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To Keep Clean Energy Manufacturing Booming, Sustain PowerAmerica and Manufacturing USA at DOE

[This post draws on David M. Hart and Peter L. Singer, “Manufacturing USA at DOE: Supporting Energy Innovation,” published by the Information Technology and Innovation Foundation in May 2018.]

Clean energy is booming, and clean energy manufacturing is booming with it. Regional clusters around the United States are well-positioned to benefit from this boom, which could be as powerful a driver for the manufacturing economy as the shale gas boom was earlier this decade.

If the United States is to win its fair share of highly competitive global markets for clean-energy goods, the public, private, and academic sectors must work together effectively. The Department of Energy’s (DOE) Manufacturing USA institutes, such as PowerAmerica, which is headquartered at North Carolina State University in Raleigh, foster the kind of collaboration the nation needs, accelerating innovation and building workforce skills.

However, federal funding for the Manufacturing USA institutes is currently required to sunset after only a few years. Congress and the executive branch should remove this restriction. DOE and other federal agencies should be allowed to fund the institutes on an ongoing basis, as long as private sector members continue to put in the lion’s share of each institute’s budget.

Global investors poured well over $300 billion into clean-energy goods in 2017, a figure that will grow exponentially in the coming years. Solar panels and wind turbines are just the tip of the clean energy manufacturing iceberg. It is a sprawling, diverse industry that includes goods like high-tech transmission lines and power electronics that transport and control the flow of energy as well as produce it. 

Countries around the world understand clean energy manufacturing’s strategic importance. Staying at its cutting edge is vital to national security and the environment as well as the economy. That’s why China, the European Union, the United Kingdom, and India have established expansive policies to bolster their industries.

The United States joins this global contest with considerable strengths. It remains the world leader in science and technology. It has a vast ecology of manufacturing companies of all sizes. It encompasses many regions with unique specialized capabilities. The American manufacturing workforce is highly-skilled and flexible.

But to take full advantage of these strengths in an industry as dynamic and competitive as clean energy manufacturing, the key players in a region or across a supply chain must collaborate. All too often, these players – big and small companies, research universities and community colleges, and governments at all levels – take a narrow and myopic view of their interests. The common interest – the whole greater than the sum of the parts – is lost and with it, jobs and economic opportunities.

Manufacturing USA is a platform for collaboration. Established through bipartisan legislation in 2014, it targets key technologies, builds partnerships that span diverse interests, and provides opportunities for workers to upgrade their knowledge and skills.

PowerAmerica, which targets power electronics, is a case in point. Power electronic devices, which control energy flows in the power grid, electric vehicles, and industrial machinery, are fundamental building blocks of the clean energy economy. PowerAmerica unites a varied group of fifty member organizations around the mission of reducing the cost and accelerating the adoption of new power electronic devices. Member company John Deere, which worked with PowerAmerica to design an inverter for its hybrid front end loader, credits the effort with shaving five years off the technology’s development.

PowerAmerica was founded in early 2015 with $70 million from DOE, which was matched by its private sector members, academic partners like NC State, and the North Carolina state government. PowerAmerica’s membership has grown over the past three-plus years, and the institute has begun to earn money by offering professional education courses. It is gamely executing a plan to try to achieve self-sufficiency in the year and a half that remains before its initial DOE funding expires. But it is an uphill fight.

Why? Innovation, especially in manufacturing industries, is slow and uncertain. Building trust among partners who haven’t worked together in the past is difficult. Governments abroad are realistic about these challenges and provide ongoing support to programs that do for their countries what Manufacturing USA does for ours.

Ongoing federal support would solidify the emerging bonds among PowerAmerica’s members. It would ensure that the institute continues to serve the national interest and look out for small manufacturers and workers. If federal support is cut off as scheduled in 2020, big companies could come to dominate its agenda. And the obligation to transfer its innovations to domestic producers could disappear.

That doesn’t mean that Manufacturing USA institutes like PowerAmerica should have an entitlement to federal funds forever. Ongoing federal funding should cover only a quarter of their budgets, down from half during the first five years. The institutes should be required to raise the rest from private sector members and other sources. Their willingness to contribute remains the most important metric of an institute’s success. In addition, every institute should be evaluated regularly.

Clean energy manufacturing is already a core industry of the 21st century global economy. It will continue to grow as the world transitions to cleaner, lower-carbon resources. The United States can and should get its fair share of the jobs and economic activity this industry generates. Putting Manufacturing USA on a firmer fiscal foundation will help that happen.

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