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A photo of wind turbine blades being transported by a train through a city.

As technologies continue to advance in U.S. wind manufacturing, larger blade designs may, in turn, increase manufacturing opportunities. Because transportation is complicated, larger blades are typically manufactured near the area of use. Photo by Dennis Schroeder, NREL

Assessing R&D Opportunities for Clean Energy Technologies

NREL sees opportunity for the United States to use and manufacture clean energy technologies, which can improve the environment and our economy.

Federal and state governments are enacting policies to encourage adoption of renewables to fulfill the dream of a clean energy future. An expanded line of NREL analyses aims to answer questions about manufacturing clean energy technologies, shedding insight not just on integration of renewables, but also on where those technologies are likely to be built.

What's in a Location?

When considering manufacturing, what drives a factory location decision?

Conventional wisdom says it's often lower labor costs. But that's not necessarily true in the case of solar photovoltaic (PV) panels. A study by NREL and the Massachusetts Institute of Technology found that production scale—not labor costs—create the current advantage for China in the manufacturing of PV energy systems. In addition, Chinese manufacturers have preferred access to capital, and the scale of production helps create a supportive supply chain that helps sustain the industry.

"There is considerable misunderstanding in the global PV industry today about the difference between production cost and sales price, leading to many bad investment decisions," said Paul Basore, who transitioned to a leadership role at NREL following a career in the solar industry. "By defining and focusing attention on the minimum sustainable price of PV-module manufacturing, [NREL and the Massachusetts Institute of Technology] provide a sound basis for decision making by both industry and government."

Harnessing the Power of the National Laboratories

This map uses colored circles to demarcate large global manufacturing centers. Currently, LIB manufacturing is concentrated in Asia, where manufacturers primarily serve consumer electronics markets. This is indicated by several blue, teal, and yellow circles on the map. In the United States, the large yellow circle indicates planned output from Tesla Motors’ Gigafactory, which would be a significant share of production of LIBs, especially for automotive applications.

Planned output from Tesla Motors' Gigafactory, indicated by the yellow circle, will give the United States a significant share of production of LIBs, especially for automotive applications. LIB manufacturing is currently concentrated in Asia, where manufacturers primarily serve consumer electronics markets.
Illustration by Billy Roberts, NREL

What about manufacturing clean energy technologies like wind turbines and batteries for electric cars? Some wonder if the United States can still compete. According to NREL's Margaret Mann, who leads teams conducting manufacturing-related analyses, the answer is a resounding yes.

"The United States is still a global leader in manufacturing. In 2011, U.S. output was higher than the combined output of Brazil, Russia, Italy, Germany, and Korea," said Mann. "There is undoubtedly still opportunity here, and it's important for the United States to remain competitive in manufacturing." And, as Mann points out, research and development (R&D) activities tend to cluster around manufacturing centers, so continued capability in manufacturing supports continued capability for innovation.

This is where NREL's new Clean Energy Manufacturing Analysis Center (CEMAC) comes in. Funded by the U.S. Department of Energy's (DOE's) Clean Energy Manufacturing Initiative and operated by the Joint Institute for Strategic Energy Analysis, CEMAC harnesses the world-class talent of the DOE national laboratory network in partnership with industry, universities, and research affiliates to provide objective insights. These insights can then be leveraged by decision-makers to inform investment strategies, policy, and other decisions, promoting economic growth and competitiveness in the transition to a clean energy economy.

"As we build on the foundational analysis that NREL has conducted on the cost of manufacturing PV technologies, and explore manufacturing opportunities for other clean energy technologies, we'll be able to better understand the manufacturing, as well as market deployment, economic, and sustainability benefits," said Mann.

DOE and the national laboratories are uniquely fitted to tackle analysis challenges in clean energy manufacturing. To date, national laboratories have pioneered manufacturing analysis for energy technologies, developed analytical models and methodologies, curated extensive input data, and trained experts in cost structures of clean energy technologies. In the process, the national laboratories have become equipped to house sensitive information and have earned the trust of industry and policymakers alike.

As it takes flight over the coming years, CEMAC seeks to establish itself as a primary source for credible and objective global clean energy manufacturing analysis. Ultimately, CEMAC seeks to provide data and insight that policymakers and industry can use to promote economic growth and the transition to a clean energy economy. Already, NREL is conducting manufacturing-oriented analyses for multiple technologies that span the portfolio of DOE's Office of Energy Efficiency and Renewable Energy. These include photovoltaics, automotive lithium-ion batteries (LIBs), heat pumps, and energy-efficient lighting.

"We are examining clean energy industry trends; cost, price, and performance trends; market and policy drivers; and the future outlook for these technologies," said Mann. "My hope is that we can continue to add manufacturing analysis to our way of thinking. This would allow us to provide insights to help DOE program offices and our other clients allocate their R&D funds in such a way as to increase the likelihood that clean energy technologies developed in the United States will be manufactured in the United States."

Industry Opportunities Abound

So where is the opportunity in these industries? Below are some examples from CEMAC's work:

  • Significant wind manufacturing capacity has been built in response to the growing domestic market, and recent manufacturing production levels exceed anticipated near-term domestic demand for select parts in the supply chain. As technologies advance, larger blade designs may increase U.S.-based manufacturing opportunities. Larger blades tend to be manufactured near the area of use because transportation is costly and difficult.
  • Potential growth of the electric vehicle market could create additional opportunity for U.S.-based manufacturers to also capture a portion of the automotive LIB market in certain economic conditions. NREL research indicates these conditions are feasible. Indeed, Tesla Motors, an American designer and manufacturer of electric vehicles, is already investing in domestic production of LIBs. Tesla's so-called Gigafactory, now under construction in Nevada, is scheduled to begin production in 2017. By 2020, Tesla estimates the factory will produce more LIBs than were produced worldwide in 2013. Tesla will use these batteries in its own electric vehicles and other applications, leapfrogging over the supply chain established elsewhere for consumer electronic devices. If Tesla achieves the anticipated production scale of its Gigafactory, the United States will be a dominant player in LIB production, as portrayed in the illustration.
  • Researchers in manufacturing competitiveness have found that developing a breakthrough technology, such as advanced automotive or stationary batteries, is more likely if innovation takes place alongside manufacturing. Manufacturing activity also supports establishment and growth of robust supply chains, which can be essential to manufacturers who wish to scale up production.

The U.S. economy is creating a growing demand for energy-efficient buildings, as well as cleaner vehicles and sources of energy. Growing demand makes NREL's work in manufacturing analysis all the more vital to national economic, environmental, and security objectives. According to Mann, "With insight provided by our manufacturing analysis, DOE, industry, and others can understand the global markets and trade flows for clean energy technologies, and from there see where opportunity may exist for U.S. leadership in the manufacturing and use of these technologies."

—Written by Kendra Palmer

NREL Analysis: Reimagining What's Possible for Clean Energy

Summer 2015 / Issue 8

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