Thursday, February 5, 2009

Wind Gusts

GNU public licenseMassive loans are necessary to finance renewable energy projects, particularly for wind, and such loans are in very short supply. The resultant slowing presages a serious loss of industry momentum, from which restarting may be costly, lengthy, and difficult. Immediate action is urgently needed to prevent a serious stall.

Many projects have consequently been postponed or cancelled, and the pall is now spreading through the supply chain:

“I thought if there was any industry that was bulletproof, it was that industry,” said Rich Mattern, the mayor of West Fargo, N.D., where DMI Industries of Fargo operates a plant that makes towers for wind turbines. Though the flat Dakotas are among the best places in the world for wind farms, DMI recently announced a cut of about 20 percent of its work force because of falling sales.
World wind turbine leader Vestas recently announced it had 15% excess manufacturing capacity due to slowing orders. The change happened quickly according to Ditlev Engel, the Danish company's chief executive:

"Six months ago everyone (in the investment community) said we were not doing enough to meet demand growing at an expected 40% this year. "Now people are saying 'Why have you put in place plans for a 40% increase in capacity when growth levels are only going to be 25%?'," he explained.
After the election of Barack Obama, there was a great rush to ramp up in the United States, due to expectations of a wind boom based on the rhetoric of the campaign. The bankers, however, despite an historically broad spread between their borrowing and lending rates, are simply not lending.

The change in economic climate has spurred layoffs at Clipper Wind, the second-largest US turbine manufacturer.

A major layoff today at Clipper Windpower's Cedar Rapids turbine works sent dozens of stunned workers home. Employees leaving the plant said they were told that their terminations were due to slowing market conditions, including difficulty by wind developers to access tax equity and project debt financing. The layoff affected about 90 of the company's 830 employees worldwide, according to Mary Gates, Clipper director of global communications. Gates said "a good number of the layoffs" took place at Clipper's production facility, which employs nearly 390. Gates said some wind developers have asked to defer delivery of wind turbines into 2010 and 2011.
The weather vane of the wind industry in the US has been spinning wildly for a while now. President Obama has been very clear about the importance of wind energy in his vision for the future energy economy, starting during his campaign, in his inaugural address, and more recently. Extending the PTC for wind is essential. Wind is one of several renewable energy technologies that need improvement to the electrical grid to accommodate their variability.

Most important, the President needs to halt the quid of showering lenders with billions of taxpayer dollars without the quo of having them lend. $200B of TARP support has gone ... where exactly? Much ink has been spilled and uncountable electrons have been shot angrily about the Internet decrying inconceivably stupid PR debacles such as junkets to resorts or casinos.

Lost in that uproar is the real grotesquerie: banks have used huge sums of that money to acquire other banks. Too big to fail just got bigger. Wasn't this kind of financial legerdemain part of the problem that got us to this ugly pass? Using astronomicaleconomical sums of cash to execute mergers and acquisitions produces no new goods and services and no stimulus to the enervated economy. Instead, it leads to layoffs, the opposite effect of what's needed, and paid for in part by taxes from those losing their jobs.

While not apparently illegal, thanks to the unfathomable negligence and panicked gullibility of the Bush Congress, it is ethically horrifying and economically indefensible. For the sake of the economy's health, for a modicum of justice for the shafted workers, and for our green energy future, put those billions to a productive use, and finance the continued growth of the wind industry.

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