A little more than three months ago, IER reported that stimulus funds for green energy projects were heading offshore, along with U.S. manufacturing.[i] The article was partly based on an analysis by the Investigative Reporting Workshop, which had evaluated where the stimulus funds for green energy projects were going. The Workshop recently updated its analysis to include the additional green energy projects that have been awarded grants from the Departments of Energy and Treasury since its original analysis.[ii] Despite criticism from Sen. Schumer and other Congressmen calling for stimulus funds to be used to create jobs within the U.S.,[iii] the Obama administration has yet to change how and to whom the grants are being awarded.
Where is the Grant Money Going?
The Investigative Reporting Workshop now calculates the total grant awards for green energy to be almost $2.2 billion, of which over 79 percent has gone or is going abroad.[iv] The vast majority (over 85 percent) of this stimulus money, which reimburses companies for 30 percent of their investment in renewables, is for wind power projects ($1.88 billion). Of the remainder, about $300 million is distributed among geothermal (41 percent), solar (26 percent), biomass (24 percent), and other renewable projects (8 percent).[v]
The largest grant made under the program so far was awarded to a bankrupt Australian company that built the Texas Gulf wind farm using 118 turbines made by a Japanese company that does not build wind turbines in the U.S. That grant of $178 million went to Babcock & Brown on December 29, 2009.
Spanish companies have collected the most money ($708.3 million), with Portuguese, German, and British companies also profiting from direct payments. Eurus Energy America, the U.S. subsidiary of a Japanese firm, received $91 million in stimulus money for its Bull Creek wind farm in Texas. Five U.S. companies received a combined $290.7 million, with First Wind and NextEra (a subsidiary of Florida Power & Light) receiving the largest shares, $115 million and $99.9 million, respectively.[vi] While the recipient of the direct grant money may be clear, where the component parts were and are being manufactured is harder to decipher.
At one point, it was believed that wind turbines were too big to import. However, cities on the West Coast and in Texas have modified their ports to accommodate wind turbines and/or their component parts. By examining Customs records, the Investigative Reporting Workshop found that wind turbine components were coming into the U.S. from China, Germany, Spain, and Brazil. Although not a comprehensive review of all imports, the Workshop investigation found numerous instances of large foreign-made components being used in the wind farms awarded grants from stimulus funds.[vii]
How Does AWEA React to the News?
Last month, the American Wind Energy Association (AWEA) reported that the U.S. installed almost 10,000 megawatts of wind turbines in 2009, a record, making total wind capacity in the U.S. about 35,000 megawatts. AWEA also reported that manufacturing jobs in wind energy had gone down.[viii] This contradiction in their goals made them call for a Renewable Electricity Standard, a policy contemplated by the administration and Congress that would mandate a certain portion of electricity be generated by renewable technologies in the future. Of course not mentioned was the fact that at least 28 states and the District of Columbia already have renewable electricity standards, which certainly provided an impetus for the 9,922 megawatts erected in 2009.
As for AWEA’s rebuttal to the Investigative Reporting Workshop’s news that over 79 percent of the grants awarded from the stimulus funds were going overseas: The association pointed out that the wind farms were built in the U.S. But the fact that they are built in the U.S. does not mean that the turbines were manufactured here, nor does it mean that U.S. companies built them.
While AWEA acknowledges that not all the wind turbine components are manufactured in the U.S.,[ix] they indicate that: “jobs in construction, transportation, civil and electrical engineering, and operations and maintenance are American and cannot be outsourced.”[x] The Investigative Reporting Workshop dealt with this by using a study of the Renewable Energy Policy Project, a think-tank that advocates renewable energy technology research. The study showed that, for every 1 megawatt of wind energy that is developed, 4.3 jobs are created: 0.6 in operation and maintenance of the wind farms; 0.7 for the installation of new turbines; and 3 in manufacturing.[xi] That makes manufacturing by far the largest benefactor of jobs from the various stages of wind construction and operation. Using this estimate and the capacity of wind farms built by foreign manufacturers, the Investigative Reporting Workshop calculated that as many as 6,838 manufacturing jobs may have been created overseas.[xii]
The question that remains is what the stimulus funds were supposed to be used to fund. Many in Congress believe they were to be used to create jobs within the U.S. and to spur our economic recovery. If this is what the American public also intended, then creating an expensive generating product with stimulus funds that largely find their way overseas is using taxpayer money wrongly.
[xi] Renewable Energy Policy Project, Wind Turbine Development: Location of Manufacturing Activity, Page 4, http://repp.org/wind_turbine_dev.htm.