MADE IN MICHIGAN
Astraeus Wind Energy Inc. was designated as a Center of Energy Excellence in 2010 to focus on advanced manufacturing techniques involving exotic materials and wind turbine blades, but the company has seen work slow as doubts rise that a key alternative energy incentive will continue. Astraeus is a close partner to Dowding Industries, a manufacturer in Eaton Rapids, Mich., that specializes in heavy equipment, transportation and wind energy components.
MICHIGAN — While politicians debate about the federal renewable energy production tax credit, some manufacturers think everyone is missing the point. The conversation isn’t about green energy, they say, it’s about innovation.
At least, that’s how Jeff Metts, president of Astraeus Wind Energy Inc., sees it.
Based in Eaton Rapids, Astraeus is a partnership between Dowding Industries and MAG Industrial Automation that works cooperatively with Dow Chemical Co. and Oak Ridge National Laboratory to develop technologies specifically for wind turbine component manufacturing.
The partnership allows Astraeus to focus on developing automated manufacturing processes for wind components using specialized carbon fiber and composite material and to work on the development of those new materials.
According to Metts, production at Astraeus has ground to a halt because of political wrangling over extending the 2.2-cent tax credit, which wind energy companies receive for every kilowatt-hour of electricity they produce from wind. The credit expires Dec. 31 and has become a national political hot potato. President Obama is advocating for its extension, while Republican challenger Mitt Romney wants the credit to sunset.
“Because installers need to have turbines in place in December, suppliers were done in March,” said Metts. “We’ve seen orders drop to zero in the last six months.”
Astraeus is not alone. According to the American Wind Energy Association, the domestic wind industry’s more than 500 manufacturing facilities across the U.S. are going through uncertain times. The manufacturers are on hold to see if they will have to retool and change industries to remain in business, and that uncertainty is stifling innovation and putting the brakes on the industry’s $15 billion in average annual private investments, said Elizabeth Salerno, the association’s chief economist.
While Metts has been able to continue to use the employees for other work at Dowding, he is frustrated by what he sees as politics stifling innovation and job creation. Currently, Metts is employing around 200 people, none of whom are working on wind projects. According to Metts, that number of employees would double if his company were still supplying parts to turbine manufacturers.
“This discussion is slowing the entire process down and allowing an opportunity for the rest of the world to catch up to us,” said Metts. “Why risk employment for political gain?”
AWEA’s Salerno agrees with Metts that jobs are at stake when it comes to the expiration of the production tax credit.
“With the pending expiration of the PTC, it sends the wrong signal to manufacturers. It sends a signal of uncertainty,” Salerno said. “There are jobs at risk because there has been a lot of growth in the wind industry in the past five years, and not just in turbine manufacturers, but also suppliers with specific sets of expertise.”
According to Salerno, this instability is causing many current manufacturers to think twice about remaining in the wind industry.
“When the policy ends in five months, manufactures have to make a very hard decision: stay in wind or do they make an alternate decision,” Salerno said. “Originally, the PTC sent manufacturers the signal that this market (wind energy) is growing, and companies transitioned out of other things.”
Now, however, many manufacturers like Dowding Industries are shifting back to manufacturing for sectors other than the wind industry, and many are not sure if or when they will return to wind. Even if the PTC is extended after elections are over, Metts doesn’t think politicians appreciate the difficult position manufacturers are in.
“Manufacturing can’t wait,” said Metts. “Turning the key on and off is a whole lot harder than simply turning a key.”
In addition to disrupting manufacturing operations, Metts also credits the uncertainty about the PTC as detrimental to innovation in manufacturing techniques and developing new materials. Metts sees the challenge of converting to renewable energy resources as similar to the challenge of landing on the moon: useful in itself, but providing ancillary benefits that outweigh achieving the goal.
“There will be things we get out of developing wind turbines that we aren’t even aware of yet,” said Metts. “The advances in production techniques will be like going from hand (machining) to CNC (machining). The PTC is allowing these new technologies to advance. It’s a huge picture economically when you begin to look at production techniques.”
Even if the federal PTC is allowed to expire, there is a chance that forces at the state level will change the playing field come November. The Michigan Clean Renewable Electric Energy Standard, colloquially known as the 25 x ’25 initiative, is a ballot proposal to amend the Michigan constitution and mandate that electric providers produce 25 percent of their retail energy from renewable sources beginning no later than 2025.
The amendment could give manufacturers an added boost to ensure that the wind industry continues to grow in Michigan. Wind turbine manufacturers typically make and source their parts close to final product destinations to save on the costly transportation of the large pieces.
However, some within the manufacturing community don’t see the amendment as a good idea.
Mike Johnston, VP of government affairs at the Michigan Manufacturers Association, doesn’t think the ballot initiative will be good for manufacturing in the end. Johnston said MMA does not support the 25 x ’25 ballot initiative, instead preferring the existing 2008 statute that passed with bipartisan support. Current law mandates that utilities produce 10 percent of Michigan’s energy from renewable resources by 2015.
“Energy policy ought to remain a statutory animal, not become a constitutional issue,” said Johnston.
However, the association has embraced the federal production tax credit.
“The MMA has been supportive of the (federal) PTC,” he said. “In the end, it encourages green energy and wind manufacturers.”
AWEA’s Salerno is hopeful that the PTC will be extended and that manufacturers will have the confidence to continue to expand and grow the industry.
“By having sustainable growth, that’s enough of a signal to domestic manufacturers to convince them it’s safe to expand,” said Salerno.
For the time being, though, Metts and Astraeus will just have to wait and see.
“We’ve had all kinds of very strong projections for the future,” said Metts. “We’ve been doing some prototype work in the hope that things will turn around.”