Shining some light on the Chinese wind farm deal by Tom Gray

Concern about this announcement, and the green manufacturing jobs it might create in China, is understandable. Still, the larger picture of wind energy and foreign imports into the U.S. tells a very different story:

* In 2008, China accounted for less than 5% of the imported value of wind turbine components for the U.S., according to data from the US International Trade Commission.

* In recent years, the trend has been towards more domestically manufactured components and wind turbines in the U.S. Overall, about 50% of the value of turbine components was made in the U.S. in 2008, up from less than 30% in 2005. Given the growth in the U.S. wind power market during that same period, this means that in three years, the U.S. increased its domestic manufacturing 12-fold, from producing $450 million worth of components in America to $5.6 billion in 2008.

* Leading global wind turbine manufacturers like Vestas (1 globally) and Gamesa (3 globally) have opened major manufacturing facilities here in the U.S.; Mitsubishi just recently announced its intention to open a U.S. factory.

* In all, as of October 2009, there are nine original equipment wind turbine manufacturers (OEM)s (Acciona, Clipper, Dewind, Gamesa, GE, Nordic, Siemens, Suzlon, and Vestas) now operating U.S. manufacturing facilities, with Siemens and Vestas also investing in additional facilities. An additional six turbine manufacturers (Continental, EWT, Fuhrlander, Global Wind Systems, Mitsubishi, Nordex) have announced plans to open manufacturing facilities here in the U.S.

* This welcome trend toward investment in manufacturing facilities in the U.S., which creates local jobs, needs to be nurtured.

* The reality is that we need to catch up after decades of energy policy neglect in the U.S., and we are in a race to build up a wind turbine manufacturing base here in this country. The wind energy market is global, and leading companies such as Vestas, GE, Gamesa, Suzlon and many others operate on a global scale. These companies will direct their investments to where markets are certain to grow—-and that in turn is where there is a firm renewable energy policy in place.

* A strong national Renewable Electricity Standard will provide the market and policy certainty that is still needed in the U.S., and will ensure that our nation competes effectively in attracting investment and building up its manufacturing base.

* The U.S. is at a time of historic opportunity: passing comprehensive climate and energy legislation including a meaningful RES will give us the means to stay in this race, compete with other strategic markets like Europe and China, avoid carbon, and create jobs.

* It’s important to understand how American Recovery & Reinvestment Act (ARRA) economic stimulus funding works: 100% of the Treasury grant funds are allocated on the basis of projects built here in the U.S. These projects create construction, engineering, operation and maintenance, and a host of other jobs here in the U.S.

The ARRA process is NOT a zero-sum game—if a company is awarded a grant for a project, it does not mean that another company won’t get funding for a project for which it might apply. To protect taxpayer money, a company that applies for funding for a particular project needs to go through a detailed checklist to ensure that the project will actually be built and produce electricity. The grant funding for which a project is eligible is equivalent to the value of a 30% investment tax credit. The stimulus grant helps leverage the additional funds needed to finance a project.

* A healthy mix of global (Iberdrola, EDP Renewables) and U.S. (NextEra, AES, First Wind) companies are receiving ARRA grants or have announced their intention to apply for such grants. Nothing is keeping more U.S. utilities and companies from applying.

The economic stimulus legislation is providing the short-term support needed to keep the U.S. wind energy market alive. A strong Renewable Electricity Standard would build upon that short-term base and ensure American clean renewable energy job growth into the future.


China’s $1.5 Billion Wind Power Deal in Texas

Lone Star, Meet Red Star: a $1.5 billion wind farm in Texas, paid for by Chinese banks and to be supplied with Chinese made wind turbines. China-US Wind Farm JV Plan Calls for 240 Units of 2.5MW Turbines.

A-Power Energy Generation Systems Ltd. (Nasdaq: APWR) ("A-Power" or the "Company"), a leading provider of distributed power generation ("DG") systems in China and a fast-growing manufacturer of wind turbines, announced today that the Company has been designated to supply wind turbines to a China-U.S. joint venture project ("JV Project") to develop a 600 MW wind farm in West Texas.


Hell No! We Won’t Send Our Tax Dollars to China

United Steelworkers (USW) President Leo Gerard is outraged—as we all are—over the news that a planned $1.5 billion Texas wind farm—seeking financing with U.S. stimulus money—will create only 30 permanent jobs here, but 2,000 jobs in China.

Taking candy from a baby: A consortium of Chinese and American companies goes to Washington and announces plans to build a $1.5 billion windmill farm in west Texas using $450 million in U.S. stimulus funds, which will create 2,330 jobs—2,000 of them in China.

The baby—Washington’s Energy Dept., specifically—doesn’t cry or whine or spit in the consortium’s face. That’s what’s really wrong with this story.

So accustomed to being bought and sold, Washington simply begins processing forms so it can hand over your tax dollars to create jobs in a turbine factory in the city of Shenyang, China, at a subsidy of $193,133 each.

It’s like these bureaucrats live in Wonderland. Or an America where the unemployment rate isn’t 10.2 percent. Or where 40,000 American manufacturing facilities didn’t disappear in the past decade. Or where banks didn’t repossess nearly a quarter million American homes in the past three months.

We’ve got a message for Washington: Hell no! We’re not giving tax dollars to China. What’s wrong with these businesses and our government? It is the $787 billion American Recovery and Reinvestment Act of 2009. It’s not the Chinese Recovery and Reinvestment Act.

It’s bad enough that we’ve off-shored our factories and technology and jobs over the past 20 years. We’re not off-shoring our stimulus cash, too. In fact, we’re tired of serving as the schoolyard wimp of the world. We need our own industrial policy so we can stand up and compete in the world market, manufacturing the likes of wind turbines. And we need it now.

China has an industrial policy. And it uses that policy to dominate. Here is how Keith Bradsher of the New York Times described China’s policy to become a world leader in renewable energy, which, of course, would include construction of wind turbine factories:

Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries—giving their own automakers time to amass economies of scale in sheltered domestic markets—China is shielding its clean energy sector while it grows to a point where it can take on the world.

China protects its chosen industries in many ways. It provides low-interest loans, some of which don’t have to be repaid. It may give free land on which to construct buildings. And there are other perks that Bradsher described:

When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data…even as Chinese companies that had never built a turbine were approved….

Later, Bradsher describes European disgust at the Chinese treatment:

European wind turbine makers have stopped even bidding for some Chinese contracts after concluding that their bids would not be seriously considered, said Jorg Wuttke, the president of the European Union Chamber of Commerce in China.

China has a policy. It ruthlessly protects its own industries.

China was among the many countries that complained bitterly when the United States included “Buy American” provisions in the stimulus bill. In fact, Vice Commerce Minister Jiang Zengwei told a press conference in Beijing in February that China would not do such a thing. “We won’t practice a ‘Buy China’ policy,” he said. Four months later, that’s exactly what China did, instituting its own stricter “Buy China” policy as part of its economic stimulus program.

China did what China felt was necessary for its economy. And it ignored foreign criticism.

That’s hardly the U.S. tactic. Wilting under criticism, Congress diminished the Buy American provisions before passing the stimulus.

As a result, we’ve got a consortium—U.S. Renewable Energy Group, Cielo Wind Power and A-Power Energy Generation Systems—so bold that it believes it can get nearly half a billion dollars in American stimulus money for 2,000 Chinese wind turbine jobs. The consortium says it would import 240 Chinese turbines to Texas, where 300 temporary construction jobs would be created and another 30 permanent jobs established.

The wind turbines could easily be made in the USA. Bradsher, of the Times, says the Chinese concede that while their turbines cost slightly less initially, they have higher repair costs. He wrote:

United Nations data from trading of carbon credits shows that the Chinese-brand turbines produce less electricity because they are more frequently out of action.

Really, is that what we want to buy with American tax dollars for a wind farm in west Texas?

If the United States put half the effort into supporting its renewable energy industry that China does, there would be no way this consortium building windmills in Texas would be looking overseas for turbines.

China has a plan. In its strategy, it doesn’t consider America first or the remainder of the world first. And that’s what the United States must do. We need an industrial policy that makes no apologies for putting America and American workers first. And when that’s the calculus, no American official would ever countenance a request to give $450 million in American taxpayers’ dollars to a turbine factory in China. And no American consortium would consider making such a stupid request.

In the meantime: Hell no! They don’t get our dough!