Wind energy is attracting investors, and corruption

The northern trade winds of the Canary Islands have long tempted daredevil windsurfers, but now they are attracting giant wind turbines and the millions of euros behind them. With their blades whirling, the 55 turbines that stand beyond the gray pebble beach of Pozo Izquierdo are stark, white symbols of a growing industry and the potential for abundant clean energy — and for corruption.

In the town of Santa Lucia de Tirajana, host to the annual Grand Slam windsurfing championships, a year-long investigation by the Guardia Civil — the Spanish gendarmerie — turned up irregularities in a plan to build a wind park. Now the mayor, five town officials and two wind park developers are fighting criminal charges that include influence peddling, misuse of public office, misappropriation of land and bribery. The apparent motivation was as much as 40 million euros, or $58.4 million, in European Union subsidies.

This investigation and others in Europe and the United States shed light on the sometimes freewheeling approach of the fast-evolving wind energy industry. Stoking the frenzy in Europe is the vast revenue available through a variety of subsidies, including the European Union’s farm subsidy system, which distributes more than 50 billion euros, or $73 billion, a year to farmers, corporate agribusiness and rural development projects.

In Europe, more than 6 billion euros in structural and agricultural subsidies have been allocated for renewable energy over 13 years ending in 2013. This is an attractive sum for a relatively new industry that specialists say gets the benefit of the doubt because of its image of environmental concern. And clean energy is at the forefront of the debate over climate change that is drawing global attention this week in Copenhagen.

The authorities say it is impossible to quantify the level of fraud in public spending on wind energy because investigations are scattered across countries among the regional and fiscal police. But critics say the available riches and patchy controls are luring a rogue’s gallery of corrupt politicians and entrepreneurs trying to create money out of thin air.

“It’s the same mentality as a Texas oil strike,” said Jesus Bethencourt Rosillo, a lawyer in Santa Lucia who represents a Canary Islands whistle-blower. “This is a gold rush, and everyone wants a wind park at whatever price.”

The European Wind Energy Association — which represents 600 manufacturers and members in 60 countries, including some outside Europe, and which attracted more than 10.9 billion euros last year in investments — argues that problems with corruption are rare and that industry regulation is not needed.

“We have fraud legislation in all countries, and this is a matter for the national police,” said Christian Kjaer, chief executive of the trade group.

Highly vulnerable to fraud

But critics like John Etherington, a former professor of ecology at the University of Wales and author of “The Wind Farm Scam,” contends that, because the industry is so dependent on subsidies, it is highly vulnerable to fraud. Etherington says that he is “not sure that the industry is regulated at all — let alone well regulated.”

Police investigators have been busy across the Continent in recent months. This year five Corsican nationalists were imprisoned and fined for skimming 1.54 million euros in European subsidies for wind farms. In Italy — where three investigations are unfolding — 15 people were arrested last month in a case the authorities code-named Gone With the Wind. They described it as a complicated Ponzi-style scheme to reap as much as 30 million euros in European Union aid.

In the United States, one of the top three wind energy producers with Germany and Spain, the Energy Department is doling out aid covering 30 percent of project costs and has already announced more than $1 billion in grants — with individual grants near $100 million.

Wind farm development follows a common pattern in Europe and the United States. Typically, small entrepreneurs strike deals for long-term land leases with farmers and seek local government approval for wind parks. Then the entrepreneurs sell development packages through intermediaries to large multinational companies or utilities that actually build the wind parks.

Even the big companies have been burned; Vestas Wind Systems, a Danish company that is the leading manufacturer of wind turbines in the world, revealed this year that it was the victim of a 12 million euro fraud. The company asserts that three top Spanish employees, who are under investigation by the authorities in Barcelona, issued payments for nonexistent services to companies under their control, shifting the money intended to invest in wind turbines.

In New York, wind developers were prodded over the summer to sign an ethics code barring gifts to public officials, a standard developed by the office of the state attorney general, Andrew Cuomo. At the time, the office said 16 companies, representing more than 90 per cent of wind energy activity in the state, had signed.

“It’s a very new area of development with the promise of a lot of money that can be made, both for the developers of wind farms and landowners,” said John Milgrim, a spokesman for the attorney general’s office, who said that the industry had been largely unregulated. “Part of what government can do is create standards that both sides can follow,” he said, adding that the code established a transparent system for public information about land leases and connections between wind developers and municipal officials and their families.

The European wind association does not have a code of conduct for developers, though Kjaer, the chief executive, said it would have no trouble operating with one.

The lure is basic: A standard two-megawatt turbine costs about 2.75 million euros to build and earns about 275,000 euros a year for the sale of electricity at the market rate. But that revenue can rise to about 500,000 euros with special state-mandated incentives paid by utilities as a premium for renewable energies. In many countries, wind producers are receiving feed-in tariffs — premiums above the market rate as a bonus for renewable energy.

Richard Robb of New York, an investor in wind parks in France and Germany through his firm Christofferson, Robb & Co., said these tariffs provide a cushion of revenue even amid lacklustre winds.

In Germany, he said, his wind farm qualified for a feed-in tariff of about 83.6 euros a megawatt hour while the free market price ranged from 30 to 70 euros — helping to deliver as much as a 15 per cent return.

“None of this,” he said, “would have been possible without government subsidies.” — © 2009 The New York Times News Service

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Printable version | Sep 26, 2020 4:53:14 AM |

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