U.S. Doles Out Grants for Energy Projects

By RUSSELL GOLD
The U.S. government handed out $502 million in grants for a dozen wind- and solar-power projects from Maine to South Texas, the first round in a new subsidy program designed to spur renewable-energy investment.
The program appears to be accomplishing two of the Obama administration's goals: producing employment and encouraging renewable-energy development. The approved energy projects have created about 2,000 jobs and capacity to generate 850 megawatts of clean electricity, enough for nearly 500,000 homes.
But while the wind farms and solar installations are in the U.S., the profits from these projects are flowing mainly to European companies and developers owned by private-equity investors.
Iberdrola SA, the Spanish wind-power giant, was awarded $294 million for five projects. Spokesman Keith Grant said the grants are "crucial to pushing ahead" with U.S. wind projects.
Horizon Wind Energy, the U.S. unit of Energias de Portugal SA, received $47.7 million for an Oregon wind farm.
Other recipients included First Wind Energy Holdings LLC, a company backed by private-equity firm Madison Dearborn Partners and hedge fund D.E. Shaw. It received three grants totaling $74 million for wind farms in New York and Maine.
Michael Alvarez, First Wind's president and chief operating officer, pledged to use the grants to invest in additional projects. "We expect these grants will have a strong stimulative effect -- not just for First Wind, but for the industry overall," he said.
EverPower Wind Holdings Inc. received a $42.2 million grant for a wind farm in Pennsylvania. "In order to make wind power economical, it requires a tax subsidy," said Jim Spencer, chief executive of EverPower, in which British private-equity firm Terra Firma Capital Partners recently bought a controlling stake.
Mr. Spencer said the project stalled last year when many of the traditional investors in wind, such as Lehman Brothers Holdings, Goldman Sachs Group and Morgan Stanley, were tossed by market turmoil and the recession.
The program has no cap and government officials pledged to award grants to all qualified applicants through 2011.
Write to Russell Gold at russell.gold@wsj.com