Industry Structure and Company Strategies of Major Domestic and Foreign Wind and Solar Energy Manufacturers: Opportunities for Supply Chain Development in Appalachia Co-Principal Investigators Gerald I. Susman, Ph.D. Smeal College of Business 210 Business Building, University Park, PA 16802 814-863-0448 Amy K. Glasmeier, Ph.D. College of Earth and Mineral Sciences 302 Walker Building, University Park, PA 16802 814-865-7323 Technical Advisors Susan K. Stewart, Ph.D. Research Associate, Energy Science and Power Systems, Applied Research Laboratory David R. Riley, Ph.D. Associate Professor, Architectural Engineering, College of Engineering The Pennsylvania State University University Park, PA 16802 Researchers Jared Freer, Graduate Assistant Barbara B. Kinne, Research Assistant Michael H. Patullo, Research Consultant Jenna P. Stites, Research Assistant Carmen Strand, Research Assistant Michael Waldhier, Graduate Assistant ARC Project Number CO-15810-07 October 1, 2007–February 27, 2009 Final Report Submitted November 20, 2009 Project Director Gerald I. Susman, Ph.D. Smeal College of Business The Pennsylvania State University 814-863-0448 TABLE OF CONTENTS Data Dictionary ................................................................................................................................5 Executive Summary .........................................................................................................................6 Phase I. Industry Market Structure, Forecast, and Potential: Part 1: The Solar Industry................................................................................................................8 Demand for Solar Energy ....................................................................................................8 Solar Energy Technologies ................................................................................................10 Markets and Applications ..................................................................................................10 Industry Participants ..........................................................................................................12 Photovoltaic (PV) Supply Chain ........................................................................................16 Competitive Strategies .......................................................................................................17 Strategic Groups.................................................................................................................21 Future Directions ...............................................................................................................25 Part 2: The Wind Industry Demand for Wind Energy ..................................................................................................27 Policies that Stimulate Demand for Wind Energy .............................................................27 Wind Energy Systems ........................................................................................................30 Markets and Applications ..................................................................................................31 Industry Participants ..........................................................................................................32 Wind System Supply Chain ...............................................................................................35 Competitive Strategies .......................................................................................................40 Industry Evolution .............................................................................................................48 Future Directions ...............................................................................................................50 Phase II: Solar and Wind Energy Industry Participation within the Appalachian Region Introduction ........................................................................................................................52 NAICS Codes to Identify Potential Firms and Employment in Solar and Wind Industries .................................................................52 Part 1. Pattern of Manufacturing Activities and Potential Employment in Appalachia ....54 Part 2. Identifying and Surveying Firms Involved in the Solar and Wind Industries ........58 Analysis of Survey Results ....................................................................................68 Part 3. Review of the Policy Landscape in the Appalachian Region .................................77 Demand-Side Incentives ....................................................................................................78 Supply-Side Incentives ......................................................................................................82 Novel Policy Strategies ......................................................................................................83 Major Findings and Observations ..................................................................................................85 Bibliography ..................................................................................................................................91 2 List of Tables Table 1 Shipments of PV Cells and Modules by Application (peak kilowatts) ...........................11 Table 2 Shipments of PV Cells and Modules by Market and Type (peak kilowatts) ...................12 Table 3 Materials, Components, and Equipment Suppliers in Appalachian Counties .......14 Table 4 Distributors/Installers in Appalachian Counties ....................................................15 Table 5 Plant Locations of Top Fifteen Cell Manufacturers ..............................................18 Table 6 Worldwide MW Additions, Plant Locations, and U.S. Installations of Top Ten Wind Turbine Manufacturers in 2008 .................................................33 Table 7 Wind Turbine Suppliers and Locations .................................................................37 Table 8 Component and Equipment Suppliers in Appalachian Counties ...........................39 Table 9 Product Line Range of the Global Top-Ten Turbine Manufacturers ....................41 Table 10 Size Distribution of Turbines from 1998–2007 .....................................................42 Table 11 R&D as a Percentage of Sales for Top-Ten Turbine Manufacturers .....................45 Table 12 NAICS 2007 Codes of Solar and Wind Industry Participants ...............................62 Table 13 Founding Years of Responding Firms ...................................................................69 Table 14 NAICS 2007 Codes of Survey Respondents .........................................................70 Table 15 Sectors Served by Founding Years of Responding Firms .....................................71 Table 16 Position in the Supply Chain..................................................................................71 Table 17 Products/Services Provided by Survey Respondents, by Sector ...........................72 Table 18 Preparedness of Employees for Participation in the Solar or Wind Industry ........75 Table 19 Renewable Portfolio Standards in Appalachian States ..........................................78 Table 20 Tax Incentives that Apply to Solar and/or Wind Installations, by State ................79 Table 21 ARC State Grant and Loan Programs Applicable to Solar and/or Wind ...............80 Table 22 Profile of Typical Established and Emergent Firms ..............................................87 List of Figures Figure 1 PV Solar Supply-Chain ..........................................................................................17 Figure 2 Strategic Groups––PV Solar Industry ....................................................................24 Figure 3 Supply-Chains for Two Major Wind System Components ...................................36 Figure 4 Strategic Groups in the Wind Industry – 2004 ......................................................49 Figure 5 Potential Renewable Energy Manufacturing Employment in ARC Counties (by State) ................................................................................................................55 Figure 6 Total Establishments with Renewable Manufacturing Potential in ARC Counties (by State) ...................................................................................55 Figure 7 Counties with Potential Solar Manufacturing Jobs over 500 .................................56 Figure 8 The Number of Firms and Components for Counties with Potential Solar Job Totals over 500 ......................................................................................56 Figure 9 Counties with Potential Wind Manufacturing Job Totals over 1,000 ....................57 Figure 10 Number of Firms and Components in Counties with Potential Wind Manufacturing Jobs over 1,000 ....................................................................57 Figure 11 Phase II––Construction of Firm Database .............................................................60 Figure 12 Collection of Firms ................................................................................................61 3 List of Maps Map 1 Potential Participants in Solar and/or Wind Industry ............................................64 Map 2 Participants in Solar and/or Wind Industry ............................................................65 Map 3 Manufacturers in Solar and/or Wind Industry .......................................................66