Energy Industries Association. Data do not distinguish between firms for the number 

of employees supported by the industry or for the respective position of each company in the industry 

supply chain.
8 

Figure 2. Opened and announced firms involved in solar energy manufacturing by state 

(as of 2008) 

Much of the growth in solar manufacturing capacity has been in traditional crystalline 

silicon flat-plate and thin-film technologies.25

Many of the world’s dominant PV OEM solar manufacturers, including Sharp, Q-cells, 

Suntech, and Kyocera do not yet have a U.S. manufacturing presence, and despite growth 

in 2008, U.S. production of solar energy equipment constitutes less than 10% of global 

production (SEIA).

However, the Schott Solar facility in New 

Mexico is expected to produce receiver tubes for concentrating solar power plants, and 

Ausra’s Nevada Production Facility, which opened in 2008, is expected to produce 700 

MW of concentrating solar power equipment annually at full capacity (SEIA 2009, and 

Ausra 2008). 

26

 

25 It is worth noting that the Chinese are currently investing heavily in traditional crystalline silicon PV 

manufacturing capacity and the Chinese Company Suntech is one of the fastest growing global producers 

of traditional crystalline silicon PV panels. In contrast, U.S. investment has frequently targeted thin-film 

PV technologies. First Solar is a commonly cited success story with regard to thin-film technology.

Still, the recent expansion of U.S. (and global) solar manufacturing 

capacity, coupled with the worldwide recession, has resulted in an oversupply of solar PV 

modules, lowering costs and putting increased pressure on the manufacturing supply 

26 Reportedly, Suntech is in the process of selecting a U.S. manufacturing facility.
9 

chain. This trend has left some economic development officials uneasy and concerned 

about the long-term viability of the domestic solar energy market.27

Solar OEMs include start-up companies emerging from R&D laboratories and larger 

corporations seeking to establish a presence in the U.S. market. Anecdotal evidence 

suggests that the start-up companies that emerge from laboratories often locate close to 

those same institutions. Examples of this trend include Abound Solar of Fort Collins, 

Colorado, which emerged from the research laboratories of Colorado State University 

and Suniva Inc., which is producing its technology in suburban Atlanta after emerging 

from research carried out at the Georgia Institute of Technology. 

Multinational manufacturers tend to plan more in terms of existing infrastructure, 

workforce capabilities, operations costs, and transportation logistics (Buch et al. 2005).28

3.3 Future Market Expectations 

Component manufacturers are more diverse and range from producers of basic hardware 

for balance-of-plant requirements to laboratories that produce highly specialized 

materials.

Clean energy manufacturing is forecast to be a growth opportunity, but it is not one 

without limits. It is estimated roughly $13.3 billion was spent on wind and PV related 

equipment in 2008.29

The scale of opportunity depends directly on deployment of wind and solar technologies. 

This analysis considers two different U.S. build out scenarios to estimate the scale of 

domestic investment in renewable energy equipment over the next ten to twenty years. 

Assuming that U.S.-based manufacturing will serve a future export market could 

significantly increase the scale of the opportunity. However, forecasting global renewable 

energy growth as well as the U.S. ability to compete on an export basis is beyond the 

scope of this work. 

In addition, certain states are better positioned to capitalize on the 

potential renewable energy manufacturing opportunities by virtue of their geography and 

existing manufacturing capital. As a result, understanding the scale of the opportunity for 

clean energy manufacturing is critical for state policymakers who are only now 

recognizing the opportunities and for states that do not have notable strategic assets (an 

existing manufacturing base and/or geographic advantages). 

The first scenario is based on the U.S. Department of Energy’s report 20% Wind Energy 

by 2030 (DOE 2008). This scenario provides an estimate of the potential investment in 

wind energy over the next twenty years. The second scenario is from deployment as 

modeled under business-as-usual and three proposed National RES debated in U.S. 

 

27 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

28 Ibid. 29 Calculated value based on 2008 installed capacity for wind and PV and assuming an estimated cost of 

$1,360/kW (2008$) for wind turbine generators (Wiser and Bolinger 2009) and a combined cost of 

$4,817/kW (2008$) for PV modules and the inverter (Wiser et al. 2009); the combined PV and inverter cost 

is calculated from the average 2007-installed cost and the percentage of total installed cost constituted by 

the PV modules and inverter as presented by Wiser et al. (2009).
10 

Congress in the spring of 2009 (Sullivan et al. 2009). A few important caveats about 

manufacturing market scale estimates include: 

• The values below reflect first-order estimates of expenditures on renewable 

energy equipment alone. They do not include expenditures on transmission, labor, 

professional services, or balance-of-plant (BOP) equipment (electrical wiring, 

concrete, etc.) incurred during construction of a new renewable energy electricity 

facility. 

• The values below are based on today’s costs and reflect constant 2008 dollars; 

cost escalation as has been observed in recent years in the wind energy industry is 

not accounted for. Likewise, continued cost declines as have been observed in 

solar PV are also not considered.30

• The values do not include potential costs associated with premature equipment 

failures, repair parts, or operations and maintenance expenses.

• To the extent that deployment deviates from these scenarios discussed here, the 

expected investment in renewable energy equipment will also vary.

Under the 20% Wind Energy by 2030 report, 305 GW of wind energy are installed in the 

United States (DOE 2008). This represents a more than 10-fold increase in installed U.S. 

capacity. Given that roughly 25.3 GW of land-based wind energy capacity were installed 

at the end of 2008, approximately 280 GW of wind power remain to be installed by 2030 

(AWEA 2009). In 2008, the average cost of building an onshore wind project was 

$1,915/kW (2008$). Of this cost, roughly $1,360 (2008$) is attributed to the cost of the 

wind turbines themselves (Wiser and Bolinger 2009). For offshore installations, 

O’Connell and Pletka (2007) estimate costs to range from $2,200/kW to $2,520/kW 

(2008$). Assuming that the cost of offshore turbines is a slightly lower percentage (5%) 

of total project costs when compared with onshore turbines, the cost of an offshore 

turbine can be approximated at $1,460 to $1,660/kW.31

The second build out scenario considered includes multiple forms of renewable energy 

generation. In this analysis, the deployment of all renewable energy resources is 

estimated to range from 163 to 261 MW depending on the details of each RES proposal 

 Further, by assuming that 

offshore costs are at the high end of the estimated range and that average real wind 

turbine prices remain relatively constant moving forward, one can approximate that under 

the 20% by 2030 scenario, the investment in wind turbine equipment will be 

approximately $400 billion (an average of slightly more than $19 billion per year). 

 

30 Solar (and wind) costs may decline greatly over the next 20 years. In addition, cost changes may greatly 

impact demand for renewable energy equipment. However, the purpose of this analysis is simply to gauge 

the scale of the market for renewable energy equipment resulting from U.S. demand. For this purpose, 

these assumptions are sufficient.

31 Ultimately, the percentage of total project costs constituted by offshore wind turbine generators may 

differ greatly from that of onshore projects. However, this analysis is intended merely to provide a sense of 

the magnitude of renewable energy equipment expenditures that may occur over the next 20 years. 

Therefore, the balance of plant (BOP) costs for offshore facilities are assumed to be slightly greater as a 

percentage of total installed project costs. The basis for this adjustment is that BOP costs are increased due 

to advanced foundations and underwater collection and transmission infrastructure. 
11 

(Sullivan et al. 2009).32 Figure 3 summarizes the expected deployment through 2030 for 

each technology type in each of the scenarios considered in this report. Under the various 

proposals considered here, energy efficiency provisions prominent in the Bingaman and 

Waxman cases are expected to reduce renewable energy deployment relative to the 

business-as-usual case (Sullivan et al. 2009). 

Figure 3. Installed RE capacity under business-as-usual (BAU) and various proposed 

national RES policies (Sullivan et al. 2009)

When applying existing equipment cost data to the installed capacity for each individual 

technology in the deployment scenarios forecast by Sullivan et al. (2009), equipment 

expenditures are on the order of $290-$430 billion or an average of $14-$20 billion per 

year through 2030. Figure 4 details the expected investment for each individual 

technology based on the above scenarios. Table 1 details the cost estimates used to arrive 

at these values.

 

32 Cases analyzed by Sullivan et al., (2009) reflect draft bills proposed individually by Representative 

Edward Markey of Massachusetts and Senator Jeff Bingaman of New Mexico as well as a draft bill 

proposed jointly by representative Markey and fellow Representative Henry Waxman of California. 

Scenarios include: a 25% by 2025 RES with no provisions for energy efficiency (Markey), a 20% by 2021 

RES, with 25% of the standard fulfilled by energy efficiency (Bingaman), and a 25% by 2025 RES target, 

with 20% of the standard fulfilled by energy efficiency (Waxman).

0

50

100

150

200

250

300

Markey Business as 

Usual

Bingaman Waxman

Installed Capacity (MW)

Deployment Scenario

Renewable Energy Deployment under Proposed National 

RES Policies

Biomass co-fire-ready coal

Biopower

Geothermal

Distributed PV

CSP

Offshore Wind

On Shore Wind
12 

Figure 4. First-order estimate of investment in renewable energy equipment installed in

the domestic market as expected under BAU and proposed national RES policies in

Sullivan et al. (2009)

Table 1: Cost Estimates Used to Approximate the Order of Magnitude of Investment in RE 

Equipment under Various National RES Scenarios through 2030.

Technology Total Installed Cost 

per GW (millions of 

2008$)

Percentage 

Attributed to RE 

Equipment

Estimated Equipment 

Cost per GW (millions 

of 2008$)

On Shore Wind $1,915 71% $1,360

Offshore Wind $2,520 66% $1,663

CSP $4,862 62% $3,038

Distributed PV $7,770 62% $4,817

Geothermal $3,461 35% $1,211

Biopower $5,000 65% $3,250

Biomass co-fire-ready coal $5,000 65% $3,250

Sources include: Wiser and Bolinger (2009), O’Connell and Pletka (2007), NREL’s JEDI CSP 

model (http://www.nrel.gov/analysis/jedi/), Wiser et al. (2007), and personal communication with 

NREL geothermal and biomass technology analysts. Geothermal and biomass equipment costs 

reflect current industry estimates.

-

50 

100 

150 

200 

250 

300 

350 

400 

450 

500 

Markey Business as 

Usual

Bingaman Waxman

Billions of 2008$

Deployment Scenario

Total Value of Renewable Energy Equipment 

Investment from Renewables Deployment Scenarios

Biomass co-fire-ready coal

Biopower

Geothermal

Distributed PV

CSP

Wind
13 

For context, the total value of the construction machinery industry, including primary 

production as well as repair parts was approximately $25 billion dollars in 2006 and 

2007. In 2007, the farm machinery industry produced approximately $17.5 billion in 

goods while the household appliances industry produced approximately $23 billion in 

goods (US Census Bureau). 

As a result, this analysis indicates that domestic demand for renewable energy 

manufacturing will support a substantial investment in renewable energy equipment. If a 

large portion of this equipment were manufactured in the United States, the renewable 

energy manufacturing industry would be on par with other significant contributors to the 

U.S. economy (Table 2). 

Table 2. Annual Investment in RE Equipment through 2030 Compared with the Value of 

Existing Industry Goods Produced in 2007

Industry or Sector Average Annual Value of Goods Produced

(Billions of 2008$)

Wind Energy (DOE 20% Wind Energy by 

2030 Scenario) $19

Renewable Energy (Proposed National 

RPS Scenarios) $14-$20

Construction Machinery $25

Farm Machinery $17.5

Household Appliances $23

Note: Existing Industry data are from 2007 and include primary production (production of new 

equipment) as well as production of repair and replacement parts. Renewable industry estimates 

are based solely on domestic demand for new equipment. A significant repair and replacement 

parts industry, or a robust export market for renewable energy equipment could dramatically 

increase the scale of renewable energy equipment production.

Source: Existing Industry Data from the U.S. Census Bureau, Current Industrial Report
14 

4 Siting Fundamentals

Developing a strategy to attract manufacturers requires that states understand the process

and variables that determine where new facilities are located. This section examines the 

siting of new manufacturing facilities and assesses the use of policy to ensure state 

resources are directed constructively. This portion of the report seeks to shed some 

insights into the typical strategy that guides business decision-makers.33

4.1 The Decision-making Process

 

Firm-level siting decisions are a balance of broader business strategy and economic 

efficiency. Typically, they proceed via a process that may be divided into higher-level 

stages (Oman 2000). In the first stage, investors and executives analyze how an 

expansion fits their firm’s long-term business strategy. During this stage, firms develop a 

short-list of potential sites based on fundamental business considerations that include:

• Reduced operating costs: Companies looking to export technology or seeking to 

lower production costs may site new facilities in locations with the lowest overall 

operating cost (Buch et al. 2005). This strategy helps corporations with low 

transportation costs and little or no perceived benefit from manufacturing in the 

markets where their products are sold. Renewable energy manufacturers with low 

transportation costs often prioritize long-term operations costs. 

• Improved access to high potential markets: Companies that face high 

transportation costs, trade restrictions, or limited market share may seek to reduce 

costs and enhance their competitive position by establishing manufacturing 

facilities in regions near markets forecast to have high growth. Many firms 

expand internationally primarily for improved access to markets (Buch et al. 

2005). High transportation costs have encouraged wind energy OEMs to locate 

proximate to the wind-rich Great Plains. Over the long-term, such factors may 

also become significant for solar manufacturers who, like architectural 

glassmakers, may seek to minimize long-haul shipments of fragile glass panels.

• Clustering Efficiencies:34 Increased efficiency results from clustering similar 

firms of a given industry in the same area (Bobonis and Shatz 2007). As a result, 

firms may look to locate in industry-specific hubs in order to maximize spillovers 

in workforce capabilities, infrastructure benefits, and supplier proximity. To some 

extent, these clustering efficiencies appear to be shaping siting decisions in both 

the wind and solar energy industries.35

• Regional Infrastructure: Firms, especially those serving broader regional 

markets, may evaluate the infrastructure associated within a region to focus their 

 

33 Obviously, not all business will precisely follow the methodology described here. For example, one 

renewable energy manufacturer considering a new facility in the United States opened the siting process to 

bid effectively telling states to make offers. This approach is rare, but it demonstrates the variability that 

exists among manufacturing firms.

34 Clustering efficiencies are more commonly identified in the academic literature as agglomeration 

economies.

35 This trend is evidenced anecdotally by the concentration of wind energy manufacturers in Iowa, 

Colorado, and Arkansas among other locations. 
15 

search (Coughlin and Segev 2000). Multiple transportation capabilities become 

more important when shipping large components like wind turbine blades or 

towers. Solar technology, which is generally modular, may not require as diverse 

shipping capacity. Nevertheless, sound regional transportation capacity is often

high on any renewable energy manufacturers list of siting variables.36

• Workforce characteristics: Even when a particular market looks promising, 

firms often seek a region with an educated and skilled workforce or lower wage 

rates (Coughlin and Segev 2000). Broad regions may be overlooked because of 

workforce deficiencies or worker expectations. States with low wage rates or a 

highly skilled manufacturing workforce are likely to have an advantage in 

attracting new renewable energy production investment. 

At the highest level, siting decisions are based on opportunities for either significantly 

reduced operating costs (characteristic of export-based businesses) or enhanced access to 

a promising new market (characteristic of companies looking to minimize transportation 

or trade costs). After identifying a few sites that may serve their broader business 

interests, firms look to the specific attributes of potential sites (Oman 2000). Such 

considerations may include:37

• Immediate local infrastructure: A well-designed industrial park or existing 

facility may help finalize an individual firm’s siting decision.

 

• Business and government relations: Courteous and transparent relations 

between government and business create a stable and clearly defined future, 

which is a vital business interest. 

• Local incentives: Incentives in the form of tax subsidies or direct grants are part 

of most government efforts to secure manufacturing facilities.

• Potential competitors or suppliers: Firms may want to isolate themselves from 

competition but desire to be proximate to potential suppliers. 

• Quality of life variables: Companies are often concerned with local public 

services (e.g., primary and secondary school systems), culture, and recreational 

opportunities. Such attributes are important when executives, management, staff, 

and families are expected to relocate.

• Public investment in the broader community: Public support for parks, 

recreation, and public spaces may be viewed as indicators of community values or 

local government values.

• Community enthusiasm: Company representatives sometimes mention 

community support for projects as drivers in the decision-making process. In 

addition, supportive communities may help simplify the permitting and approval 

processes, thereby reducing costs.

 

36 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix. 37 These considerations are derived from the personal interviews conducted for this report (see the 

Appendix for details) as well as a sample of economics literature on this topic, including work cited in this 

report by Bobonis and Shatz (2007), Buch et al. (2005), Coughlin and Segev (2000), and Oman (2000). 
16 

In addition to the above considerations, firms also gauge the level of public interest in 

their siting decisions and consider whether local policymakers are working to stimulate 

the local demand for their products. 

4.2 Renewable Energy Siting Variables

Manufacturing needs vary for renewable energy technologies, and lower-tier 

manufacturers expand the range of siting needs. As a result, states are likely to benefit 

from evaluating their strengths and examining their abilities to meet the diverse needs of 

renewable energy industries. 

The need for local demand and long-term market stability is a common theme in 

discussions with economic development and industry officials.38 Businesses like to know 

the expected market demand for their products or services both in the short and long 

term. Businesses are also interested in ensuring that the renewable energy market in the 

United States is robust and growing. Therefore, many firms stated that they prefer states 

with progressive renewable energy deployment policies and states that are actively 

moving forward the national discussion on U.S. renewable energy policy.39

Traditionally, transportation costs have been a lesser consideration for solar OEMs, but 

this may change as the industry matures. Transporting large volumes of glass can 

challenge manufacturers, and they may ultimately desire to be proximate to high-value 

markets. Nevertheless, the solar energy industry like the wind energy industry entails an 

array of lower-tier suppliers for which proximity to demand is less important. Early 

decisions by manufacturers suggest that the solar energy industry prioritizes the ability to 

leverage existing assets, including R&D capabilities as well as workforces and 

infrastructure with preexisting silicon refining and production capacity.

 For the wind 

energy industry, transportation costs can be a significant part of the total cost of a wind 

turbine. OEMs often seek states that are close to regions with valuable wind resources. 

Likewise, transport of wind turbine equipment requires specific local and regional 

infrastructure. In contrast, first tier and lower renewable energy component suppliers may 

be less constrained by resource areas or transportation infrastructure (e.g., rail, waterway, 

etc.), but they require more engineering and machining production expertise. These 

suppliers, which may have diverse markets for their goods and services, may not prefer 

states that take a progressive renewable energy policy position. Instead, lower-tier 

suppliers may be more interested in workforce characteristics, local government 

dynamics, overall operations costs, and incentive packages. 

40

 

38 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

39 Though this was a common theme, it was not ubiquitous. Other firms noted that the value of progressive 

renewable energy policy depends on the scale of the market resulting from state policy as well as general 

market demand and transportation costs. In some cases, particularly for products with lower transportation 

costs, the value of proximity to market may not offset other factors that influence siting decisions. 40 Of course, thin-film or solar thermal technologies that do not use silicon do not benefit from existing 

silicon production capacity. These locations hold less appeal for solar technologies that are not based on 

amorphous silicon. 
17 

5 The Role for Policy

Given the long-term outlook for renewables, the United States is an attractive 

manufacturing location for firms looking to serve the North American renewable energy 

market. However, in today’s economy, the desire for renewable energy manufacturing 

jobs could quickly exceed the market demand for renewable energy products. 

Competition among states for a finite pool of renewable energy manufacturing 

investment can benefit and challenge state policymakers targeting renewable energy 

manufacturing opportunities. On one hand, competition can drive states to invest directly

in infrastructure and human capital in order to attract both foreign and domestic 

investment. On the other hand, competition can drive up the financial and fiscal 

incentives that local governments feel they need to attract manufacturers. Data from the 

automotive industry indicate that the public investment per job increased by a factor of 

more than 40 between 1980 and 1997 (Oman 2000). However, past a point, incentives 

grow so large they no longer represent a net benefit for their provider. Furthermore, to the 

extent that increased incentives shift funds from investment in infrastructure and 

workforce development, relying on incentives to attract new manufacturers may actually 

diminish a state’s ability to maintain or develop its fundamental economic assets (Oman 

2000).41

5.1 Policy Impacts on Siting Locations and State Experiences

 Sound policy plays a key role in attracting both renewable energy investment 

and investment from unrelated industries. However, it also plays a role determining the 

balance of costs and benefits associated with attracting new investment. 

For many years, economists argued that states had little influence on the siting decisions 

of business (Oman 2000). However, given the development of modern transportation and 

communication networks along with broader trends toward globalization and larger 

multi-national corporations, economists now recognize that state and local policy play a 

role in siting decisions (Oman 2000). Nevertheless, state policy is secondary to basic 

business strategy in its influence (Buch et al. 2005). 

Despite their secondary role, states have sought to maximize their influence in siting 

decisions by using incentives and recruitment packages. Survey data indicate that 

between 1977 and 1996 the number of states offering incentives for direct investment 

generally, more than doubled. A 1995 survey of U.S. corporate executives showed that 

nearly 80% of firms received incentives for siting facilities where they did (Oman 2000). 

At least 19 states currently offer incentives aimed at renewable energy business 

recruitment (DSIRE n.d.).

The policy tools used have historically emphasized financial incentives. Property tax 

rebates, income tax credits, grants, loans, and sales tax exemptions are common, while 

infrastructure improvements may be part of broader incentive packages. Leading states in 

renewable energy manufacturing, including Arkansas, Colorado, Iowa, Michigan, New 

Mexico, and Oregon have all provided individualized incentive packages to the facilities 

 

41 A great deal of analysis has been devoted to this area, and although it is difficult to pinpoint the whole 

array of costs and benefits, at some point the costs of government incentive packages certainly exceed the 

benefits that communities realize from a new manufacturing facility.
18 

they have secured and have largely relied on traditional tools, including tax assistance, 

long-term and short-term loans, job training funds, and physical infrastructure assistance 

(Wind Powering America 2009). 

Despite the widespread use of financial incentives, empirical evidence on their impact is 

mixed. According to some economists, the power of incentive policies to explain the 

location of direct investment is limited. Broad-based analysis of labor subsidies, capital 

subsidies, and foreign trade zones indicates that these tools, as applied in the United 

States, offer no explanatory value in the siting of foreign direct investment (Bobonis and

Shatz 2007).42 Further, financial incentives are often justified as a mechanism to generate 

jobs in underdeveloped or depressed areas, but econometric analysis finds little evidence 

that depressed areas are better served by such packages (Oman 2000). Finally, lessons 

learned from the auto industry indicate that increasing competition between states for 

limited investment dollars tends to increase the size and sophistication of incentive 

packages but does not influence the actual amount of direct investment (Oman 2000).43

This evidence has led economists to recommend focusing on long-term economic 

development and investing in diverse sets of durable assets, including human capital and 

modern infrastructure while reducing entry barriers, rather than devoting significant 

resources to incentive packages (Oman 2000).44

Nevertheless, economic development officials often identify financial incentives as an 

important marketing tool, and industry officials often place financial incentives among 

their top considerations when evaluating new manufacturing sites. Still, industry officials 

interviewed for this report generally noted that financial incentives alone are not 

sufficient to justify the large investment that a new manufacturing facility entails. Thus, it 

seems that financial incentives may be an important component for keeping a specific 

state competitive, but long-term economic growth results from a portfolio of economic 

development programs. 

5.2 Applying Policy Tools

A holistic economic development strategy that seeks to maximize the impact of the 

renewable energy sector will be based in traditional economic drivers like human capital, 

a diverse economic base, and modern infrastructure. It may require tailoring for the needs 

of renewable energy industries. Such a policy strategy might include: 

• State and local infrastructure development: The dispersed nature of renewable 

energy resources means that the equipment frequently travels long distances to the 

point of installation. Ensuring that state and local infrastructure is capable of 

transporting equipment to valuable resource areas is an important element of 

supporting renewable energy business development. And, it fits well with a 

 

42 To every rule there are exceptions and the media often highlight cases where large financial incentives 

have helped to secure a given business siting. However, the evidence indicates that when there are broad 

trends the incentive policies noted here have no statistically significant explanatory value.

43 In the auto industry the value of incentives paid per job grew from roughly $4,000 in the early 1980s to 

over $168,000 per job in the 1990s. 44 Economists are also critical of removing funds from existing public investment to fund excessive 

financial incentives that may be in place to compensate for deficiencies in overarching strategic criteria 

(e.g., proximity to market, existing infrastructure, or market stability).
19 

broader economic development strategy, as infrastructure is a vital component of 

any advanced economy (Coughlin and Segev 2000, Oman 2000). 

• Education and workforce training: Robust education and workforce training 

are critical to all economic development strategies (Coughlin and Segev 2000, 

Oman 2000). Modifying university programs, community college curriculums, 

and transitional training programs to prepare workers for opportunities in the 

renewable energy industry can leverage existing assets. Investment in public 

education can support R&D and lead to cleantech spin-offs from public research 

institutions (e.g., Abound Solar from Colorado State University and Suniva Inc. 

from the Georgia Institute of Technology as noted above). 

• Direct outreach and marketing: Bobonis and Shatz (2007) document the 

positive impacts of foreign recruiting offices in countries from which firms are 

expanding. Visits by high-ranking state officials can also enhance marketing and 

outreach efforts.45

• Community development and quality of life programs: Many firms seeking to 

attract the best and brightest must consider quality of life when choosing a siting 

location. Investment in public services, parks and recreation, and other projects 

that impact quality of life metrics can assist in community and state 

differentiation.46

• Predictable regulatory and governing environment with limited barriers to 

entry: All businesses prefer predictable, stable markets (Oman 2000). Outside 

investors favor policy environments with fair competition and limited barriers to 

entry (Buch et al. 2005). Increasing government transparency and providing for 

stable and predictable regulatory environments, while minimizing governmentbased barriers to entry ensures that local government is doing their part to 

enhance the local business climate.

• Provision of fiscal and financial incentives: States may seek a level of 

incentives that keeps them competitive with other states pursuing new 

manufacturing investment. However, relying solely on financial incentives to 

attract investment will not offset an absence of basic components necessary for a 

viable business. Coupling incentives with broad-based programs will ultimately 

support long-term economic development (Oman 2000). 

• Detailed resource and market analysis: Competition from other states can be 

mitigated by specifying a niche that clearly connects existing strengths with 

renewable energy industry needs. Analysis that provides a thorough 

understanding of the renewable energy industry and details the characteristics of 

the local economy is vital to this process.47

 

45 This information is from interviews conducted for this report. For more information about these 

interviews, see the appendix.

46 Ibid. 47 Ibid.
20 

• Advancement of renewable energy markets: States with established renewable 

energy markets sometimes have an advantage in attracting OEM manufacturers. 

State political leaders who promote federal renewable energy policy also 

demonstrate commitment to renewable energy technologies that may differentiate 

their states from others.

48

6 Summary and Conclusions

Renewable energy markets in the United States are growing rapidly, and the long-term 

outlook for the industry is positive. In addition, the economic development impacts of 

renewable energy are notable even without considering the impacts of U.S.-based 

manufacturing. However, a great deal of renewable energy job generation will occur 

outside the United States if the country continues to import much of its renewable energy 

equipment. 

Over the next 20 years, the investment in renewable energy equipment resulting from 

domestic demand is estimated to be $14-$20 billion. As such, domestic demand for 

renewable energy manufacturing represents a large but not unlimited opportunity. 

Moreover, the strategic advantages inherent in geographic location and existing 

manufacturing assets suggest that large-scale renewable energy manufacturing facility 

will not likely be sited in every state even in best-case scenarios (i.e., widespread global 

deployment and a robust export market). 

Marketing strategies for states seeking to attract manufacturers may be best served by 

multi-faceted strategies that allow them to compete in terms of financial incentives but 

are more focused on differentiating themselves by leveraging and strengthening durable 

assets. Policy measures designed with this goal in mind emphasize broad-based 

infrastructure development, industry-specific worker training, progressive renewable 

energy deployment policies, and a stable regulatory environment, as well as investment in 

public education and research, community development, and quality of life factors. 

A long-term broad based approach such as that outlined here takes time to reveal its 

value. Nevertheless, it is more likely to yield a sustainable outcome whether the resulting 

economic development is due to investments made by the renewable energy industry or 

another unrelated industry that may be better suited to the resources of a state or 

community.

 

48 Ibid.
21 

References 

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Report. Washington D.C.: AWEA. 

Ausra Incorporated. (2008). "Ausra Opens First U.S. Solar Thermal Power Factory." 

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Bobonis, G. J.; Shatz, H. J. (2007). "Agglomeration, Adjustment, and State Policies in the 

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 Accessed June 24, 2009. 

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 Accessed June 2009. 

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O'Connell, R.; Pletka, R. (2007). 20 Percent Wind Energy Penetration in the United 

States: A Technical Analysis of the Energy Resource. Project Number 144864. Walnut 

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Oman, C. (2000). Policy Competition for Foreign Direct Investment: A Study of 

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Pollin, R.; Garrett-Peltier, H.; Heintz, J.; Scharber, H. (2008). Green Recovery: A 

Program to Create Good Jobs and Start Building a Low Carbon Economy. Amherst, 

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Sherwood, L. (2008). U.S. Solar Market Trends 2007. Latham, NY: Interstate Renewable 

Energy Council. 
22 

Stoddard, L.; Abiecunas, J.; O’Connell, R. (2006) Economic, Energy , and 

Environmental Benefits of Concentrating Solar Power in California. NREL/SR-550-

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Solar Energy Industries Association (SEIA). (2008). US Solar Industry Year in Review.

Washington DC: SEIA.

Solar Energy Industries Association. (n.d.). http://www.seia.org/galleries/pdf/

Solar_manufacturing_tax_credit.pdf

Sterzinger, G.; Svrcek, M. (2004). Wind Turbine Development: Location of 

Manufacturing Activity. Washington DC: Renewable Energy Policy Project. 

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National Renewable Energy Laboratory. 

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23 

Appendix

Data regarding the experiences of states engaged in efforts to attract clean energy 

manufacturers were based on five detailed interviews between the authors and state 

economic development officials and representatives of non-governmental organizations 

(NGOs) who work to build the green economy in their respective states. This information 

was supplemented by detailed interviews conducted with ten active renewable energy 

equipment manufacturers. 

The authors selected the state representatives based on their states’ success securing clean 

energy manufacturers, their ability to represent specific regions of the country, and their 

willingness to be inteviewed. Industry manufacturer interviewees were chosen to reflect a 

diversity of renewable energy technologies and locations but were limited by industry 

participation. The sample of interviewees is biased towards the West, Midwest, and 

Southwest as no interviews were completed by persons in the Northeast, Mid-Atlantic, or 

Southeast. 

Interviews were conducted during April, May, and December of 2009 and generally 

covered topics including: 

• What companies and investors seek out in specific siting locations 

• Strategies viewed as having been key to successful efforts.

• The extent and impact of intersate competition 

• Strategies for dealing with interstate competition

• Concern (or lack thereof) over future outsourcing of clean energy manufacturing 
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OMB No. 0704-0188

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PLEASE DO NOT RETURN YOUR FORM TO THE ABOVE ORGANIZATION.

1. REPORT DATE (DD-MM-YYYY)

February 2010

2. REPORT TYPE

Technical Report

3. DATES COVERED (From - To)

4. TITLE AND SUBTITLE

State Clean Energy Policies Analysis (SCEPA): State Policy and the 

Pursuit of Renewable Energy Manufacturing

5a. CONTRACT NUMBER

DE-AC36-08-GO28308

5b. GRANT NUMBER

5c. PROGRAM ELEMENT NUMBER

6. AUTHOR(S)

E. Lantz, F. Oteri, S. Tegen, and E. Doris

5d. PROJECT NUMBER

NREL/TP-6A2-46672

5e. TASK NUMBER

IGST.9000

5f. WORK UNIT NUMBER

7. PERFORMING ORGANIZATION NAME(S) AND ADDRESS(ES)

National Renewable Energy Laboratory

1617 Cole Blvd.

Golden, CO 80401-3393

8. PERFORMING ORGANIZATION

REPORT NUMBER

NREL/TP-6A2-46672

9. SPONSORING/MONITORING AGENCY NAME(S) AND ADDRESS(ES) 10. SPONSOR/MONITOR'S ACRONYM(S)

NREL

11. SPONSORING/MONITORING

AGENCY REPORT NUMBER

12. DISTRIBUTION AVAILABILITY STATEMENT

National Technical Information Service

U.S. Department of Commerce

5285 Port Royal Road

Springfield, VA 22161

13. SUPPLEMENTARY NOTES

14. ABSTRACT (Maximum 200 Words)

Future manufacturing of renewable energy equipment in the United States provides economic development 

opportunities for state and local communities. However, demand for the equipment is finite, and opportunities are 

limited. U.S. demand is estimated to drive total annual investments in renewable energy equipment to $14-$20 billion 

by 2030. Evidence from leading states in renewable energy manufacturing suggests that economic development 

strategies that target renewable energy sector needs by adapting existing policies attract renewable energy 

manufacturing more than strategies that create new policies. Literature suggests that the states that are most able to 

attract direct investment and promote sustained economic development can leverage diverse sets of durable 

assets—like human capital and modern infrastructure–as well as low barriers to market entry. State marketing 

strategies for acquiring renewable energy manufacturers are likely best served by an approach that: (1) is multifaceted and long-term, (2) fits within existing broad-based economic development strategies, (3) includes specific 

components such as support for renewable energy markets and low barriers to renewable energy deployment, and 

(4) involves increased differentiation by leveraging existing assets when applicable.

15. SUBJECT TERMS

renewable energy; renewable energy sector; renewable energy equipment; manufacturers; manufacturing; site; 

siting; siting decisions; renewable energy markets; state policies; policy; economic development strategies; economic 

development strategy; state marketing strategies; state marketing strategy; economic development; state; local; 

demand; investment; direct investment; durable assets; state renewable energy markets; infrastructure development; 

workforce training; community development; fiscal incentives; financial incentives; United States

16. SECURITY CLASSIFICATION OF: 17. LIMITATION 

OF ABSTRACT

UL

18. NUMBER 

OF PAGES

19a. NAME OF RESPONSIBLE PERSON

a. REPORT

Unclassified

b. ABSTRACT

Unclassified

c. THIS PAGE

Unclassified 19b. TELEPHONE NUMBER (Include area code)

Standard Form 298 (Rev. 8/98)

Prescribed by ANSI Std. Z39.18