This report discusses the U.S. wind turbine manufacturing industry, its supply chain, employment and international trade trends, major federal policy efforts aimed at supporting the industry, and issues affecting its future. The wind industry's national trade group, the American Wind Energy Association (AWEA), reported an estimated 30,000 Americans were employed directly and indirectly in wind turbine manufacturing in 2011, compared to 2,500 in 2004. Another 45,000 U.S. workers reportedly were employed in other parts of the wind industry in 2011, including construction and services. Wind turbine equipment and component manufacturing jobs range in pay from about $30,000 to around $90,000, according to the Bureau of Labor Statistics. Following an unprecedented period of growth in the U.S. wind power market between 2005 and 2009, about half as many new wind turbines were installed in 2011 (some 3,500) as in 2009. Aside from GE Energy and Clipper Windpower, most of the manufacturers that sell, assemble, or manufacture turbines and wind-related components in the U.S. market are headquartered outside the United States. Vestas, Gamesa, and Siemens are among the European manufacturers that have responded to government regulations that mandate the use of renewables, including wind power. Other firms manufacturing wind turbines for the U.S. wind market include Japanese and Indian companies such as Mitsubishi and Suzlon. Manufacturers from South Korea and China are also expanding production capacity and entering the U.S. market. Federal interest in the U.S. wind turbine manufacturing industry is based on (1) increasing the role of clean energy technology in energy production; (2) encouraging advanced manufacturing and the creation of skilled manufacturing jobs; and (3) enhancing the diversity of U.S. energy sources. Wind energy, like many energy technologies, benefits from government incentives. Without them, it does not appear likely that there would be a U.S. wind turbine industry. To a large extent, the federal government sets the framework and influences the pace of domestic wind power development. One of the main federal policy tools to encourage wind generation is a tax credit, known as the production tax credit (PTC), which is slated to expire at the end of 2013. Other policy drivers include state renewable portfolio standards, which have been adopted by more than half the states to mandate production of electricity from "clean" sources. No nationwide renewable electricity standard currently exists, but the Obama Administration and some Members of Congress have endorsed the concept. These policies do not directly address manufacturing, but greater wind power adoption supports the development of a U.S. wind energy manufacturing base. In addition, the federal government and some state governments have maintained programs that provide financial incentives for manufacturing of wind power equipment. Many international wind turbine manufacturers and component suppliers have opened manufacturing facilities in the United States since 2005. In 2011, there were more than 470 U.S.-based wind turbine manufacturing facilities—a 10-fold increase in five years—ranging from wind turbine assembly plants to factories producing various wind-related components including large bearings, castings, electrical wiring, fasteners, hydraulics, and power electronics. Only a small number of these factories are dedicated exclusively to building turbine parts (blades, towers, and nacelles); the others manufacture components for various industrial uses, including wind-specific products. Given the interest in wind power around the world, manufacturers with U.S. production facilities may be able to increase exports of advanced wind-energy components. Around $250 million in fully assembled wind turbines were exported from the United States in 2011. The industry's future in the absence of government support, however, is open to question. While the cost of electricity from land-based wind turbines is less than the cost of power from other alternative sources, such as concentrated solar plants and geothermal installations, it is still, in general, somewhat higher than the cost of power from new gas-fired generators. This means that without government support, electricity suppliers' demand for wind turbines would be relatively limited. It is possible that, if existing policy tools are allowed to expire, wind industry manufacturing will face a difficult future. On the other hand, it is imaginable that technological improvements in wind generation and higher costs for construction of fossil-fuel power plants could at some point make wind cost-competitive with coal and gas as a source of electricity, creating a brighter outlook for wind turbine manufacturing. Wind turbine manufacturing is at the core of the multifaceted wind power industry. Because of the use of castings, forgings, and machining, turbine manufacturing is a significant contributor to U.S. heavy manufacturing. By the end of 2011, more than 38,000 wind turbines were installed in the United States. Procurement of wind turbines accounts for an estimated 60% to 70% of overall expenses for wind energy developers. The market potential of offshore wind power is not covered in this report. No offshore projects have been installed in the United States to date, and the industry faces difficulties with permitting, financing, and infrastructure availability. So far, Cape Wind, off the coast of Nantucket in Massachusetts, is the only project that has a commercial wind energy development lease with the U.S. government. AWEA reports that at the end of 2011, there were 15 different proposed offshore wind projects in the United States, and a proposed offshore transmission line. To help spur offshore wind development, in December 2012, the Department of Energy (DOE) awarded $28 billion in grants to seven offshore wind projects in six states, with the aim of three to begin commercial operations by 2017. Also, this report does not cover small wind turbine manufacturing, which AWEA defines as turbines with rated capacities of 100 kilowatts (kW) or less. This segment of the wind turbine market appears to be growing. According to the World Wind Energy Association, worldwide more than 330 manufacturers offer small wind turbines. AWEA's most recent data indicate that 95 manufacturers of small wind turbines were based in the United States in 2009. The use of a wind turbine to generate electricity is an American invention of the late 19 th century. The development of U.S. commercial wind turbine manufacturing can be traced back to the 1970s, when the U.S. government advanced the technology in response to the oil crises of 1973 and 1979 as an alternative to power generation from fossil fuels. The first U.S. wind farms were developed in California, an early adopter of policies favorable to wind energy, and the state dominated worldwide wind development in the early 1980s. This created a market for wind turbine manufacturers. Enertech, U.S. Windpower (renamed Kenetech in 1988), and Zond were among the American suppliers. Other U.S. manufacturers included technology and aerospace firms such as Westinghouse and Boeing. In 1986, 60 U.S. firms produced turbines for the California market. Foreign suppliers from Denmark, Germany, Japan, and the Netherlands, among other countries, also sold their wind turbines in California. The California "wind rush" became the training ground for several firms, including the Danish manufacturer Vestas, now the world's largest manufacturer of utility-scale wind turbines. However, a drop in oil prices, along with reductions in government tax credits, caused a near total collapse of this market in the mid-1980s. By the end of the decade, many wind turbine manufacturers went bankrupt as the industry adjusted to a much smaller market. For the next two decades fuel prices were low and U.S. incentives spotty. In the United States, annual installed wind power capacity slowed from 1987 to 2000. The entire U.S. wind fleet exceeded 1,000 megawatts (MW) for the first time in 1986, but then took 13 years to reach approximately 2,400 MW. In the 1990s a more sustained market for wind power and wind turbine manufacturing evolved overseas. Strong, consistent government incentives and policies, which have included a policy mix of direct government investment, tax breaks, loans, regulations and laws that cap or tax emissions, supported the development of manufacturers abroad, particularly in Europe. This allowed wind turbine manufacturers to establish themselves in countries such as Denmark, Spain, and Germany, where many wind turbine manufacturers are now based. Demand for wind turbines and components is driven by growth in wind power capacity. More consistent U.S. policies have resulted in a substantial increase in cumulative utility-scale wind power capacity, from 9,000 MW in 2005 to more than 46,000 MW in 2011. The United States was second to China in cumulative and new installed wind power capacity in 2011. China and the United States accounted for more than 45% of total installed worldwide wind power capacity at the end of 2011. The size of the U.S. market has made the United States an attractive investment location for wind turbine and wind component manufacturers. However, the prospects for 2013 and beyond are clouded owing to several factors, including the fate of the PTC, low-cost natural gas, and manufacturing overcapacity in the wind turbine sector. Major customers for wind turbine manufacturers are large independent power producers (IPPs) and utilities such as Iberdrola Renewables, NextEra Energy Resources, Horizon-EDPR, Terra-Gen, Duke Energy, or Xcel Energy, which purchase wind turbines for commercial electricity generation. Other wind turbine customers include universities and military bases, but these customers account for a very small share of the market. Commercial utility-scale onshore wind turbines are installed at wind farms, which are clusters of wind turbines grouped together to produce large amounts of electricity. Currently, there are some 975 wind farms in the United States. The largest is located in California, and there are several huge wind farms in Texas (see Table 1 ), which is by far the leading state in wind energy output, with over 10,000 MW of installed capacity at year-end 2011.