A Narrow Escape For Taxpayers

Posted on April 2, 2012
by John Hinderaker
Powerline Blog:

The collapse of the “green” energy industry continued today, as Solar Trust of America LLC filed for bankruptcy. Solar Trust was, it claimed, carrying out the world’s largest solar energy project in California. Two things make Solar Trust’s bankruptcy especially newsworthy: first, Barack Obama’s Department of Energy offered the company a $2.1 billion loan guarantee just last year. Fortunately, Solar Trust turned it down:

It would have been one of the largest stimulus-funded clean-technology projects, and Solar Trust had been negotiating the deal for roughly a year. But [Solar Trust's CEO Uwe] Schmidt decided it was too risky. …

The Obama administration’s vaunted initiative to catalyze the U.S. clean-energy industry — under attack for betting half a billion dollars on the solar-panel manufacturer Solyndra, which closed last month — has become a case study of what can go wrong when a rigid government bureaucracy tries to play venture capitalist and jump-start a nascent, fast-changing market.

Schmidt concluded in early 2011 that the influx of inexpensive flat solar panels was undercutting his company’s year-old proposal to use a field of parabolic mirrors that focus the sun’s energy to heat liquid-containing tubes. Despite market changes, however, the terms of the federal loan guarantee wouldn’t let Solar Trust switch in midstream to flat panels. So Solar Trust sought private financing.

So the Obama administration’s proposed loan guarantee was so dumb that the prospective borrower decided not to take it! That tells you all you need to know about the Obama administration’s ability–actually, the ability of any administration–to execute an industrial policy that doesn’t fleece the taxpayers.

Of course, Mr. Schmidt remained high on “green” energy even though he decided not to take the taxpayers’ money. He blogged about it at the Huffington Post, suggesting that voters shouldn’t let Solyndra dampen their enthusiasm for government-funded energy boondoggles:

Without a clear government mandate and ongoing support for renewable energy, America will continue to be dependent on foreign energy sources, mostly from countries in a region beset with political volatility.

So what went wrong with our federal program to support renewables? Nothing, except one company’s bankruptcy has cast doubt on the credibility of a government program that is otherwise being administered with incredible efficiency.

Except for the occasional offer to guarantee $2.1 billion in loans to a company that is about to go bankrupt.

Indeed, despite the posturing and finger pointing, the American solar energy industry is alive and well. I should know. My company, Solar Trust of America, is planning to build over 2,000 MW of new solar plants in the coming years. …

By 2014, the United States will become the largest solar market in the world, with new solar plants being the largest source of new electric generating capacity in the US.

That obviously isn’t going to happen.

What that adds up to is jobs. Good jobs.

News accounts indicate that as of its bankruptcy filing, Solar Trust employed nine people.

The second reason why the Solar Trust bankruptcy story is remarkable is that its own German parent companies declined to continue funding the company, even as Steven Chu’s Department of Energy was willing to put American taxpayers on the hook to the tune of $2.1 billion:

The company filed for Chapter 11 bankruptcy protection in Delaware on Monday after majority owner Solar Millennium—now under the control of a German bankruptcy professional—stopped putting money into the company. …

The company tried to sell itself last year to another German solar-power company, Solarhybrid. Solarhybrid executives blamed the deal’s collapse on dwindling European subsidies for alternative energy.

Solar Millennium filed for Germany’s equivalent of bankruptcy in December. Amid the economic crisis, European governments are slashing programs that once made it more affordable for residents and businesses to buy expensive solar systems.

The insolvency administrator put in charge of the company’s bankruptcy case, Volker Boehm, has “ceased to provide any funding whatsoever” to the project, according to court papers.

Solar Trust was founded in 2005 by Solar Millennium and another German industrial heavyweight, Ferrostaal AG. Ferrostaal, which owns a 30% stake, stopped putting money toward Solar Trust two years ago, according to court papers.

What could better illustrate the rampant fraud or incompetence–take your pick–that besets the Obama administration? One of the owners of Solar Trust, a German “industrial heavyweight,” refused to put any more money into that company two years ago, while the Obama administration was willing to pour $2.1 billion of American tax dollars down the rathole just last year. And even today, as the solar and wind industries collapse in a sea of unpaid bills, Barack Obama yaps on and on about how taxpayers should invest in “green energy.” The man’s economic ignorance is frankly staggering.