Chinese Turbine Suppliers for Texas Wind Farm Agree to Buy American Steel

Chinese makers of turbines for a Texas wind farm agreed to buy steel from U.S. producers after lawmakers objected to foreign production of the equipment.

A-Power Energy Generation Systems Ltd., based in Shenyang, China, and Shenyang Power Group anticipate buying about 50,000 tons of steel to be produced in American steel mills, the United Steelworkers union announced today. The companies will buy parts from American suppliers and invest in a plant in Nevada, the union said.

“This is a new model,” Leo Gerard, the union’s president, told reporters today. “They will work with us to develop and grow the domestic wind-energy supply chain. But I don’t have any illusions that this will be easy.”

Democratic Senators Charles Schumer of New York and Sherrod Brown of Ohio had criticized the Texas wind farm, saying the federal aid it was seeking would be subsidizing jobs in China because much of the turbine manufacturing would take place there. Lawmakers had pushed for “Buy American” rules to limit government funding for foreign suppliers.

“We can’t replace our dependence on foreign oil with a dependence on Chinese-made wind turbines,” Brown said in a statement. “This agreement is an important step forward.”

The Texas project’s partners, U.S. Renewable Energy Group, a Washington-based private-equity firm, and closely held Cielo Wind Power LP of Austin, announced plans for the 600-megawatt wind farm in October. They are in the joint venture with Shenyang Power Group, a Chinese energy alliance in which A-Power is the biggest investor.

American Jobs

This deal “will result in hundreds of American jobs and help create a clean energy future for the U.S.,” Cappy McGarr, managing partner of U.S. Renewable Energy Group, said in the steelworkers’ statement.

Asia makes more than half the world’s wind and solar energy equipment and is widening its lead. China invested $34.5 billion in low-carbon energy technologies last year, according to Bloomberg New Energy Finance. The U.S. spent $18.6 billion.

A wind turbine contains about 8,000 parts, and many of those may not be made in the U.S., so the Chinese companies agreed to turn to American companies where practical, Gerard said. As a result of the agreement, the project should qualify for stimulus funding and the products, if made domestically, wouldn’t face antidumping complaints, he said.

A U.S. Energy Department report released Aug. 4 found that a growing share of wind turbine equipment is being supplied domestically, as companies from the U.S. and abroad seek to minimize transportation costs and currency risks. U.S. content increased to about 60 percent in 2009 from about 50 percent the previous year, the department found.

To contact the reporters on this story: Mark Drajem in Washington at mdrajem@bloomberg.net; Kim Chipman in Washington at kchipman@bloomberg.net.

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