Tax incentives and other federal aid helped the U.S. wind industry increase new installed capacity to a record 9,922 megawatts in 2009, but the boom did not extend to the manufacturing sector—a key goal of the Obama administration.

While the administration repeatedly has justified renewable energy subsidies on the grounds that they would create more jobs for Americans, officials with the American Wind Energy Association (AWEA) said January 26 that investment in U.S. wind turbine manufacturing declined last year and that overall wind industry employment remained flat only because of an uptick in turbine installation jobs.

However, AWEA officials said the federal clean energy aid provided by the administration’s American Recovery and Reinvestment Act (ARRA) clearly averted a feared drop in wind farm installation. Prior to ARRA, wind industry officials had warned that 2009 wind power development might drop by as much as 50 percent from 2008 levels due to the financial crisis, which pummeled the banks and investment firms that previously were the industry’s biggest backers.

However, the ARRA incentives instead led to a 39 percent increase in the nation’s wind energy fleet last year, with total U.S. capacity rising to more than 35,000, according to a report issued by AWEA on Jan. 26.

Wind still accounts for only about 2 percent of total U.S. power generation, but AWEA said it was the second biggest source of new U.S. electricity generation in 2009, trailing only natural gas–fired plants. Wind remains the hottest generation sector in terms of growth, expanding at an average annual rate of 39 percent between 2003 and 2008.

In contrast, AWEA officials said the wind manufacturing sector declined, with one-third fewer wind component plants announced, expanded or coming on line in 2009 compared to 2008. “The result was net job losses in the manufacturing sector,” AWEA said in its report.

The trade association said the slump was partly due to high inventories, which dampened demand.

However, AWEA also cited “the continuing lack of a long-term policy and market signal” as a major contributing factor, and said that could only be remedied by adoption by Congress of national renewable energy deployment requirements for utilities.

“We need to set hard targets, in the form of a national renewable electricity standard, in order to provide the necessary stability for manufacturers to expand their U.S. operations…,” AWEA Chief Executive Officer Denise Bode said in a statement.

Not mentioned by AWEA was the politically sensitive issue of foreign turbine manufacturers providing many of the components used in U.S. wind farms. A review of 2009 projects issued by AWEA shows Siemens, Vestas, Suzlon, Repower and Mitsubishi and other foreign manufacturers accounting for the lion’s share of U.S.-installed turbines, with GE Energy the only U.S. manufacturer holding significant market share, along with a lesser position for Clipper.

It would appear that fledgling U.S. turbine manufacturers face a tough situation in trying to compete for business—especially with large and established European competitors—but the use of foreign turbines in U.S. projects is increasingly drawing the ire of U.S. lawmakers and some states are setting domestic content requirements in their renewable energy deployment standards.

The administration sought to bolster the U.S. clean energy manufacturing sector this month by announcing some $2.3 billion in tax incentives for plants making renewable energy or efficiency equipment, with President Obama saying such aid will help secure more long-term, high-paying clean energy jobs for Americans.

AWEA’a report also showed that Texas has lengthened its lead over other states in 2009 in installed wind capacity. The Lone Star state added 2,292 MW in 2009, bringing its total to 9,410 MW.

The second-ranking state, Iowa, trails far behind with 3,670 MW, with 879 MW added last year. California is third in total capacity with 2,794 MW, but added only 277 MW in 2009. Rounding out the top five are Washington, which at 1,980 MW overtook Minnesota, at 1,809 MW.

Other fast-growing wind states are Indiana, which added 905 MW last year; Oregon, which added 691 MW; and Illinois, which added 632 MW.

—George Lobsenz is editor of The Energy Daily, a sister publication of MANAGING POWER, where this article was first published. Date references have been updated.