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Texas wind project’s stimulus funds may stall over Chinese parts, jobs

A group of Democratic senators may seek to halt stimulus funding for wind-energy projects over concerns that the program is subsidizing jobs overseas.

The dispute was prompted by a proposed wind farm in West Texas, whose investors planned to use Chinese-made turbines and seek a $450 million stimulus grant. The senators insist that stimulus funds shouldn’t go to projects that get most of their materials from abroad and create “the bulk of their jobs” in other countries.

“I don’t know anyone who thinks it’s right that we use tax dollars to hire workers in other countries,” said Sen. Sherrod Brown, D-Ohio. “The right thing is for the government to figure out how to do the program right in a way that works for American companies.”

The project’s developers say they’re doing that. Austin-based Cielo Wind Power LP says more than 70 percent of the turbine parts are American-made, including its steel towers and blades.

The project prompted debate in two Senate committees on Thursday, where both Democratic and Republican senators questioned administration officials about whether the project should benefit from the stimulus. The U.S. Energy Department said any effort to suspend the wind stimulus program would cost U.S. jobs and set back efforts to expand clean-energy manufacturing in the country.

“It may come down to just the xenophobia dealing with China,” said Ed Cunningham, managing partner of the U.S. Renewable Energy Group, a private equity group that arranged the deal between Cielo and its Chinese partners.

U.S. Renewable Energy Group, whose leadership includes Dallas investor Cappy McGarr, says the $1.5 billion wind farm will support several thousand jobs in the U.S.

In the fall, however, McGarr was quoted as saying the 600-megawatt project would support as many as 3,000 jobs in China, because the 240 turbines would be built there. McGarr disputes that characterization now, saying most of the jobs will be in the U.S.

Chinese banks are financing the project, and China’s A-Power Energy Generation Systems Ltd. still plans to assemble the generator components in China. But Cielo officials say the project has prompted A-Power to plan a 320,000-square-foot plant in the U.S. that will employ 1,000 workers. Final assembly will be done at the U.S. plant, said Walt Hornaday, Cielo’s president.

“Hopefully, this is not a one-way street where China buys our debt and we buy a lot of things from China,” said McGarr, who is a major Democratic fundraiser. “Hopefully, this is the beginning of a two-way street.”

McGarr said he spoke to Sen. Charles Schumer, one of the project’s critics, in November to explain those details. He said he wasn’t able to persuade Schumer, D-N.Y., to stop criticizing the project. A spokesman for Schumer didn’t return a phone call seeking comment.

The Democratic senators haven’t introduced their legislation yet to halt the wind-energy stimulus program. In a letter released Wednesday, the senators said the bill would also seek to subject the program to “Buy American” requirements that apply to other provisions of the stimulus.

The stimulus law allows the Chinese and American investors to claim a cash grant equal to 30 percent of the project costs. Under the law, the Obama administration doesn’t have discretion to withhold a grant if a project qualifies and a company requests the incentive, Energy Secretary Steven Chu said.

Energy Department officials told lawmakers Thursday that most wind turbines supplied for the U.S. market contain between 40 and 50 percent foreign parts. That’s because renewable-energy manufacturers initially flourished in European countries where governments were faster to offer incentives to support the industry.

“If the U.S. puts in place fiscal policies that allow a market to flourish, the manufacturing will naturally migrate to the U.S., and the parts will migrate to the U.S.,” Chu told members of a Senate Appropriations subcommittee.