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Southeastern U.S. Works to Sustain Manufacturing, Project Momentum

If you measured the southeastern United States by its solar and wind capacity, it'd barely register on the map. Dig a little deeper and you'd realize that even without the mega-PV farms and the sprawling fields of turbines, the region plays a vital role in the overall health of the industry.

American manufacturing is often referred to as a dying commodity, yet it’s one of the region’s success stories. Bolstered by relatively consistent policy in the wind industry, manufacturing has taken off across the Southeast with about 90 manufacturing facilities spread across 10 states. On the solar side, the region is starting to gain some manufacturing momentum with an eye toward global markets. Promising companies like Twin Creeks and Semprius have emerged from the shadows and established players like Sharp and Hemlock Semiconductor have deepened the industry’s presence in the area. Relatively low energy prices have stifled calls for a Renewable Energy Portfolio, and to date only North Carolina has a state-based target. That low cost of electricity — often fueled by coal — is also among the leading reasons why companies choose to manufacture there.

That growing manufacturing presence is drawing the rest of the renewable industry to the region in search of new business.

The American Wind Energy Association is for the first time bringing its annual conference and trade show to Atlanta in June. And the solar industry's largest event, Solar Power International, will set up shop in Orlando in September. Add in an upcoming Tennessee Valley Solar Solutions Conference next week in Memphis and it becomes clear. The Southeast is in many ways the last frontier, and it is built on the promise of new installations and the reality of an emerging manufacturing base.

But now, as policies that benefit generation fade away and as the general global malaise deepens, manufacturing and budding installations in the region could face the brunt of the economic impact. The solar industry has already lost the 1603 Treasury grant and is working hard to maintain its Investment Tax Credit, which has become a target of elimination within Congress. The wind industry, meanwhile, hopes to extend the Production Tax Credit beyond this year, and the current political stalemate is putting that extension into question. The wind industry’s most vocal opponent — Sen. Lamar Alexander — is a Republican icon in Tennessee and his angst against what he calls “Big Wind” has certainly been fueled by the Buffalo Mountain wind project in his home state.

Inaction at the federal level may indeed jeopardize many jobs, business and facilities in the area, especially if the PTC is not extended since so much of the American wind manufacturing supply chain is built to serve the American market. In 2004, the last time the PTC expired, wind development took a major hit, but at that time less than 25 percent of wind components were manufactured in the United States. Today, the number is between 60 and 70 percent, and if the PTC goes away, many of those facilities could disappear as well. And a reinstatement of the PTC down the road probably wouldn’t achieve the quick bounce-back that has occurred in the past since the recent development boom has been built on the backs on a solidifying manufacturing base.

Some manufacturers in the wind industry are already indicating that they may not wait to see if a more certain policy emerges. Mitsubishi Heavy Industries recently announced that it was scrapping plans to build a wind turbine manufacturing plant in Arkansas. The move will eliminate the 330 long-term manufacturing jobs that were expected.

Still, there remains hope for a continued push toward renewable energy in the region, at least from a generation standpoint. Florida's first large-scale wind farm recently received local approval for a controversial 200-MW project at the edge of the Everglades. The state has also moved swiftly in pursuit of large-scale solar, including a 400-MW project near Tallahassee. Despite the low cost of electricity, the Southeast does have one key factor that's driving the push toward renewable sources of power, and that’s the high number of coal plants that are in their final stages.

The Tennessee Valley Authority, which serves a seven-state swath of the southeast, recently settled a Clean Air Act dispute with the Environmental Protection Agency, and the utility will now retire, idle or retrofit 18 coal-fired boilers in the region. While natural gas is expected to fill a large volume of this new capacity, renewable sources like solar, wind, biomass and landfill gas will play a key role as well.

The utility currently has 1,680 megawatts of operational or committed renewable power, and most of this is through contracts with wind farms based in the Midwest. The company has a stated goal of adding between 1,500 and 2,500 MW of new renewable capacity by 2020. Wind could eventually play a prominent role even in its own territory as technology improvements push wind resources to new heights. TVA’s solar portfolio currently stands at 47.5 MW across 860 installations — focused mostly in Tennessee — and Patty West, director of TVA’s renewable energy programs, says solar installations will continue to be a priority as the company works to broaden its portfolio and fill the void of coal, which provides two-third's of the utility's capacity. Biomass, meanwhile, looks to be a strong candidate to replace some of that coal capacity. But the utility — like many across the nation — is awaiting EPA ruling regarding the resource's carbon neutrality before it determines how it will integrate into its renewable energy mix.

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