Thursday, October 21st, 2010
This story was co-published with msnbc.com
The Obama administration is crediting its anti-recession stimulus plan with creating up to 50,000 jobs on dozens of wind farms, even though many of those wind farms were built before the stimulus money began to flow or even before President Barack Obama was inaugurated.
Out of 70 major wind farms that received the $4.4 billion in federal energy grants through the stimulus program, public records show that 11, which received a total of $600 million, had erected their wind towers during the Bush administration. And a total of 19 wind farms, which received $1.3 billion, were built before any of the stimulus money was distributed.
Yet all the jobs at these wind farms are counted in the administration's figures for jobs created by the stimulus.
In testimony to Congress earlier this year, the Energy Department’s senior advisor on the stimulus plan, Matt Rogers, touted the wind farm program for creating as many as 50,000 jobs. He acknowledges that these figures were provided by a wind industry trade and lobbying group. The trade group, in turn, cites a government study, which found that most of the jobs are short term.
The Investigative Reporting Workshop at American University fact-checked that claim, using the federal government’s own documents. Not only were 19 of the wind farms already in place before the first stimulus payments were made, but 14 of them were already sending electricity to the grid.
First comes the project, later the stimulus
Here’s how we checked the administration's claim: Wind towers are tall – hundreds of feet tall – making them dangerous to low-flying planes. The Federal Aviation Administration requires every structure over 200 feet to be recorded in a database, including the date each structure was built. We reviewed these records filed by the wind farms that received stimulus grants. We also checked records kept by utility regulators, showing when wind farms began producing electricity.
In western New York, for example, in the hills near the economically hard-hit cities of Syracuse, Rochester and Buffalo, the Canandaigua Wind Farm could have created the sort of green-collar jobs that the Obama administration promised would be generated by the stimulus package. The feathery blades of the farm’s 88 gigantic turbines reach more than 400 feet in the air. Each turbine contains 8,000 components and is almost as sophisticated as a jet engine. Hundreds of construction workers were needed to haul and erect the steel towers, each weighing hundreds of tons.
The wind farm was built in two phases. The developer, First Wind, received a total of $61.8 million in stimulus grants on Sept. 1, 2009, when the administration began rolling out money for the program. But FAA records indicate both were completed at least 15 months earlier -- by May 20, 2008.
There are other examples.
In the coal country of eastern Pennsylvania, FAA records show, the last turbine on the 51-turbine Locust Ridge II wind farm in Mahanoy City, Pa., was erected on Jan. 1, 2009, the first day a project could be eligible for a stimulus grant. But the other 50 turbines were built in 2008 -- 31 of them before Obama was elected. The farm’s developer, Iberdrola Renewables, the subsidiary of a Spanish utility, collected $59.1 million in stimulus money.
High above the rolling plains southeast of Lubbock, Texas, the 166-turbine Pyron Wind Farm represents the new wave of American wind farm development. In the heart of the country’s “wind belt,” it's far larger and more labor intensive than the projects in Pennsylvania and New York. German developer E.On Climate and Renewables estimated that 620 construction jobs were created, and on Sept. 22, 2009, the project received $121.9 million in stimulus money. FAA records show the last tower had been built on Dec. 11, 2008.
The program, known as the Section 1603, reimburses developers of renewable energy facilities, such as wind and solar farms, up to 30 percent of the project’s cost. Applicants need only prove they built the facility and are automatically awarded the money. Unlike other stimulus programs, the wind farms aren’t judged on job creation or required to abide by “Buy American” clauses. The money also comes with virtually no strings, and there is no obligation to reinvest it.
Administration officials and the companies did not dispute that much of the work on the wind farms occurred in late 2008 or early 2009, but said the stimulus money was vital for creating jobs down the line. Even if the wind farms that received the grants had been completed, they said, the money was vital to ensure that the next generation of wind power plants is built.
As the stimulus program continues to be hotly debated on the campaign trail, the Obama’s administration record of touting all these grants for creating “real jobs” continues.
“These programs were particularly effective in getting money out the door quickly to put people back to work on great projects that would otherwise have been idled in the face of the Great Recession,” Matt Rogers, the Department of Energy’s senior adviser on stimulus, testified to Congress in April of this year. At other points in his written testimony, Rogers said the Section 1603 program was responsible for “50,000 additional jobs in 2009.”
In an interview in late September, however, Rogers did not dispute the records showing that a large portion of work on many projects was completed before 2009. But he defended the grant program as a vital tool to ensure the recipients continued to invest in wind farms in the United States.
“With the first set of projects, that were done before the passage of the Recovery Act – in almost every case, what they did was reinvest in the next set of projects,” Rogers said. “Because we now have a set of incentives, project developers and sponsors are reinvesting in the U.S. market, instead of seeing a lot of that money go to other places. That’s one of the most exciting parts of the job creation story.”
Because of the way the law was written, the Section 1603 grant program has no language requiring that recipients reinvest their grant money in the United States. Rogers said he was basing his claim on the fact that many companies have reported to the administration that they reinvested their grants in future wind projects in the U.S.
Most of the job gains are short term, study finds
Although at times Rogers has described 50,000 new jobs, when pressed on the question he speaks of 40,000 to 50,000 jobs being created, saved or supported. He said these figures were provided by the American Wind Energy Association, an industry lobbying group. In February, for example, that group said, "Were it not for the Recovery Act, we estimated a loss of as much as 40,000 jobs."
The association cites a study by the Energy Department's Lawrence Berkeley National Laboratory, which estimated that the grant program supported more than 51,600 short-term jobs during the construction phase, the equivalent of that many people working full time for one year, and an additional 3,860 long-term full-time jobs.
The study assumed that all the projects finished in the first half of 2009 were not caused by the stimulus. ( Read the study here.)
When the wind association and the Obama administration cite such figures as 50,000 jobs, however, they don't mention that the study found that most were short-term jobs.
Since it gave out its first grants on Sept. 1, 2009, the renewable energy stimulus program has handed out more than $5 billion to more than 1,100 projects, many of them small solar-energy projects. The largest amount of money, $4.4 billion, has gone to big wind farms.
The Workshop previously reported that the majority of the money was going to foreign-owned developers, and that the majority of turbines being installed were built by foreign-owned manufacturers. ( Read those stories here.) The Treasury Department has rejected Freedom of Information requests by the Investigative Reporting Workshop seeking grant applications, citing trade secrets.
Only one of the companies identified by the Investigative Reporting Workshop as having finished construction on a project before Jan. 1, 2009, disputed the date its turbines were listed as built. The FAA records show that the final turbine on the Wheat Field wind farm in Gilliam County, Ore., was built on Nov. 10, 2008. But in a statement, Horizon said construction on the project began in September 2008 and the first turbine wasn't “mechanically completed” until Feb. 2, 2009. In the statement, Horizon said the FAA information was filed in February 2008, and the November 2008 date was only an estimate to make sure the FAA had the structure on its maps by the time the tower was built.
Power generated during Bush administration
The Workshop also reviewed publicly available data on each wind project’s electrical generation. The Federal Energy Regulatory Commission keeps records of nearly all commercial energy transactions – recording the time, quantity of power, price and total cost of the transaction.
The records show that at least 11 wind farms were generating at least some electricity and selling it into the grid by March 1, days after the stimulus bill was passed in late February. And 14 wind farms were generating electricity and selling it into the grid by the time the stimulus money was first given out in September 2009.
For example, the Locust Ridge II wind project, in Pennsylvania, first sold electricity to PJM Interconnect on Oct. 24, 2008, at 11 a.m. Between Oct. 24 and Dec. 31, 2008, the holding company that owns the facility sold 687.6 megawatt/hours of electricity to PJM, charging a total of $32,788.
Paul Copelman, a spokesman for Iberdrola, said the Locust Ridge II wind farm wasn’t in full commercial operation until March 2009. The electricity generated in 2008 was the result of testing, he said.
How they qualified
These wind farms qualified for the stimulus grants for two reasons.
First, the stimulus bill allowed a wind farm to qualify if it was "placed in service" on or after Jan. 1, 2009. The money didn’t start flowing until Sept. 1, 2009, so it was inevitable there would be payments for work previously done, particularly for large wind farms that can take years to develop. To get the money, these companies didn't have to create new jobs; they just filled out an application after the fact.
Second, "placed in service" has a peculiar meaning. Generally, it means a piece of equipment, like a wind turbine, is ready to be used for the purpose it was intended. But, when a developer finishes building the tower and attaching all the parts – the labor intensive part of the process where most jobs are created– there are several more steps, including testing and installing the equipment that regulates the flow of electricity and feeds it into the grid, before it is deemed “in service.”
In the operation of other federal incentive programs for wind energy, each turbine in a large wind farm is evaluated individually before being “placed in service.” However, under the Section 1603 program, tax attorneys and the companies contacted by the Investigative Reporting Workshop said that developers were allowed to count all of their turbines on a wind farm as one. In other words, what counted was when the last turbine was “placed in service,” and the whole farm was ready to operate at full capacity.
Tax attorney Jeffrey G. Davis, a Washington partner at the law firm Mayer Brown, where he specializes in representing renewable energy firms, said it’s not uncommon for a wind farm to generate electricity – and even sell it – before being “placed in service.” Wind farms may need to start turbines and generate electricity to test them or prove viability for commercial production.
Additionally, all the wind farms contacted stressed that the process of qualifying a wind farm as “placed in service” involves a number of steps, like testing and building associated transformers and transmission equipment. Iberdrola also noted that it was required to submit third-party certification of the “placed in service” date.
Rogers, the Energy Department official, said that some of the wind farms cited by the Investigative Reporting Workshop could have been left half-built during the recession, but that once Obama was elected in November 2008, developers decided to finish the work in hopes of a stimulus package. When pressed for examples, Rogers declined to name any projects.
“It’s a question you’ve asked, I’ve answered. It’s an incredibly successful program,” Rogers said.
Several of the companies contacted by the Investigative Reporting Workshop said they had considered halting construction during the recession. These include Iberdrola, which considered halting construction on half of its projects, spokesman Paul Copelman said, regardless of how far along they were in the construction process. And E.ON Climate and Renewables said it had considered halting the Pyron Wind Farm in Texas. Neither company ultimately halted construction.
When asked how to reconcile claims from the administration that the jobs associated with these projects were a result of the stimulus – even though the work was done months before the stimulus was passed – Rogers did not offer a direct response.
“I think it’s the simplest thing. You can talk to the 40[,000] to 50,000 people who have been working on these projects since they were passed," he said, "and ask if they are pleased."