William Pentland of the Pace Energy and Climate Center has an article at Forbes.com, remarking on press accounts that General Electric, the largest U.S. manufacturer of wind turbines, is rethinking its strategy on offshore wind due to current lack of demand for its offshore product offering. The news, Mr. Pentland says, may augur no or slow growth in the offshore wind market.
Time will tell whether this is so. With roughly 3,000 megawatts of wind generating capacity already in European offshore waters, and thousands more on the way, it's clear that there is currently momentum in the market.
As a former colleague used to say, I've seen this movie before–it happened in the 1980s with land-based wind. The U.S. enacted a tax incentive for wind, but included a sunset date just seven years after enactment, hardly time enough to develop a major new manufacturing industry. The incentive expired, a global oil glut knocked the props out from under energy prices, and the U.S. wind industry, at the time a world leader, disappeared. Major American companies with wind turbine development programs, including Boeing, United Technologies, Alcoa, Bendix, Grumman, and yes, GE–closed down those programs.
It wasn't until a new supportive tax policy was enacted and then–more importantly–extended for more than a year or two in advance that the U.S. began to build a new wind turbine supply chain and manufacturing base. By that time, it was playing catch-up, with several major European turbine manufacturers providing stiff competition in the global market.
Today, tax policy uncertainty still threatens U.S. wind developers and manufacturers of both land-based and offshore turbines, and Mr. Pentland's article exemplifies the effect of that uncertainty. Stable tax policy is what fostered the development of the supply chain for onshore wind and it is what is needed for the development of the supply chain for offshore wind (as well as continued growth for land-based). Otherwise, we will find ourselves a decade from now, wondering why the still-growing global market for offshore wind (and perhaps land-based too!) is dominated by foreign turbine and component manufacturers.
Wanted: Predictable energy policy, July 29, 2011
Flurry of positive news, but expiration of key incentive looms, July 15, 2011
Energy policy tops list of needs at wind manufacturing conference, July 14, 2011
Connecting the dots: Job losses to China … and … consistent energy policy, June 30, 2011
Demand-side policies will fuel growth in wind power manufacturing sector, June 14, 2011