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How the Virus Slowed the Booming Wind Energy Business

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Even as businesses around the world shut down this spring, executives at EDF Renewables were hopeful they would finish installing 99 wind turbines in southern Nebraska before a year-end deadline. Then, in early April, the pandemic dealt a big blow to the company.

A manager at a factory that was building the giant cylinders on which the turbines sit had died of the coronavirus, shutting down the plant and delaying EDF’s work by five weeks. That and other setbacks — including construction workers at the site in Nebraska contracting the virus — have hampered EDF’s efforts to finish the $374 million project by the end of the year. A prolonged delay could increase costs, threatening the project’s financial viability.

The company’s struggles are emblematic of how the pandemic has disrupted global supply chains and imperiled tens of billions of dollars of investments and millions of jobs, with retail stores and oil and gas companies among those hit hardest. But EDF’s challenges show how the pandemic has walloped even thriving industries like renewable energy.

The American Wind Energy Association estimates that the pandemic could threaten a total of $35 billion in investment and about 35,000 jobs this year. The losses could grow if the coronavirus continues to disrupt the economy well into next year.

“Every part of the supply chain has been hit by this,” said John Hensley, the wind association’s vice president of research and analytics. “Certainly if we see major delays, it can take a major economic toll.”

Wind turbines provide more than 7 percent of U.S. electricity and are the largest carbon-free energy source after nuclear power plants. Nebraska gets about 20 percent of its electricity from wind, and when it is complete, EDF’s project will have the capacity to meet the electricity needs of about 115,000 homes.

The wind energy business was growing about 10 percent a year before the pandemic. But industry officials now fear that projects under construction might be postponed or canceled because of the pandemic. The industry had hoped Congress might provide aid to renewable energy, but it got little from the stimulus bills passed in the spring.

The industry did receive some help from the Treasury Department, which in May gave wind energy developers more time to complete construction in order to qualify for a federal tax credit. Businesses now have to finish projects they began in 2016 and 2017 within five years, up from four years previously. EDF began its project in 2016.

“Everybody is trying to figure out how everything is going to land,” said Benoit Rigal, a vice president of engineering and construction for EDF.

ImageSome of the components, like the towering cylinders on which turbines sit, are so large that they have to be delivered by truckers with special training and permits.

On March 13, EDF was preparing the site to receive three dozen blades that harness the wind. These are some of the first components the company had expected to arrive in the village of Milligan, Neb., less than an hour southwest of Lincoln.

But three days before the blades were scheduled to arrived, Dwynne Igau, an EDF planning and construction manager in charge of the project, received worrying news: one of her workers had taken ill. Ms. Igau quickly called off the delivery and ordered about 30 percent of her crew into quarantine.

The areas around Milligan experienced an early surge in coronavirus cases, driven in part by infections at meatpacking plants. Just a few hundred people live in the village, a railroad community incorporated in 1888 that is surrounded by rows of cornfields and is known as the “Hospitality Capital of Nebraska” because it has services like a salon and spa.

According to EDF, at least three workers tested positive for the virus this year. Several people who worked as contractors and equipment suppliers have also gotten sick.

“We didn’t really think it would spread that much and that fast,” said Gilles Gaudreault, transport and logistics manager who also oversees the project.

Normally, Ms. Igau would have been at the construction site to manage the work. But the pandemic had forced her to work from her home, in a suburb of Austin, Texas, more than 800 miles away. Ms. Igau also had to deal with an outbreak closer to home: Her daughter’s college roommate came down with the coronavirus, forcing the family to shuttle her daughter back and forth multiple times from Texas A&M University, about two hours away.

Ms. Igau had spent seven years leading project operations but had never encountered anything like this. It was the first time she lost access to her crew for days on end.

“There was so much uncertainty in the March, April time frame about what our deliveries would look like,” Ms. Igau said. “Would we have components in that time frame to start putting these components together?”

The blades that were delayed in mid-March were on their way from China and sat for days at a railway yard in central Nebraska. But that delay was hardly the last of Ms. Igau’s problems.

Another set of blades, from India, were delayed when the government there closed a factory because of a coronavirus outbreak. The plant eventually reopened, but the shutdown had a lasting impact, and the last seven of those blades just arrived at a Houston port last week.

Ms. Igau and EDF had to make numerous other changes at the construction site that also slowed work down. Crews of four or five workers could no longer pile into a pickup truck to drive around a work site. Each worker would have to drive on their own. Some inspections that were typically done by teams of workers would now require a drone to reduce the need for people to be close to each other.

A big weekly meeting on Wednesdays that used to involve some 300 people standing shoulder-to-shoulder in a parking lot was scrapped. Instead, managers met with groups of 10 workers who were required to stay at least six feet apart. EDF also did away with daily 8 a.m. meetings in a manager’s trailer. Everybody was required to wear masks, in addition to gloves. And EDF started conducting regular temperature checks.

Just as the work crews were adjusting to those changes, EDF confronted yet another challenge: heavy rain that made it difficult for delivery crews and construction workers to move around.

“If you’re trying to receive components, you really have to have tiptop roads,” Ms. Igau said. “We had messy conditions and we had a number of people out.”

In the first week of April, EDF received word from the cylinder maker, which is based in Mexico, that a logistics manager had died from the coronavirus.

“That whole team was quarantined for two weeks,” Ms. Igau said, adding that for a time she couldn’t even get the contractor to confirm when “they would be able to return to work.”

She spent days looking for other suppliers and worrying that the setback would mean that the project would not be done by the end of the year. But few companies make the cylinders, which have to be strong enough to hold up heavy turbines and withstand stiff winds. There was little spare capacity available, and even had she found another factory, there was no guarantee she would have been able to arrange for transportation because the shipping routes had been disrupted by the pandemic, too.

“How will we finish by the end of the year?” Ms. Igau recalls asking herself. Another concern: What should she do with construction workers if there were no towers for them to erect?

Even once the cylinder factory was up and running again, new problems cropped up. The cylinders had been scheduled to be sent by rail. But the delay meant there was no space on a train heading in the right direction, so they would now have to be sent by truck.

The cylinders, which are generally as tall as a five-story building, require a special class of truck that can only be operated by drivers with special training and permits. The drivers are typically older than 50, which makes them more vulnerable to the coronavirus. In addition, most drivers and their trailers were already busy ferrying other massive cargo.

But it wasn’t just the cylinders that Ms. Igau had to worry about. She was also having trouble securing blades for her turbines.

Supplies of balsa wood, a major component of wind turbine blades, became scarce this spring because about 95 percent of it comes from Ecuador, which was overwhelmed by the pandemic. At one point, so many people were dying there that bodies wrapped in plastic bags lay in the streets.

With just over two months left in the year, the first five turbines started spinning last week, giving EDF some hope that it will meet its deadline. But the number of coronavirus cases are on the rise across the country, and flu season is beginning, leaving executives uncertain.

“Every day something could happen on site that means our entire team could go into quarantine,” Ms. Igau said. “I don’t know how we will finish by the end of the of the year.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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