Thursday, a report said Democrat Senator Schumer called to restrict the stimulus funds to be used in the 600MW wind farm joint venture in Texas, which is made up of A-Power Energy Generation (NASDAQ:APWR), U.S. Renewable Energy Group and Cielo. A-Power owns 49% of the JV. The project is expected to get funding from the Commercial Bank of China (around $1.05B) and $450M from the US stimulus package. So Sen Schumer is supporting President Obama's policy to develop renewable energy, but assails the $450M being taken from stimulus. His reason is simple: the $450M will be used to create jobs in China, not in the US. Well, it looks that way, however, he ignores that $1.05B will be from China. China is financing the major part of the project! Let me list a few facts that prove Sen Schumer is not seeing the full picture here.
1. A-Power formed a joint venture with General Electric (NYSE:GE) to develop wind turbines earlier this year. According to the announcement, GE owns a majority stake in the business that will serve as GE Drivetrain Technologies' Southeast Asia manufacturing center starting in mid-2010. Now it is clear that turbine shipped from A-Power is at least 50% owned by GE. In other words, China's $1.05B investment in the 600MW project is going to create jobs associated with GE.
2. Open your eyes wider Mr. Schumer and you'll see an even bigger picture as China recently granted First Solar (NASDAQ:FSLR) a 2GW solar farm project when Chairman Wu Bangguo of the Standing Committee of the National People's Congress of China visited the company. The four-phase 2GW solar power plant will receive total RMB$10B(~US$1.6B) from China's commercial bank according to a report. So again China is financing the project, and it's benefiting First Solar (creating jobs in the US).
3. It's all about free trade. If you restrict $450M to the wind farm project in Texas, why would China give this 2GW project to First Solar? China has better solar PV technology than the US. Companies such as Suntech (NYSE:STP), Solarfun (SOLF), Trina Solar (NYSE:TSL), JA Solar (NASDAQ:JASO) and Yingli Green (NYSE:YGE) all are capable of doing as good a job as FSLR. I do praise China for 9taking the first step to cooperate on renewable energy between the two nations. There is no reason the US should say no to A-Power's wind farm, especially when President Obama has been diligently promoting a renewable energy policy since he took office.
Disclosure: Long FSLR, SOLF and APWR.