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Cloudy outlook for Texas factory as protectionism row over Chinese imports deepens

NORTH AMERICA: A senator's outcry over federal stimulus funds for a proposed wind project using Chinese turbines threatens to backfire by imperiling the creation of US jobs. Major Chinese turbine blade manufacturer HT Blade is considering a blade factory in the US to supply the wind project and others but is re-evaluating the plan following the senator's complaints.

The wind project is a proposed 600 MW joint venture in Texas between developer Cielo Wind Power, managing partner US Renewable Energy Group, Chinese turbine maker A-Power Energy Generation Systems and a consortium of Chinese equity players dubbed Shenyang Power Group. If built to schedule by end-2011, the project could be eligible for the federal cash grant covering 30% of the installed cost, or around $450 million based on a $1.5 billion projection. Grants would be available after project completion.

Not a dime

New York Senator Charles Schumer, from Barack Obama's centre-left Democratic Party, singled out the Texas project in a November letter to US Energy Secretary Steven Chu. "The goal of the stimulus was to spur job creation here, not overseas," he writes. "This project should not receive a dime of stimulus funds unless it relies on US manufactured products (Windpower Monthly, December 2009)." New York state is home to GE Energy's wind turbine business.

Just as Schumer's words were being reported, a logistics team sent by HT Blade was visiting the US on a fact-finding mission to recommend a site for the blade factory.

"It's more than ironic," says Patrick Jenevein, president of Texas-based Tang Energy. His company co-founded HT Blade, based in China's north-eastern Hebei province, in 2001 and owns a 25% stake. "It's disturbing and discouraging to people that want to make opportunities to work constructively in the wind industry here, as well as work with folks in China," Jenevein adds. "We've made blades in China, sold blades in China, made profits from China and imported profits to the United States. And now we're looking at using profits to invest in the United States to build a factory here."

Jenevein says his firm and the wind farm consortium have cash to spend. "We've gone to folks that have money to invest and are willing to invest it," he says. "Our objective is to get wind farms built."

Ruffled feathers

HT Blade produced more than 6000 blades in 2008 and roughly 9000 last year, primarily for Chinese projects. Blades from a US factory would be manufactured to fit the 2.5 MW Chinese-made A-Power turbines planned for the Texas project. A factory could start churning out blades by 2011. A-Power has built 2.5 MW turbines for about a year, using a combination of technology and components licensed through GE and German turbine maker Fuhrlander.

Jenevein believes Schumer's comments could provoke HT Blades' board to instead consider factory sites in South America or Europe. "Maybe he didn't realise how powerful or how far reaching those comments are," Jenevein says. "But the board in China wants predictability. They want to understand that an investment today is going to be respected, if not appreciated, and Schumer certainly appears not to appreciate it."

In a separate deal in May, Tang arranged $300 million in financing from Catic International Trade and Economic Development, a subsidiary of state-owned China Aviation Industry Group, to develop US wind projects (Windpower Monthly, July 2009). "We're looking at several projects and we are likely to buy some projects that are fairly well advanced in their development," Jenevein says.

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