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TUMCS, University of Maryland, University of Cambridge | PM | 01.09.2020

Multiple Cities, August 31, 2020—A new study published today in Nature Energy, Effects of technology complexity on the emergence and evolution of wind industry manufacturing locations along global value chains, examines the relationship between characteristics of wind turbine technology and the manufacturing location for various components of the turbine—from high-complexity components, such as blades and gearboxes, to low-complexity components, such as towers and generators. The study finds that what gets manufactured and where it gets manufactured depends largely on the complexity of the turbine component and the knowledge required to manufacture that component.

Led by Prof. Kavita Surana, Assistant Research Professor at the Center for Global Sustainability, University of Maryland, with co-authors Prof. Claudia Doblinger, Assistant Professor of Innovation and Technology Management, Technical University of Munich; Prof. Laura Diaz Anadon, Professor of Climate Change Policy, University of Cambridge; and Prof. Nate Hultman, Director, Center for Global Sustainability, the paper maps the global value chain of wind energy manufacturing. The authors first developed a first-of-its-kind dataset of the 9 major components that comprise a wind turbine and traces the origins of these components to nearly 390 component suppliers and 13 original equipment manufacturers involved in the wind technology global value chain from 2006 to 2016. Using this dataset, they evaluate the relationship between the wind technology component complexity and the geographical location of manufacturing over time.

The analysis finds that many countries with installed wind capacity have developed a manufacturing base with local suppliers. However, the emergence of the supply chain, particularly in the developing world, has been for manufacturing low-complexity components. The manufacturing of high-complexity components has been limited to only a few countries, primarily industrialized countries, that tend to work with few local original equipment manufacturers (i.e., the large companies that assemble and sell the full turbine). The study also finds that low-complexity manufacturing does not necessarily lead to higher-complexity manufacturing of more advanced products over a period of 5 years.

“Countries increasingly aim to expand renewable energy generation to meet climate and energy goals, but they also must address other goals related to economic development, such as developing local supply chains, fostering new industries, and generating attractive, high-skill jobs. Our findings point towards the need for policy design that integrates clean energy deployment policy with more targeted policies for manufacturing and industry development” says Kavita Surana from the University of Maryland.

“We look at turbine components and the suppliers that manufacture them, two aspects that are central to both energy and industry,” says Claudia Doblinger from the Technical University of Munich. “The differences in the complexity of components reflect differences in the knowledge, skills, infrastructure, and financial capacity required for manufacturing them. The companies that manufacture these components are often small to medium-sized businesses, a key employer in many countries”.

“We documented the emergence of manufacturing of simpler (less complex) wind components in a wide range of countries over the 2006-2016 time period. However, during this time period, we find much less evidence of countries being able to upgrade to manufacture more complex components. Clean energy manufacturing, like many other modern technologies, involves global value chains. Yet, this has been a neglected area of research, particularly given the current policy interest on green growth and recovery. ” says Laura Diaz Anadon from the University of Cambridge. “Our research is an important first step, but it only skims the surface of implications for developing countries and how integrated policy can successfully address energy, climate, and economic goals.”

“Many countries want to encourage domestic clean energy manufacturing. But our understanding of how a country could start from specializing in something simple, like a steel tower and move into higher-value areas of manufacturing has been murky at best” says Nate Hultman from the University of Maryland. “Our analysis shows how technology complexity influences both the emergence and evolution of suppliers, as well as the location of manufacturing. The work has implications for countries interested in not only the entry points for clean energy technology manufacturing but also the potential importance of policies for those interested in moving along a trajectory toward higher-value products.”

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