Story first reported from freep.com
With the auto industry on the verge of collapse in 2008,
former Michigan Gov. Jennifer Granholm and other state officials were
eager to diversify the economy and create thousands of jobs by making a
big push into alternative energy.
To capitalize on the state's strengths, they focused in particular on the manufacturing of parts for wind turbines.
But four years later, the drive to grow a new sector built on clean
energy has lost momentum with little to show, the victim of turbulent
industry conditions, Washington politics and what some critics would
call misguided government policies.
Several high-profile projects have encountered significant delays and
have yet to launch full-scale production. They include a manufacturing
plant for large wind turbines in Saginaw, a new foundry in Eaton Rapids
to make iron parts for wind turbines and an innovative ethanol plant in
the Upper Peninsula.
In late June, one of the state's major solar industry players, United Solar Ovonic, was liquidated.
Even some of the wind turbine parts suppliers that have successfully
launched production have seen a sharp drop in orders because of
uncertainty over whether a production tax credit that expires at the end
of December will be renewed. Ventower Industries in Monroe started
building giant wind turbine towers late last year in a new factory, but
its business would be three times larger if the tax-credit situation was
resolved, said Scott Viciana, the company's vice president.
"The wind industry is on the edge of a cliff," said Matt Kaplan,
associate director of IHS Emerging Energy Research, a consulting firm in
Cambridge, Mass. Although,
wind turbine repair companies are doing well compared to manufacturing companies, because repair is less costly than replacement.
He and other experts predict that 2012 will be a record year for the
installation of wind turbines as companies rush to take advantage of the
tax credit before it ends. On the flip side, however, the number of
installations could plummet to record lows next year, Kaplan said.
The tax credit isn't the only headwind facing wind turbine parts
manufacturers. Just like in the solar industry, the wind industry has
too much production capacity, which is driving turbine prices lower.
That's good for the growth of wind energy but puts pricing pressure on
turbine parts suppliers. Kaplan forecasts that the industry is on the
verge of consolidation.
In Michigan, the alternative energy industry lost a key proponent when
Granholm left office at the end of 2010. She tried to transform the
state into a manufacturing hub for wind and other renewable-energy
industries, providing millions in grants, tax credits and other
incentives to entice companies to the state. A team of economic
development officials worked to grow green jobs.
Today, Michigan has 35 wind-related manufacturing plants, according to
the American Wind Energy Association. In 2010, the state had nearly
80,000 green jobs, which accounted for 2.1% of its total employment, a
U.S. Bureau of Labor Statistics study found.
The growth of the alternative energy industry has always been dependent
on government subsidies. Critics, such as the Mackinac Center in
Midland, have long opposed this assistance, arguing that these business
ventures should be based on market forces.
Under Gov. Rick Snyder, programs specifically designed to spur the
growth of the alternative energy industry no longer exist. The state
revamped its economic development strategy with the goal of treating all
industries equally.
"We're doing what we can to help all industries in Michigan be
competitive," said Steve Bakkal, director of the state's Energy Office.
He contends that successful companies will be those that are supplying
products for multiple industries, not just wind or solar.
But at the moment, several projects that are trying to break new ground
in the alternative energy field have run into difficulties.
Two years ago, Northern Power Systems announced plans to manufacture
large wind turbines, something that had never been done in the state. So
far, the Vermont-based company has made and sold only two prototypes of
its next-generation turbines to a wind farm in the Upper Peninsula.
The uncertainty over the future of the production tax credit has caused
customers to delay placing new orders, said Douglas Prince, Northern
Power's chief financial officer.
The company's leased facility in Saginaw is "kind of in standby mode
right now," Prince said. "We're hopeful the market will recover."
In central Michigan, a plan to make iron parts, which are called
castings, for wind turbines at a new foundry in Eaton Rapids has also
been delayed. The foundry was supposed to open at the end of 2011,
promising lower-cost and higher-quality castings. But it ran into
management, financing and other problems.
Eaton Rapids Castings hopes to start production this fall but still
needs to find additional investors, said Lennart Johansson, the
company's CEO and one of its owners.
To offset the uncertainty in the wind business, the foundry plans to
make castings for other industries. It has scaled back its initial
production volumes.
To be sure, the outlook isn't completely bleak. A few ventures are
making progress, most notably Energetx Composites in Holland. The
company, which has nearly 80 employees, won an order to build more than
200 large wind turbine blades for a customer it cannot name, said David
Slikkers, Energetx's chairman.
He and other family members saw blade manufacturing as a natural fit
because they have been building boats for decades as the owners of S2
Yachts. "We have been composite fabricators for 50 years," Slikkers
said.
And near the Port of Monroe, Ventower expects to have built 15 towers
for large wind turbines by this fall. It occupies a new factory on a
former industrial landfill and has hired 53 employees. But the industry
slowdown caused by the tax credit situation is holding back its growth.
"I would have orders booked through the bulk of next year if the tax credit was not an issue," Viciana said.
More Details: Hitting a Green Wall
Here are some of the high-profile alternative-energy business ventures
in the state that have shut down or run into significant delays:
* Northern Power Systems' large wind turbine plant: The Saginaw plant
has yet to launch production and is operating with a skeleton crew.
* Eaton Rapids Castings: Foundry to make iron parts for large wind
turbines in Eaton Rapids has been delayed. It is still trying to get
financing.
* United Solar Ovonic: The maker of solar roofing materials filed for
bankruptcy in February and sold its assets at the end of June.
* Mascoma's cellulosic ethanol plant near Kinross in the Upper
Peninsula: Groundbreaking was supposed to occur this summer. The company
says construction will start at year's end after engineering design
work is completed, contracts are awarded and financing is finalized.
* Astraeus Wind Energy: In 2010, company announced plans to make spar
caps for wind turbine blades in Port Huron. It is still in the testing
phase.
* Danotek Motion Technologies: Was supposed to start making generators
for large wind turbines last year. The company says production will
begin this fall in Canton. It has 28 employees, down from 45 at the end
of 2010.
For more national and
worldwide Business News, visit the Peak News Room blog.
For more Health News, visit the Healthcare and Medical
News blog.
For more Real Estate News, visit the Commercial and
Residential Real Estate blog.
For more Law News, visit the Nation of Law blog.
For more Environmental News, visit the Environmental
Responsibility News blog.
