Towers of wind power, made in Pa.:
A Spanish firm's big investments in Pennsylvania
are a signs of the economic potential of renewable
energy in the Rust Belt
June 20, 2007 McClatchy-Tribune Regional News
- Jeff Gelles The Philadelphia Inquirer
If wind energy ever plays a big role in Pennsylvania's
economy, a little-noticed 2003 recycling conference
in Bilbao, Spain, may merit some of the credit.
Bilbao is in Spain's Basque region, home to Gamesa
Corporacion Tecnologica S.A., Spain's largest wind-turbine
manufacturer and a worldwide leader in the burgeoning
wind-energy business. One of the speakers at the
recycling conference was Kathleen McGinty, Pennsylvania's
newly minted secretary of environmental protection.
McGinty had heard that Gamesa was scouting locations
for a U.S. expansion, possibly in wind-rich Texas.
So the Philadelphia native took an extra day and
made a pitch for her home state, beginning a series
of meetings between Gamesa and state and local officials.
Today, fruits of those visits are evident across
Pennsylvania, where Gamesa expects to have 1,000
people on its payroll by year's end. It runs factories
in Bucks County and Ebensburg, near Altoona, and
has its U.S. headquarters in Center City. This month,
it named a Philadelphia lawyer, Julius Steiner,
as its U.S. chief executive officer.
By the end
of the year, wind farms Gamesa is developing along
the Allegheny Mountains ridgeline are expected to
generate up to 150 megawatts of power -- a small
fraction of the state's electric needs, but enough
to serve about 38,000 to 50,000 homes.
other wind-energy proponents say Gamesa's Pennsylvania
investments -- so far totaling $110 million, nearly
six times the $19 million in incentives from state
and local governments -- are a sign of the economic
potential of renewable energy in the U.S. Rust Belt.
But the company's experiences here also reflect
challenges facing Gamesa and other leaders in wind
energy, a capital-intensive business subject to
the volatility of energy markets and vicissitudes
of governmental policies.
Interest in wind energy
is soaring. Yesterday, Gov. Rendell helped dedicate
Pennsylvania's seventh multi-megawatt wind farm,
in Schuylkill County. The new Locust Ridge Wind
Farm, owned by Spain's Iberdrola S.A. and developed
by its Radnor affiliate, Community Energy Inc.,
is equipped with 13 two-megawatt turbines built
In the last six months, new wind farms
have been announced in places as diverse as China,
Peru, Egypt, Morocco, Spain, Iowa, Minnesota and
Montana. By one recent estimate, wind-energy investment
will total $150 billion over the next five years
in the United States, Europe and China.
of the wind boom has been slower delivery of wind
turbines and a spike in prices by as much as 25
percent. Steiner, who takes over July 1 as Gamesa's
U.S. chief, said turbines ordered now would not
be delivered until 2011.
The boom has even bitten
into Gamesa's profit, which dipped 14 percent in
the first quarter after more than doubling in 2006.
Vertical integration helps -- unlike its main competitors,
Gamesa develops wind farms with its own turbines
-- but it said it suffered from a shortage of supplies
such as carbon fiber and resulting delays in getting
projects under way.
Wind's success is a result of
its enviable status as a green power that has matured
enough to bring green to investors.
product is entirely clean. But aside from the waste
byproducts from building and installing wind equipment,
wind energy generates no pollution, no carbon dioxide
that contributes to global warming, and none of
the radioactive waste that bedevils the nuclear
"It's the only commercially viable energy
resource today that can claim zero emissions. And
there are also no toxic byproducts," said Gamesa
spokesman Michael Peck.
To be sure, wind owes some
of its rising commercial viability to government
support, including the current federal-production
tax credit of 2 cents per kilowatt-hour, which runs
through the end of 2008.
Advocates such as Rob Gramlich,
policy director of the American Wind Energy Association,
an industry group, argue that all energy industries
get subsidies, either directly or through the tax
code. His group wants Congress to extend the tax
credit for five years, arguing that investors have
been scared away by the credit's on-again, off-again
Also important to wind's success are state
targets such as those in Pennsylvania, which by
2020 will require utilities to obtain at least 8
percent of the electricity they sell from clean,
renewable resources such as wind and solar power.
Gamesa's Peck said consistent government standards
had been crucial to the success of Europe's wind-power
companies, such as Gamesa and Iberdrola, which leads
the world in wind-power production.
Peck said the
Spanish province of Navarra expects to generate
45 percent of its electricity from wind power by
2010, about twice its current production. Overall,
he said, Spain gets 8 percent of its electricity
from the wind.
U.S. production is minuscule by comparison,
less than 1 percent of the country's electricity
use, despite growth that Gramlich said had averaged
22 percent a year since January 2002. By the end
of 2006, the nation's wind-energy capacity was rated
about 11,600 megawatts, or about enough to power
3 million homes, Gramlich's group says.
the Pennsylvania environment official and onetime
environmental adviser to President Clinton and presidential
candidate Al Gore, said she watched in frustration
in the 1990s as European companies took the lead
in renewables, after a long dip in world oil prices
sapped U.S. interest sparked by the 1970s' price
"The great tragedy in this story is that
most of the basic technologies were invented in
the United States," McGinty said. "And then the
United States lost interest in that technology,
and we lost multiple billions of dollars in investment
to Europe and Asia."
Now McGinty has hopes of getting
some of that back, in part by encouraging Gamesa
to expand and by trying to lure companies that are
part of its supply chain.
McGinty said her pitch
had not changed from the one she gave Gamesa: Pennsylvania
has a reliable workforce, great location, solid
infrastructure and electrical grid, and good highways
and railroads for delivering turbine components
-- all crucial considerations for making, delivering
and using Gamesa's massive wind-power units, which
are topped by three six-ton blades and, from ground
to blade-tip, stand about 40 stories tall.
wind-energy industry is mature and looking for new
markets, McGinty said. "Our goal is to bring the
companies themselves to Pennsylvania -- to hire
Pennsylvanians and bring investment and jobs to
our economy," she said.
For its part, Gamesa has
made other U.S. forays, including the opening of
wind farm development offices in Minnesota and Texas,
and hopes to develop wind farms in 15 to 20 U.S.
states. But company officials say that Pennsylvania,
thanks largely to support from the state's government
and its electrical utilities, remains fertile ground
for this still-fledgling U.S. industry.
looking for opportunities, but we're focusing a
lot of our efforts on Pennsylvania," Steiner said.