Developers of wind farm projects in Eastern Oregon will receive nearly $150 million in Recovery Act funds, in a widely-publicized announcement Tuesday.
What was not widely publicized was that the money will go to the U.S. subsidiaries of two giant foreign utilities for projects that are already developed.
The announcement from the Department of Energy said that the Hay Canyon Wind Farm near Moro will receive $47,092,555, and two Arlington projects, the Wheat Field and Pebble Springs wind farms, will receive $47,717,155 and $46,543,219, respectively, instead of energy production tax credits.
The Hay Canyon and Pebble Springs wind farms are owned by Iberdrola, a Spanish utility, through its U.S. subsidiary.
The Wheat Field project is owned by Horizon Wind, which was purchased last year by Energias de Portugal. EDP billed itself on a proposal describing the project as “the third largest utility in Portugal, Spain, & Brazil.”
But those projects have already been completed. How does handing federal funds to them stimulate economic development?
According to a DOE press release, “The new funding creates additional upfront capital, enabling companies to create jobs and begin construction that may have been stalled until now.”
Construction was stalled by the collapse of the tax credit trading market in the general economic meltdown last fall. For 15 years, the federal government issued production tax credits, or PTCs. The market allowed companies to sell the tax credit in return for capital to finance contstruction projects.
“Switching from the PTC to the grant program was made necessary by the collapse of US financial markets last fall,” said Ralph Currey, President and CEO of Ibadrola Renewables, Inc. “This change will enable our company and others to keep investing in new renewable energy while the financial markets mend.”
In a joint press release from senators Jeff Merkley and Ron Wyden, the senators both praised the decision, saying the wind farms will use the funds to support their efforts to create jobs producing clean energy.
“The funding will provide additional upfront capital, which will enable companies to jump-start construction on clean energy projects and create jobs in the process,” the statement said.
Though provided in the form of a direct cash grant for the companies involved, the Treasury Department is calling the payment an “investment tax credit,” according to Jan Johnson, a spokesperson for Iberdrola in Portland.
“In the case of Sherman County, we are instantly taking that money as was intended to put it right back to new construction at our Star Point project with is 99 megawatts.”
She said the company did not have a shovel-ready project in Gilliam County to apply the $46 million it will receive for the Pebble Springs wind farm, but that all of the investment tax credit money received through the program would be spent in the United States.
Iberdrola Renewables, Inc. received Treasury Department approval of five grants totaling $294,889,003. A news release said the money would support new wind energy projects in four states, and represented investment by Iberdrola Renewables of approximately $1 billion in US wind power.
By Rodger Nichols, The Dalles Chronicle – http://www.thedalleschronicle.com/news/2009/09/news09-02-09-01.shtml