President Barack Obama hopes that new wind and solar projects will produce many thousands of new jobs. Renewable energy, after all, is manufactured energy. If domestic producers were to provide the thousands of component parts that a major shift to wind and solar energy requires, a side benefit would indeed be a domestic production industry and significant employment. Unfortunately, we do not currently have a domestic renewable industry capable of supplying those components. Neither do we have any real plans to develop one.
Failure to support a world-class domestic renewable industry in the face of greatly expanded demand will have two negative consequences. European Union and Asian countries will continue to capture most of the new jobs. And the increased domestic demand for wind and solar projects could easily outstrip the industrial capacity to supply the components, leading to bottlenecks and price increases. The expectation among renewable-energy advocates is that programs to create market demand will allow the technology to drive down costs, leading to increasing competitiveness and market share. But can this virtuous circle of increased demand leading to lower prices leading to further demand be realized? Only if the market demand is matched by programs to expand industrial capacity to supply the components and finished products demanded.
Even the relatively mild increase in demand for wind and solar over the past three years produced sharp price increases. The installed costs for wind have risen, according to the Department of Energy, from a low of $1,200 per kilowatt in 2003 to an average of $1,710 in 2007.
The costs of solar energy are a bit more difficult to pinpoint because installations vary dramatically from small systems for individual households to grid-sized projects hundreds of times larger. SolarBuzz, an international solar-energy research and consulting company, publishes an average of module costs that shows U.S. costs dropped to $4.35 per watt in 2005 and then climbed to $4.85 in 2008 and have stayed at that level.
Today, there is not a single federal program to support the development of a domestic renewable-manufacturing industry. And nothing in the initial Obama administration recovery plan supports one either. That needs to change if the promise of green energy and jobs is to be realized.
THE GREEN MANUFACTURING POTENTIAL New wind and solar projects provide jobs for workers installing and maintaining them. And the jobs created by the installation and ongoing maintenance of renewable projects cannot be sent offshore. For example, the 330 mega-watts of wind turbines at the Kittitas and Wild Horse wind farms developed outside Ellensburg, Washington, and the 400 acres of mirrors at the Solar One concentrating solar power project outside Boulder City, Nevada, provide visible evidence of renewable energy's economic footprint.
However, the greater potential for renewable energy to stimulate the U.S. economy requires looking beyond installation and maintenance to the manufacturing industries that provide the wind and solar technologies. At the Kittitas, Wild Horse, and the Solar One projects, all of the major capital equipment was imported. The wind project developers imported towers, blades, and turbines from Europe and Southeast Asia to the wind farms. The Solar One project imported mirrors, vacuum tubes, and the power generator from Europe to Nevada.
Every megawatt of a typical wind turbine installed today is estimated to create 4.85 full-time equivalent jobs to manufacture, install, and maintain the project. About 70 percent of the total labor required for a typical wind turbine is in the manufacturing. For solar, the manufacturing requires about 75 percent of the total labor. As it now stands, any new national clean-energy policy that relies solely on accelerated incentives for installation of wind and solar projects will simply lead to an acceleration of imported equipment. …