“We are demanding the Obama administration suspend this program immediately and indefinitely. We are sending a letter to Secretary Geithner asking him to halt all payouts for this program until we in Congress can go back and fix this law.”
Letter signed by Senators Charles Schumer (D-NY), Bob Casey (D-PA), Sherrod Brown (D-OH) and Jon Tester (D-MT)
An embarrassing firestorm swept Capitol Hill after the results of a study by Investigative Reporting Workshop showed that 79% of the more than $2 billion in clean energy stimulus payments granted since September 2009 were actually paid to foreign firms supplying wind projects. Remember this is the change in the law sought by the wind industry because the production tax credits and investment tax credits traditionally used to subsidize wind energy proved useless in the credit squeeze in recession.
Congress tried to mask the stimulus impacts by wrapping them in a ‘Buy America’ disguise for domestic consumption but howls of foreign protest forced the Obama Administration to soft pedal those constraints to avoid a rash of unfair trade practices complaints by global suppliers.
While this is hitting the fan now, it should have come as no surprise to those who understand the global supply chain for the wind industry. As demand for clean energy has grown it has attracted additional suppliers.
Nowhere has clean energy demand grown faster than China itself and so, surprise—surprise, the Chinese have ramped up production of wind turbines and used it both to satisfy domestic needs for wind energy as well as grow exports by scaling market share around the world driving down the cost of wind turbines. As prices for Chinese equipment put pressure on manufacturers in other countries we have seen a consolidation in the industry and the growing purchase of cheaper Chinese equipment by domestic installers eager to keep their deal flow going. The result is in country after country pursuing clean energy China has become a major supplier of wind turbines, solar PV panels, and is using its capital to invest in projects.
While Senate Democrats are screaming bloody murder over US stimulus money going to foreign wind companies the very same thing is happening for solar photovoltaic projects as well—so expect a second wave of wailing on Capitol Hill.
The other reason this should be no surprise is the same thing happened in the EU where the aggressive use of feed-in-tariffs (FiT) in Spain and Germany were used to rapidly grow market share in hopes of creating jobs for local vendors and reducing the EU dependence on Russian gas. It worked for a while and Spain and Germany became world leading markets for solar energy. Then the recession hit and the cost of the FiT subsidies became an increasingly unbearable burden. Spain blinked first and cut the subsidies claiming, in part for political cover, that the lion’s share of the FiT subsidies were being suctioned up by Chinese suppliers of cheap PV panels. Spanish installers caught with an oversupply of PV panels in a market the government was no longer willing to subsidize dumped their PV panels cratering prices on the global market for a while as supply swamped demand. Germany followed reducing its FiT subsidies. 
This food fight over beneficiaries of stimulus payments is coming at a very bad time for Congressional Democrats who look increasingly feckless so finding a common enemy to hammer is the oldest of Congressional traditions. Today it happens to be Senate Democrats going after the US Treasury and US DOE over the practical implications of American stimulus payments and subsidies being pumped into a global market for clean energy technology.
The answer, however, is not a “buy American” trade war since the US benefits greatly in the long run if China drives down the global price for wind turbines and solar PV panels to grid parity (sustainability in clean energy-speak) so they can be competitively installed by domestic dealers—without the need for a stimulus payment or a FiT.
I know this is not politically correct but it is good economics.