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U.S. Cleantech Industry Grows, Green Jobs Expand into New Markets

Manufacturers in the U.S. clean-energy industry, which is expected to grow rapidly, are looking for new markets, low costs, and top talent. Which locations can satisfy those needs?

Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting  and Dustin Gellman, Senior Consultant, Global Expansion Optimization Group, Deloitte (Apr/May 10)
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Particularly with solar production - which will likely be more widespread than wind industry production - we expect local programs to strongly influence siting decisions. For example, Pennsylvania has allocated nearly $240 million toward consumers, and $430 million for clean energy projects and economic development. Thus far, the state has attracted upwards of $800 million in private investment.

Ontario, Canada, went even further with its public policy: in 2009, the province introduced an aggressive feed-in tariff to promote solar, wind, water, and biomass projects; it offers owners above-market rates for producing electricity. The stipulation: upwards of 50 percent of the goods and services used in the project must come from Ontario. The role and impact of relevant incentives in the United States will strengthen, as companies will compare the business case to manufacture within the United States vs. other countries such as Mexico, Singapore, Malaysia, or Eastern Europe.

Finally, half the respondents cited various perceived risk factors - political, economic, and labor market - as critical location-drivers, which certainly aligns with our recent experience. Several Deloitte clients openly expressed concern for locating in communities with high perceived potential for labor disputes, uncertain government policies and budgets, and natural disasters. Circumstances that could potentially hinder speed to market and operational success simply aren't worth the risk.

Beyond Solar and Wind
Cleantech and clean energy extend far beyond solar and wind - and include emerging technologies that promise to deliver everything from pure water to smarter electric grids to cleaner coal. One sector poised for significant growth is advanced batteries. As automakers gear up to produce pure-electric cars, the U.S. federal government is helping to fund development of this essential component. While Asian companies have long dominated battery manufacturing, the Obama administration announced that it would invest $2 billion to boost domestic production. Figure 6 summarizes a portion of ARRA funding for battery manufacturing announced in August 2009.

Michigan's aggressive efforts to evolve and revive its ailing auto industry have attracted over $4 billion in private and public investment in lithium ion batteries. According to Bob Metzger of the Michigan Economic Development Corporation, the state will gain over 14,000 related jobs by 2014 - a meaningful boost to one of the states hardest hit by the recession. Just as makers of wind turbines are locating close to the wind farms, battery makers are expected to locate in close proximity to auto manufacturers - primarily in the Midwest and Mid-South.

Looking Toward the Future
During the next decade, the U.S. clean-energy industry is expected to grow rapidly and solidify its position as a significant contributor to the economy. At the federal level, public-policy decisions made in the next few years will play a critical role in determining whether the United States exports or imports clean-energy technologies.

As manufacturers enter the U.S. market or expand existing facilities, traditional geographic factors such as labor cost and availability, logistics, and manufacturing infrastructure will undoubtedly influence location decisions. However, clean-energy companies are still highly motivated by incentives and grant programs to fund initial growth. Communities that develop targeted, proactive strategies for leveraging their core strengths and targeting specific sub-sectors should fare well attracting clean-energy manufacturers and have a distinct competitive advantage as these companies expand.


Phil Schneider, Partner in the Global Expansion Optimization Group of Deloitte Consulting LLP, also contributed to this article. In recent years, Deloitte Consulting has played an active role helping clean-energy manufacturers expand. Since 2007, we have helped clean-energy manufacturers select locations for over $9 billion in capital expenditures for domestic and global deployment projects creating more than 6,000 jobs.

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You mention that communities that develop targeted, proactive strategies should fare well in attracting cleantech. Can you provide an example of a city or community strategy?
A few communities immediately spring to mind. Austin, TX is near of the list for a few reasons... More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting
Of the various ways to lure new cleantech business in, what seems to work best when it comes to incentives - grants, tax credits, feed-in tariffs, rebates, other creative financing?
At a national level, Feed-in-Tariffs (FiT) have proven to work in other countries, such as Germany, Spain, and Japan. At a State and local level, "cash is king"... More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting
As cleantech is an emerging industry, business and skills are still being defined. From which labor pool should cleantech companies draw when hiring, i.e., is there some field of expertise that lends itself to being a cleantech expert with some additional training and education?
A natural labor pool is from the semiconductor cluster especially at engineer level for solar wafer and solar cells manufacturing plants. More
- Olaf Babinet, Senior Manager, Global Expansion Optimization Group, Deloitte Consulting

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