The wind turbine manufacturing industry experienced dramatic declines over the past five years due to uncertainties regarding the federal government production tax credit (PTC), according to a report from IBISWorld. 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 the wind turbine manufacturing industry revenue to fall at an annualized rate of 4.8% over the five years to 2014.
“The industry experienced a sharp decline in revenue in 2010, due to prolonged economic malaise and dismal investor confidence,” said Lucas Isakowitz, industry analyst.
In addition, the Advanced Energy Manufacturing Tax Credit 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.
For more information, visit www.ibisworld.com.