The federal government production tax credit expired, devastating US wind capacity growth
New York, NY (PRWEB) October 05, 2014
The Wind Turbine Manufacturing industry experienced dramatic declines over the past five years due to uncertainties regarding the federal government production tax credit (PTC). In 2009, the American Recovery and Reinvestment Act established incentives for renewable energy development; state governments also implemented favorable clean-energy policies. These policies made wind power more attractive to utilities and independent power generators. However, industry revenue fell 62.4% in 2013, due to uncertainties regarding the extension of the PTC. On the other hand, the extension of the tax credit to the end of 2013 is anticipated to drive revenue growth 79.1% to $10.2 billion in 2014, as power developers rush to start construction on new wind farms to qualify for the tax credit. Nevertheless, IBISWorld expects Wind Turbine Manufacturing industry revenue to fall at an annualized rate of 4.8% over the five years to 2014.
According to IBISWorld Industry Analyst Lucas Isakowitz, “The industry experienced a sharp decline in revenue in 2010, due to prolonged economic malaise and dismal investor confidence.” The Advanced Energy Manufacturing Tax Credit also expired over the year, making it more expensive to open turbine-manufacturing facilities. As a result, revenue fell 40.5% over 2010. In 2012, industry revenue grew 71.5%, due to concerns regarding PTC extension. The PTC was scheduled to expire in 2012, which provided an incentive for downstream operators to construct wind farms in 2012 to take advantage of the tax credit. The PTC was extended in early 2013, but downstream operators were unable to budget for wind power projects due to uncertainties regarding the PTC extension. Volatile demand has cut into industry profitability in recent years, despite strong revenue growth in 2014.
“The Wind Turbine Manufacturing industry is expected to further decline over the next five years,” says Isakowitz. The PTC expired on December 31, 2013, and US wind capacity growth is projected to stall. In the five years to 2019, US wind power generation capacity is projected to slowly increase at an annualized rate of 3.0%. However, Industry revenue is projected to grow 27.6% in 2015. The 2013 PTC extension allowed any projects that began construction before January 1, 2014 to claim the tax credit. The positive effects are anticipated to carry over through 2015, as downstream operators purchase turbines to finish wind farms that were already under construction.
For more information, visit IBISWorld’s Wind Turbine Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Wind Turbine Manufacturing industry manufactures wind turbine blades, towers, generators and related parts. Industry operators also provide maintenance and support services for installed wind turbines.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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