Editor’s note: The following data was originally collected and analyzed as part of the 2017 Real Jobs Rhode Island Planning Grant, in which Camoin Associates partnered with the North Kingstown Rhode Island Chamber of Commerce, Mayforth Group, and New Commons to assess workforce capacity and readiness within Rhode Island by defining the competencies for an emerging wind energy technology workforce.
A rapidly growing industry sector.
The wind power industry within the United States is considered a growing industry; in other words, it is an industry not yet at maturity, and one that is not showing any signs of decline. Characteristics of a growing industry include industry revenue growth being greater than the national economy, new companies entering the market, and consumers accepting and demanding the product or service. Additional signs of a growing industry are rapid technology change and innovation as well as high growth particularly in economic importance and demand.
That pretty much sums up what is happening in the Wind Energy sector.
In 2016, the U.S. wind power industry generated $8.5 billion in revenues, resulting in $1.3 billion in profits. The industry also grew 11.6% annually from 2011 through 2016, and is projected to continue growing through 2021 at an annual growth rate of 18.4%. We dig deeper into the sub-sectors driving this growth at the end of this article.
So, what’s causing all this growth?
- The wind power industry has recently received significant support and assistance from both federal and state governments. At the federal level, specific laws have been enacted over the past five years to stimulate growth and innovation. One of the most beneficial incentives being the Production Tax Credit (PTC), which brought down the cost for utilities to transmit energy from wind farms. With this credit, initial project costs decreased, which increased profit margins and subsequently allowed for innovation to efficiently and effectively manufacture wind turbines at a lower cost. In addition to federal incentives, state governments have also been supportive of wind energy initiatives. Twenty-nine states and the District of Columbia have renewable energy portfolio standards that force all electricity-generating utilities to diversify the way which they transmit electricity, thereby prioritizing renewable energy sources
Another external driver for promoting wind energy is the simple fact that people in the US are consuming more electricity than they have historically. Therefore, rising levels of electricity consumption lead to a higher demand for renewable energy.
Since people are consuming more electricity, meaning the demand for electricity is high, this drives up the price of electricity. Higher prices for traditional electricity make consumption of wind powered electricity more desirable for consumers and cost-competitive with traditional forms.
- Lastly, turbine manufacturing input prices have decreased. More specifically, the price of steel has decreased. Lower steel prices result in lower costs for manufacturing turbines, which allows producers to generate wind energy at a lower price.
The support from federal and state governments, coupled with the acceptance and demand from consumers, has helped to promote growth in the wind energy industry over the past five years. The industry is projected to continue expanding and maturing, especially with growing concerns about rising greenhouse gas emissions putting more interest and demand on renewable energy resources.
States that have taken advantage of abilities to operate wind farms have seen substantial employment growth. For example, Texas, having ranging open space to hold wind turbine farms, houses the most wind power nationally, with a yearly wind capacity of nearly 18,000 MW. Due to the wind farms, overall industry employment increased at an annualized rate of 9.4% and added nearly 5,000 workers over the past five years. With significant opportunities for job growth, this industry may become more desirable. Innovation is also projected to help further decrease the costs of manufacturing wind turbines, therefore decreasing overall costs and increasing potential profits. Not only is the overall wind industry projected to grow, but new opportunities are continuing to emerge for offshore wind projects. Our research tells us that long awaited offshore wind projects are becoming more operational and highly desirable.
A look at the 5-year trends in wind energy and related sub-sectors.
As noted above, the wind energy industry has shown significant growth across the United States. As part of our work with Real Jobs Rhode Island, we wanted to understand the economic conditions around the sector; which means, looking at how individual industry sub-sectors related to wind energy are performing. So, we used Emsi data to create a group of sub-sectors related to the wind energy industry.
When analyzing the data below, it is important to note that the wind-related industries listed do not necessarily commit all job numbers to wind related activities, instead we build this group to better understand the operating environment for the wind industry. In other words, the expansion of the wind industry will certainly require jobs within the Engineering Services industry; however, not all 989,552 jobs within the Engineering Services industry are doing work related to wind energy.
The data shows that over the past five years, the U.S. saw growth of 9%, an increase of nearly 275,000 jobs within various wind energy related industry sectors. The two wind-related sectors with the highest number of jobs in both 2012 and 2017 are Engineering Services and Electrical Contractors and other Wiring Installation Contractors. Each sector has nearly a million jobs each in 2017.
Arguably, the most noteworthy industry in the grouping is Wind Electric Power Generation, which has the lowest number of jobs of the grouping, only providing about 5,000 jobs in 2017. However, this sector has shown the most significant growth in number of jobs over the past five years, increasing by 60% since 2012.