The jewel of the crown of Portland’s fledgling renewable energy cluster of companies may be gone with the wind. Vestas is expected to be sold to the Chinese energy conglomerate Ming Yang. Portland taxpayers have been on the hook for at least $10 million of dollars in giveaways to the company. In return, the company was to bring 1200 jobs to the City. The millions are gone. The jobs promises which taxpayers were told would pay for the freebies were only fractionally fulfilled. Sound familiar?
Reports and rumors have abounded for weeks about the acquisition of the company, but a source told me this overture seems to be even more serious this time and the wind industry –and “the street”–have taken note. Vestas financiers have been after the company to court suiters because American federal and local tax payer subsidies are winding down.
Portland and the state of Oregon have tried to prop up the renewable industry with millions in loans, grants and subsidies. The federal production tax credit subsidies of 2.2 cents per kilowatt hour will run out at year’s end. And now Vestas’ financiers want the company to be gone, too.
In addition to $10 million in enticements to come, Vestas originally was to be given an $8.1 million dollar no interest taxpayer loan as an enticement to stay (it already was leasing space) and do a $66 million refurbishment of a new building for its headquarters. In a switcheroo, that $8.1 million “free loan” (taxpayers are on the hook for the nearly $3 million in debt service) went to developer Gerding Edlen. The Portland Development Commission moved heaven and earth, breaking its own rules in the process, and now Vestas’ North American Headquarters sits in the newly refurbished Meier and Frank warehouse at 15th and NW Flanders.
But since the freebies are gone, it appears so is Vestas. Vestas is expected to build out existing wind farms for the rest of 2012. No new plans are drawn up for build outs in 2013, after taxpayer subsidies run out.
Vestas certainly is looking like a takeover target. In January it laid off 2335 workers 182 in n America. The Colorado headquarters may lay off 1600 workers.
Portland has wooed renewable companies with taxpayer dollars to set up shop. Iberdrola, E.ON Climate, First Wind, and Moventas are all here. Iberdrola, a Spanish company, was given extra incentives to come.
But if Vestas goes will they stay? They want the freebies too. Moventas supports the wind industry, for instance. They’re not likely to stick around if there’s little to support.
And once again, the central planners look as if they’ve biffed it again. Picking winners and losers is what the market does best. Occupy Portland, take note, this is what privatizing the profit and socializing the loss looks like. Margaret Thatcher famously said, “The problem with socialism is eventually you run out of other people’s money.” This is what that looks like, too.
