Austin company joins $1.5 billion U.S.-Chinese wind venture

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Austin-based Cielo Wind Power said Thursday that it will partner with Chinese and American companies to build one of the biggest wind farms in the United States.

The project will cost $1.5 billion, cover 36,000 acres in West Texas and generate 600 megawatts of electricity — enough to power 180,000 homes.

The agreement signals one of the largest undertakings of its kind, proponents said.

"We see this as a very good strategic move," Walt Hornaday, president of wind power developer Cielo, said in a telephone interview after a Washington news conference to announce the plan. "It's a pretty smart project."

The American-Chinese collaboration comes in a busy year for wåind power, despite an economic downturn that has caused some projects to be delayed.

That list includes plans by Texas billionaire T. Boone Pickens to build the world's largest wind farm.

In recent years, Texas has become a leading hub for wind power, boasting capacity of 8,797 megawatts of wind-generated electricity, more than any other state, according to the American Wind Energy Association.

Cielo, which has 20 employees in Austin, has developed 10 wind farms in Texas and New Mexico that combined generate 1,100 megawatts of power. The new project will be twice as big as Cielo's biggest project, the King Mountain Wind Farm near McCamey in West Texas.

Hornaday estimates that the new project could generate 300 construction jobs, plus a small core of technical positions.

The Texas project will be the largest investment ever by a Chinese group in renewable power.

It reinforces China's growing role in renewable energy manufacturing. China already dominates the global solar panel manufacturing industry.

Chinese banks will finance the project. A subsidiary of the Shenyang Power Group will build the 240, 2.5-megawatt turbines for the project.

"We are thrilled," Jinxiang Lu, CEO of Shenyang Power, said on a conference call announcing the project. "This is just the beginning" of collaboration of such projects between the U.S. and China.

Cielo, Shenyang and private equity firm U.S. Renewable Energy Group will own the wind farm.

"We are proud to sign a historic agreement with Shenyang," said Cappy McGarr, a Dallas-based managing partner for U.S. Renewable Energy Group, which has offices in Los Angeles and New York.

The project will also entail technology from German wind power firm Fuhrlander AG and turbine gear boxes designed by General Electric.

Hornaday said the project is aiming to qualify for $450 million in U.S. stimulus money, which is 30 percent of the project's capital costs.

To qualify, work on the project must begin in earnest by 2010 and be complete by the end of 2012.

Hornaday said the project is expected to begin construction in March and be completed as early as March 2011.

The exact West Texas site for the wind farm likely won't be announced until early next year, as the partners nail down specifics on the site's proximity to new transmission lines.

Hornaday said the project came together thanks to a transmission line project that is under way through a Texas Public Utility Commission plan.

The plan is designed to put up more transmission lines in West Texas, where the wind farms are concentrated, to send power to urban customers.

The stimulus money, plus Chinese investment, were also significant drivers to pulling the deal together, he said.

cgrisales@statesman.com; 912-5933

Austin company joins $1.5 billion U.S.-Chinese wind venture

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News that $450 million in federal stimulus money might go toward installing Chinese-made wind turbines in Texas prompted criticism on Thursday, with Senator Charles E. Schumer, Democrat of New York, calling on the Obama administration to deny federal financing.

According to partners in the deal, the proposed 600-megawatt wind farm, announced late last week, would be built on 36,000 acres in West Texas using 240 wind turbines manufactured by A-Power Energy Generation Systems of Shenyang, China, Tom Zeller Jr. and Keith Bradsher report in The New York Times.

Partners in the $1.5 billion deal said that while most of the financing would come from unnamed Chinese banks, they would seek about one-third of the project’s cost — $450 million — from money set aside in the American Recovery and Reinvestment Act, the huge stimulus bill that passed earlier this year.

But that stimulus money, Mr. Schumer said, “is supposed to create jobs in America.”

The Texas project — a joint venture between the American private equity firm U.S. Renewable Energy Group, Cielo Wind Power and A-Power Energy — would create about 300 construction and operational jobs in Texas, according to the partners, but substantially more manufacturing jobs in China.

Mr. Schumer pointed to a recent analysis by the Investigative Reporting Workshop, a nonprofit journalism project at American University, which found that 84 percent of the $1.05 billion in “green” stimulus funding distributed since September had gone to foreign companies building renewable energy projects in the United States — mostly wind projects.

In a letter he sent to Energy Secretary Steven Chu, the senator urged Mr. Chu to “reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States.”

But Walt Hornaday, the president of Cielo Wind Power, which is based in Austin, Tex. and is the largest independently owned wind power developer in the United States, said in a statement that the project would need stimulus money to move forward, and that it was vital to “engineers, contractors and suppliers who will see millions of dollars of work at a time when energy-based jobs are difficult to find.”

China has vexed multinational corporations and American officials by blocking access by foreign companies to its own growing renewable energy market, though the country did ease its local-content requirements for wind turbines in talks with American officials last week.

The Energy Department noted in a statement that money for this type of project was provided as a tax credit, giving the agency little discretion. Stephanie Mueller, a spokeswoman, said that “if a taxpayer meets the eligibility requirements, they receive the tax credit.”

Jobs Question Jeopardizes Wind Farm’s Stimulus Deal - DealBook Blog - NYTimes.com

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Senator: No fed money for US-China wind project
By H. JOSEF HEBERT
Associated Press Writer
Thursday, November 5, 2009 7:39 AM CST
WASHINGTON (AP) — A Democratic senator is calling on the Obama administration to reject an expected request for federal economic stimulus money as part of a $1.5 billion West Texas wind energy project because he says it will generate Chinese, not American, jobs.

The U.S.-China venture, announced last week, would erect 240 huge Chinese-manufactured wind turbines on 36,000 acres in West Texas, with the Export-Import Bank of China committed to handle most of the financing.

But Sen. Charles Schumer, D-N.Y., said the project reportedly may also be seeking 30 percent funding from economic stimulus grants from the Energy Department — funds he said would used to buy turbines and other components made in a Chinese plant.

“The idea that stimulus funds would be used to create jobs overseas is quite troubling,” Schumer wrote in a letter to be sent Thursday to Energy Secretary Steven Chu. The senator urged Chu to reject any request for funds from the Texas project.

“The purpose of the (stimulus program) was to jump start the economy to create and save jobs — American jobs,” the senator wrote. “Yet the Texas wind farm project would create an estimated 2,000-3,000 clean energy manufacturing jobs in China. ... American taxpayer dollars should not be used to finance those Chinese jobs.”

A draft of the letter was provided late Wednesday to The Associated Press.

The project, announced a week ago, is a joint venture of China’s Shenyang Power Group, Cielo Wind Power LP of Austin, Texas, and a private equity firm, U.S. Renewable Energy Group. It would be the largest renewable energy investment made by China in the United States.

Under the agreement, A-Power Energy Generation Systems Ltd. of Shenyang, China, would be the exclusive provider of 240 2.5-megawatt wind turbines for the 600-megawatt wind farm, which would produce enough electricity to serve 180,000 homes.

Project officials could not be immediately reached for comment on the senators’ concerns.

In a news release when the project was announced Oct. 29, Ed Cunningham, USREG’s managing partner, said the wind farm would “create new high-paying jobs on both sides of the Pacific.”

Cappy McGarr, the group’s managing partner, said that in addition to the Chinese financing, the project expected to tap U.S. stimulus money earmarked for development of jobs in the renewable energy industry.

Schumer said the federal stimulus funding should be provide only for wind projects where major components, including wind turbines, are manufactured in the United States.

Chu frequently has expressed concern that China and European countries have overtaken the United States in the commercial development and production of clean energy technologies, even in some cases where the technologies originally were developed in the United States.

While turbine production has been dominated by largely European manufacturers, Schumer maintained that U.S. plants are capable of making the products. “U.S. wind farms financed with stimulus money should be buying American-built turbines and parts,” maintained Schumer.

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