In wake of CNN report, mayor defends solar deal

Mayor Julián Castro meets in San Antonio with OCI representatives Woo Jeong Lee (from left), Kirk Milling and Greg Baik. Mayor Julián Castro meets in San Antonio with OCI representatives Woo Jeong Lee (from left), Kirk Milling and Greg Baik. Photo: Tom Reel, San Antonio Express-News Photo: Tom Reel, San Antonio Express-News Image 1 of / 1 Caption Close In wake of CNN report, mayor defends solar deal 1 / 1 Back to Gallery

On a sunny day last January, CPS Energy announced it had reached a long-awaited deal with OCI Solar Power to construct one of the largest solar projects in the world, a plan that is to add 400 megawatts of clean energy in San Antonio.

It was a unique deal, formalized under contract in July, that didn't just add enough electricity to power 80,000 homes. It also was an economic development project with OCI Solar, whose parent is a South Korean chemical company, and Nexolon, another South Korean firm closely tied to OCI, that guarantees a capital investment of more than $100 million and the addition of 800 permanent jobs here — with an average salary of $47,000, Mayor Julián Castro announced that day in January.

On Friday, cable news network CNN aired a seven-minute segment critical of the deal, speculating that CPS could have contracted with U.S. firms that have more experience and alleges the mayor backed a plan to send millions of dollars overseas.

Local solar advocates, the mayor and others quickly defended the deal Saturday and said the CNN piece was riddled with problems.

Castro said the deal brings good jobs employing American workers in an industry that will be making solar materials here, “yet folks who watched that (segment) got the sense that the opposite was true.”

“It was very clearly a sloppy, inaccurate and very misleading example of reporting,” he said Saturday. “First, it created the impression that somehow jobs are being shipped overseas. And that's ironic because the entire point of the way we have done things at CPS is to bring jobs to San Antonio, to create local jobs, and that's exactly what's happening here. And that was never mentioned by the reporter.”

CNN correspondent Ted Rowlands declined to comment on reaction to the segment. A CNN publicist sent an emailed response to this story, simply saying “CNN stands by its reporting.”

The segment tells viewers that in October 2011, Castro traveled to South Korea and then to Washington to attend a state dinner for the South Korean president.

He was part of a local trade delegation and also spoke at the Urban Environmental Accords summit on green cities. The trip was slated to last several days, but Castro had to cut his portion short to fly to Washington for the state dinner.

Castro said he never had any conversations about the CPS Energy proposal or the companies seeking the deal.

More Information Timeline 2010: Mayor Julián Castro agrees to visit San Antonio sister-city Gwangju, S. Korea, after visit from his Korean counterpart. January 2011: CPS Energy announces plan to add 50 megawatts of solar power and leverage it as a development project. April 27, 2011: Castro announces he will lead local businesses on trade and investment mission to ?S. Korea and Taiwan. July 2011: CPS rebids solar project for 400 megawatts because price of solar continues to drop. Oct. 11-12, 2011: Castro travels to South Korea. Oct. 13, 2011: Castro attends White House dinner; sits with U.S. and South Korean presidents. November 2011: CPS tosses out bids on 400-megawatt project and reopens process in hopes of getting a better deal. Jan. 11: CPS announces deal with OCI Solar Power to bring 400 megawatts of solar power to S.A., 800 jobs, $100 million in capital investments. July 23: CPS signs contract with OCI. Friday: CNN airs correspondent Ted Rowlands’ 7-minute piece disparaging OCI and saying Castro “backs deal that sends millions abroad” and implies CPS could have gotten a better deal from an American company. Source: Archives, city of San Antonio

“That wasn't the purpose at all — of either visit,” he said.

It's not been uncommon for Castro to travel to the White House. He has attended several functions there.

CPS spokeswoman Lisa Lewis, who was interviewed for the CNN story, said the correspondent repeatedly asked her about the mayor's trip to South Korea and sending money overseas.

“The part I found most bizarre was that they kept talking about it as outsourcing. I think of that as sending jobs overseas,” she said. “It didn't make any sense.”

Rowlands aired interviews with Sandy Fardi, whose Farmers Branch-based 1SolTech firm was part of a consortium that unsuccessfully bid on the project, and a freelance journalist who covers the energy industry.

Fardi could not be reached for comment Saturday, but a company representative said 1SolTech was approached by CNN about the 400-megawatt project, and that the solar company did not seek out the media coverage.

In January 2011, CPS CEO Doyle Beneby announced the utility would invest in “big solar.” Whichever group chosen as the solar provider would have to locate part of its business in San Antonio and bring jobs.

More than 100 proposals came in from companies around the world, and after a few delays, in July 2011 CPS made international headlines when it announced it would allow companies to expand proposals from 50 to 400 megawatts, enough to power 80,000 homes.

The field narrowed to 19 companies last fall.

CPS used outside legal consultants and technical consultants to guide it through the bidding.

The San Antonio Express-News was unable to compile a complete list of bidders on Saturday.

The CNN segment questions why OCI won the contract because of the company's experience and the pricing per kilowatt-hour it offered to CPS Energy.

Rowlands' story quotes “multiple sources familiar with the bids” saying that OCI offered to sell solar power to CPS for 11 cents per kilowatt-hour while another consortium offered a 9.8-cent rate.

CPS does not publicly disclose the cost of individual power contracts.

Lewis said it's difficult to make a pure per-watt cost comparison of the final companies. Some proposals included so-called “all-in pricing.” Others didn't include the cost of obtaining the land for solar farms or a manufacturing site.

Others who watched the bidding process unfold say the mayor's heightened political profile make him a new target for criticism.

Castro was on the national stage last month when he presented the keynote address at the Democratic National Convention. He since has traveled to several battleground states as a surrogate for President Barack Obama.

Lanny Sinkin, executive director of Solar San Antonio, said the “political answer” to why CNN aired the story is because of Castro's emerging role as a national politician, “so now he's a target.”

Lewis said OCI's package made it the best choice.

OCI's financial stability, manufacturing expertise and ability to follow through on the contract played a role in why it was chosen, as well as technical expertise.

OCI Solar and Nexolon are considered major players in polysilicon and wafer production. OCI offered to build dual-axis solar farms, which means its panels will track the sun as it moves across the sky daily, as well as adjust to the changing level of the sun in the sky throughout the seasons.

The quality of the jobs and the type of manufacturing the companies would bring also were factors.

“They're going to build components and panels here not just ship parts from other places in the world and assemble them,” Lewis said. “There's a difference between manufacturing and just assembly. Comprehensively, they had the best package.”

OCI Solar will locate its international headquarters here, and Nexolon America is establishing its North American headquarters here.

Lewis also said there are contracts to come on the project, which could mean more jobs for U.S. companies. OCI still is working on contracts for everything from who will build the solar farms to who will manufacture components or frames for the solar panels.

“That's the real genius of this deal and was one of the major goals of Mayor (Phil) Hardberger and, later, Mayor Castro,” said Tom “Smitty” Smith, director of Public Citizen's Texas Office. “It was to create a clean-energy economy in San Antonio by using the purchasing power of CPS to bring jobs home instead of continuing to ship your money to Wyoming to buy coal or to California to buy solar panels.”

jbaugh@express-news.net

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