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Exporters are starting to feel squeezed by the looming year-end lapse of the production tax credit (PTC), with layoffs and factory closures across the component subsector being caused by congressional indecision over extending the PTC. This offers $0.22/kWh for the first ten years of wind projects.

Shrinking loans

A further outcome for a reducing US supply chain is smaller loans from the Export-Import (Ex-Im) Bank - a federal agency mandated in part to finance exports of US-made wind equipment - because of a sliding-scale provision tied to domestic content. The bank provides 85% of costs for products with 85-100% US content. But as content ratios decline, so do the loans. Nacelles, blades and towers with only 50% domestic content are eligible for loans equaling only 50% of the equipment's value.

The timing is unfortunate. Ex-Im Bank's financing for renewable-energy equipment increased to more than $700 million in 2011 and 2013 from $100 million in 2008. US exports of wind equipment have grown from $22 million in 2008 to $149 million in 2011, according to a government study by the US International Trade Commission. And the figure for this year's first quarter alone is $83 million. Markets in Canada and Latin America - the biggest importers of US-made wind equipment - are expected to account for 8.3% of global installations by 2015, up from 5.3% in 2011.

"OEMs are looking for other markets and other ways to stay afloat while the US essentially abandons policy at the federal level," said Matt DePrato, a wind-energy analyst at IHS Emerging Energy Research. "But the supply chain is very threatened and the light has almost gone out at some levels - especially in the near term."

Ex-Im Bank offers project-friendly terms that include 18-year fixed-rate loans at 2.82%. Since 2009, the bank has financed a 67.5MW Clipper project in Mexico, along with LM Wind Power blades in Brazil, Northern Power turbines in Italy and Gamesa turbines for Honduras and Uruguay.

More deals are planned and last month Ex-Im announced $2 billion in financial support for South Africa's renewable-energy sector, which plans to install 3.6GW by 2016.

"Ex-Im Bank's mandate is not to make a profit," said Craig O'Connor, director of the bank's office of renewable energy and environmental exports. "Ex-Im Bank will be the most cost-effective source of financing for US-made goods and services in the world. We're an active tool in the arsenal of US suppliers to wind projects."

Latin America

Gamesa's 102MW Honduras development involved 51 turbines and a $159 million loan, delivering the country's first utility-scale project when inaugurated in February. The 50MW Uruguay project, scheduled for 2013 construction, will keep staff working at the company's Pennsylvania blade and nacelle plants despite a lack of domestic orders. The US arm of Spain-based Gamesa has additional Latin American deals pending with Ex-Im.

"By exporting we are actually helping the US trade balance," said David Rosenberg, Gamesa's North America marketing and communications vice-president. "But if our suppliers are shut down or go out of business, that's going to have a direct impact on our ability to export."

The results could be tragic. The July report, US Wind Turbine Export Opportunities in Canada and Latin America, notes that domestic OEMs are positioned to capture growing Canadian and Latin American markets in large part because transportation costs are much lower than for faraway competitors in Europe, China and elsewhere.

Local components

The report adds that, although target markets in the Canadian provinces of Ontario and Quebec maintain significant local-content requirements, the Canadian pipeline for US firms totals about 3.6GW - and content quotas can often be met by adding locally sourced components.

Brazil, Latin America's largest wind-power market, is described as a limited opportunity for US exporters due to local-content requirements and a flurry of international OEMs expanding into the country. But the Mexican market is growing rapidly, with more than 450MW completed in the first quarter of 2012 and annual installations expected to reach 600MW next year.

Other Latin American markets are also thriving and offer US manufacturers various opportunities, according to the report. New policies that encourage development of wind power, along with rising electricity demand and excellent wind resources, provide encouraging signs. The report does however point to potential problems, including poor grid infrastructures, a shortage of skilled personnel and utilities largely unfamiliar with wind power.