Syracuse University Magazine


Research Snapshot

Project: Economic Impacts of Emerging Clean Energy Industries: Jobs and Wages in the Wind Energy Global Value Chain

Investigator: Jason Dedrick

School: Information Studies

Sponsor: Alfred P. Sloan Foundation

Amount Awarded: $124,775 (2011-13)

Background: Should the United States continue to support the wind energy industry? Existing policies include a federal Production Tax Credit (PTC), which pays wind generators 2.2 cents per kilowatt-hour produced, and state laws mandating a certain amount of electricity be supplied by renewable energy sources. These policies have helped U.S. wind generation grow rapidly and driven investment in a domestic manufacturing base. Yet they are criticized by some as being too expensive and distorting energy markets.  

To understand the value of the wind industry in the United States, iSchool professor Jason Dedrick and colleagues Kenneth L. Kraemer and Greg Linden have been examining such industry-related issues as cost, economic impacts, and innovation. They developed an adjusted cost model to compare the full cost of wind versus other energy sources, particularly natural gas. The adjusted cost adds the cost of carbon emissions to fossil fuels, and the cost of intermittency to wind energy (the cost of providing backup energy when wind speeds drop). Since there is a range of estimates for both carbon and intermittency costs, they use a high and low estimate for each. The figure pictured below compares the cost of wind and gas under high and low cost scenarios for carbon and intermittency. The dashed lines represent the lowest adjusted cost for each source. While wind is more expensive than natural gas on average, there are many scenarios in which wind is competitive with natural gas.

Regarding the industry’s economic impacts, their research shows the U.S. industrial base for wind has grown rapidly, with domestic content reaching 65 percent for wind equipment, compared to 35 percent a decade ago. The industry now supports 30,000 jobs in the United States and about 9,000 more outside the country. Many of these are relatively well-paying manufacturing and construction jobs, along with many professional and engineering positions.

Another case for supporting wind is to encourage U.S. leadership in an emerging energy technology. This requires having a market to support domestic R&D, particularly by domestic companies. They’ve found that European turbine makers have set up manufacturing in the United States, but do most R&D in their home countries. By contrast, General Electric does most of its R&D and product design in the United States.  The majority of GE’s wind business is in this country, so a sizable U.S. market is vital to its continued innovation in wind technologies.

Impact: Dedrick and his colleagues conclude that it makes sense to provide continued support to the wind industry to develop a clean, affordable energy source that creates jobs and supports technology investments in the United States. In their view, renewable standards should be ration­alized across states, and the PTC should be extended to compensate for the cost of carbon emissions that are not captured in the market price of fossil fuels. However, the PTC should be gradually phased out so the wind industry is forced to innovate and stand on its own.