Some of you might be surprised to learn that non-US companies make most of our wind energy equipment and are the principal beneficiaries of wind related stimulus dollars. But it is true and the Lobbying Organization that seems to be leading this effort is the American Wind Energy Association (AWEA). Russ Choma posted “Foreign Firms Dominate Wind Energy in US, Land Stimulus Dollars” in the Energy Tribune in which he discusses the players, who’s building, where is the money going and what part do American manufacturers play.
Look at what Choma reports about the leadership of the AWEA:
AWEA also claims credit for being “the voice of wind energy in the U.S.” by representing “more than 2,500 member companies and offering a possible solution to the government’s dream agenda for energy and environmental policy: a clean, alternative power source spun out of America’s air. But ironically, this political force is dominated by foreign companies, which make up two-thirds of the organization’s event sponsors. AWEA’s current board president, Donald Furman reports to Iberdrola Renewables from Spain and the previous board president, Jim Walker, works for the French corporation EDF Energies Nouvelles. The powerful association’s controlling “leadership council” has 20 slots, and 10 are filled by representatives of European-owned companies that pay $150,000 a year each for a voice in the political agendas AWEA pushes in D.C.
Foreign companies have a right to participate in lobbying organizations but why is AWEA overwhelmingly directed by foreign companies when rank and file membership is probably overwhelmingly American. My guess is that they probably set up AWEA and have the money to fund its operation. (Disclosure: I represented a major chemical company’s particular product line before my retirement. We and several other major companies with similar interests formed a trade association and we took over management. We did not conspire to set prices, nor do anything illegal. So, I am not suggesting that the AWEA is doing anything illegal either.)
What Choma’s posting does expose is that the monies for equipment and the subsidies for promotion of wind energy go mainly to foreign companies. Lets look at some examples:
The makeup of the AWEA reflects the state of the wind energy industry in the U.S. America’s wind farms now have the capacity to power as many as 9.7 million homes — about 2 percent of the nation’s energy needs — but foreign companies build many of the turbines being installed today. In part, that’s because American utilities lack the expertise, and few American companies manufacture the equipment. Overseas companies also own and manage many of the wind farms sprouted along our amber fields of grain. Last year their U.S. subsidiaries even tapped the 2009 American Recovery and Reinvestment Act, sending billions in federal stimulus dollars to foreign-owned energy and manufacturing conglomerates in Europe and Asia.
Through one stimulus measure — the Section 1603 Grant Program — developers of renewable energy are entitled to a reimbursement of 30 percent of the cost of building a facility. Since last September, that government program has given out $2.3 billion to developers of U.S. wind farms. About 70 percent of the rebates — more than $1.6 billion in U.S. tax dollars — has gone to foreign developers, according to an analysis in February by the Washington-based Investigative Reporting Workshop of grant information released by the Department of Energy.
Among other goals, the stimulus package is meant to “create new jobs and save existing ones.” Supporters say this particular stimulus program has generated jobs in construction and maintenance of new wind farms. But the bulk of economic activity from investing in wind, as much as 70 percent according to industry analysts, is in manufacturing of turbines, and most of that manufacturing is done by foreign firms.
Wind turbines are composed of a giant steel tower supporting huge blades and a control unit called a nacelle. Both the tower and the turbine’s nacelle (containing the gear box, speed shafts, generator, brakes, and other parts) require a high-level of manufacturing precision and reliability. At last count, 1,758 of the 2,211 turbines put up under this stimulus grant program were built by foreign companies, according to the most recent analysis by the Investigative Reporting Workshop.
Some of these companies have invested in U.S. factories and others are planning to do so. But the level of investment varies widely, from companies like Spain-based Gamesa, which has the ability to completely manufacture some models at its Pennsylvania plants, to India-based Suzlon, which has only one American plant that builds just one component — hubs.
An example of foreign dominance of wind power is the Meadow Lake Wind Farm in Indiana. The farm, which picked up $113 million in U.S. stimulus funds, was developed by a Portuguese firm, Horizon-EDPR. Horizon hired the Danish firm Vestas to construct the turbines using steel towers built by the Vietnam factory, CS Wind, with blades and giant nacelles from Denmark.
A wind farm built for Puget Sound Energy, also by Vestas, received $28.6 million in stimulus funds. Its steel towers also came from Vietnam and the blades and nacelles from Denmark. And the U.S stimulus grant program gave $91.3 million to the Bull Creek wind farm in Texas — a project that consists of 180 Japanese-built wind turbines constructed under the supervision of a British company for Japanese owners who use a French firm to manage the site.
And our manufacturing position is slipping:
It’s not surprising that foreign companies collected the majority of stimulus dollars spent on the wind industry. Compared to mature and vibrant wind power industries in Europe and Asia, the U.S. has only two homegrown wind turbine manufacturers of any significance: General Electric and Clipper Wind. While both have assembly plants in the U.S., they also import many parts from factories overseas. G.E. and Clipper accounted for 49.3 percent of the U.S. turbine market in 2008. By 2009, that had slipped to 45.7 percent. As of late 2009, the two U.S. companies combined have 32.3 percent of the market for wind plants currently under development, according to AWEA market reports.
G.E. has three turbine manufacturing and assembly facilities in the U.S.: Greenville, S.C., Pensacola, Fla., and Tehachapi, Calif. G.E. also operates three wind turbine component manufacturing facilities in China. The company has opened a plant in Vietnam with the announced purpose of manufacturing up to 10,000 tons of components for use by G.E. in other countries.
Senator Schumer (D NY) wants to introduce a “buy American” bill to refocus stimulus spending to create American jobs. According to Choma:
The bill attempts to apply the same “Buy American” provision that exists in other areas of the stimulus to renewable energy grants, but includes significant exceptions that make it more about transparency than about blocking imports. The proposed law would not apply to products produced by foreign companies at facilities in the U.S., provides exceptions if no American product exists or is too expensive, and requires the “Buy American” clause be applied in line with existing international trade agreements, many of which prohibit protectionist actions. While the “Buy American” clause might not be ironclad, the proposed legislation would require the administration to disclose to Congress how many American jobs would be created with each grant and why a foreign product was used instead of an American one.
To read all of Choma’s posting click here.