Did the US Tea Party Drive Out Wind Investments by Giant Iberdrola?

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With the latest change in the US policy environment, Iberdrola now plans to install only 350 MW over the next two years in the US, NAW reports.

Investment banking consultants for Jeffries, say that due to the inconsistency of its renewable policy, the US no longer provides a stable investment environment for the international wind giant Iberdrola, which has 62 GW of projects under development worldwide.

This is a major cut for Iberdrola. Last year it had announced that it planned to build 1 GW (1,000 MW) in the US in 2011, and add another GW in 2012. There is still 850 MW under construction, which will be completed

The Spanish energy giant Iberdrola has been on a roll here, opening a US subsidiary, and ramping up wind projects with the election of President Obama, in the expectation of a long-term change in US policy to match that of the EU. Europe has a consistent legislative environment that favors renewable power, because that is needed to cut the greenhouse gases emitted by extractive energy that are responsible for climate change. Neither party disputes that, there.

The Recovery Act, passed during the five month period when Democrats briefly held a filibuster-proof majority, did succeed in adding 16 GW of renewable energy to the US grid, an achievement that doubled the renewable power in the US.

The US subsidiary of Iberdrola received $976 million from the Recovery Act – and its 800 US employees used it to get 3.8 GW of wind power on the grid, almost a quarter of the total 16 GW. It was spread among 41 wind farms in 23 states.

During that time Iberdrola made some $5.5 billion of purchases from US companies and created another 14,200 indirect jobs, mostly in manufacturing wind turbine parts. This helped jump start a US wind turbine supply chain and the beginning of a wind industry here that could end up rivaling the EU wind industry, able to compete for wind farms funding with EU companies with a decade’s head start in renewables.

But that brief control of the Senate that enabled the Recovery Act was over with the death of Ted Kennedy in mid 2009, giving the GOP de facto “minority rule” over what bills could be voted on, and killing the climate bill that the most progressive House in a decade had easily been able to pass.

Not only the failure of the climate bill in the Senate, creating a renewable legislative stalemate at the federal level since mid 2009, but the election put a GOP majority in many states as well. The new House GOP has clung to subsidies to support traditional energy like oil and coal, but cut subsidies that encourage renewable energy and innovation to develop more.

While Obama wants $550 million for the Department of Energy’s ARPA-E budget, the GOP counter-offered $50 million, not enough to fund more than a couple of projects. Under the Recovery Act the US invested $400 million in renewable innovation (A Manhattan Project), and even then had to weed out a hundred times more qualified innovation applications than it could fund.

At the state level, the big polluter-funded GOP also lost no time in rolling back pollution controls and progressive legislation passed by former Democratic Governors.

Wisconsin’s Koch-funded GOP Governor Scott Walker has killed off wind-power development in a state that – under former Democratic Governor Doyle – had been growing a real renewable energy manufacturing sector. New Mexico’s new GOP Governor is still blundering after the climate bill passed by the former Democratic Governor, attempting to kill off any competition for the fossil interests that funded her candidacy(Tea Party Governor Kills Yearly 3% Pollution Reduction Plan). Arizona went from writing a well thought through climate bill under Democratic Governor (now Homeland Security Secretary) Napolitano, to opting out of the resulting multi-state climate agreement, under GOP Governor Brewer.

The result of this schizophrenic back and forth is that investment stability in the US is undermined by the near civil war between the opposing parties and the unbridgeable gulf between their respective world views.

The result has favored the GOP and thus fossil energy. It has long been a choppy market for renewable energy to get a toehold, as it requires building new projects which have a hard time competing with the low costs-per-kilowatt of already-built aging and dirty power plants which are not required to clean up after themselves.

Comparing the US to the equally unstable investment environment in another nation with fluctuating incentives, equity analysts Gerard Reid and Scott McCollister at Jeffries wrote of the US and Spain, “both countries do not have long-term policies in place and will need to enact legislation for projects post-2012.”

That’s not so easy.

Image: Wonkette

Susan kraemer@Twitter

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