Incentives Add Players to Wind

By MARA LEMOS STEIN
The list of wind-tower and wind-blade manufacturers selected recently for the U.S. Department of Energy's manufacturing tax credit program revealed that the field of suppliers to the wind business is opening fast and wide in the U.S.
Among the winners of the approximately $150 million in tax incentives were companies beyond the usual group of wind turbine makers. The list included Carl Icahn's American Railcar Industries Inc., a maker of railcars adapting its steelworks technology to make tower structures to hold wind turbines; venture-backed TPI Composites Inc., which makes wind blades; and Merrill Technologies Group, which will set up production of nacelles (cases that hold the gearbox, generator and other parts of the wind turbine) for the new 2.2-megawatt turbine being developed by venture-backed Northern Power Systems.
Matt Kaplan, senior analyst at Emerging Energy Research, said that the fact that some companies are shifting their business focus to participate in the booming U.S. wind industry was a sign of confidence in the industry.
"If we just had the same old names, and not many newcomers, it wouldn't quite reinforce that [bullishness] as much," he said.
The wind power industry has been one of the main beneficiaries under the American Recovery and Reinvestment Act of 2009. The federal government incentives, which include production tax credits, investment tax credits, cash grants and the manufacturing tax credits, were behind a strong level of new installed wind power capacity in 2009, Mr. Kaplan said. Emerging Energy Research is revising its 2009 wind power installation that is around 8,900 megawatts, a number that the consulting firm expects will be at least repeated in 2010, he said.
Much of the incentives are in place until 2012, a window open long enough to keep investors interested in the wind power sector, Mr. Kaplan said.
The DOE manufacturing tax credits provide a 30% tax credit for qualifying investments over a three-year period. The DOE announced awards of $2.3 billion for 183 manufacturing facilities for clean energy products across 43 states, and said the demand for the program was so high that the White House has called on Congress to expand the program by another $5 billion.
The newcomers adding to U.S. wind tower manufacturing capacity will compete with leading suppliers Trinity Industries Inc. and Otter Tail Corp.'s DMI Industries.
American Railcar was selected for two separate awards: $3.65 million to re-equip a manufacturing plant in Marmaduke, Ark., which will have annual capacity of 500 towers; and $5.3 million to convert a railcar plant to make 500 wind towers annually in Fort Dodge, Iowa. Icahn is the chairman of American Railcar.
Another facility will be built in San Angelo, Texas, by Martifer-Hirschfeld Energy Systems LLC, a joint venture between Martifer Energy, which is part of Portugal-based Martifer Group, and structured steel company Hirschfeld Industries LP, set up earlier this year to manufacture new steel towers for wind turbines. The joint venture was selected for a $3.5 million tax credit. Richard Phillips, president of Hirschfeld, has said that the JV would spend $40 million on the facility.
One of the largest tax credit awards for wind power components, of $22 million, went to Merrill Technologies Group, Saginaw, Mich., which will invest $73 million in advanced manufacturing equipment to make nacelles for the new 2.2 megawatt utility-scale turbines being developed by Northern Power.
Northern Power, a subsidiary of Wind Power Holdings LLC, got a $37 million capital infusion in the summer of 2008 from Allen & Co., Rockport Capital, and other private investors. Among wind-blade manufacturers, TPI was selected for two separate awards, totaling $9 million.