Can We Please Get the Feds Out of the Solar Venture Capital Business? - Granite Grok

Can We Please Get the Feds Out of the Solar Venture Capital Business?

Solyndra Obama
Solyndra was peanuts…

Your drunk Uncle Sam, he likes to play the solar ponies, but he couldn’t pick a winner if your life depended on it. But why should he care? It’s not his money.

The Economist

On March 29th SunEdison, an American firm that calls itself the world’s largest renewable-energy development company, was described in a public filing as facing a “substantial risk” of bankruptcy. A day earlier, the Wall Street Journal reported the firm was under investigation by the Securities and Exchange Commission (SEC) over accounting disclosures. Its debt exceeds $11 billion, gathered in just a few heady years.

SunEdison and its subsidies have been the beneficiaries of over $650 million in subsidies and tax credits from the federal government since 2000.

Meanwhile, Abengoa (Spain’s largest bankruptcy ever, when it happens) has $17 Billion in debt, and is the beneficiary of $2.7 Billion in loans from the US Department of Energy.

States News Service Reported Saturday that the loan guarantees, from 2010, were “for two solar energy projects and a massive cellulosic biofuels plant that has yet to announce production levels or sell any product it produces. These projects were financed with subsidized loans from the Treasury Department’s Federal Financing Bank (FFB).” The report goes on to say that,

The pro-labor union group Good Jobs First reported last year Abengoa has “received $605 million in grants and allocated tax credits; $464 million came from Section 1603 and most of the rest from Energy Department research grants.” That’s on top of the $2.7 billion the company got in DOE loans.

Taxpayer money, meet low-flush toilet, but with reason.

From the NYT International.

”The whole reason Abengoa Solar had to get the guarantee from the government is that no private lender thought the risk was worth it,” the Institute of Energy Research, a prominent renewables critic that has received financing from the oil industry, said in 2011.

Danger Will Robinson, Danger!

Wait. There are some ‘private’ investors, sort of…

(Both Companies) borrowed oodles to build large projects that delivered energy to utilities at increasingly attractive prices. They then sold the assets to publicly listed and tax-efficient offshoots, known as “yieldcos”, that funded themselves by issuing shares. Since 2014 the biggest such share sales in America were by SunEdison’s yieldcos, TerraForm Power and TerraForm Global, and by the eponymous Abengoa Yield. Each raised over $500m.

Those prices were only attractive because they were propped up (or should I say down) by other government subsidies and incentives. Think ethanol. Almost everyone in the manufacturing/installation/production/delivery chain gets a piece of your tax-dollars to make it “affordable,” all before you pay for it again to put in your car or as part of some state mandated renewable portfolio mandate–all of which makes your once cheaper fossil-fuel energy cost more as well. So the yieldcos were selling shares of something that only existed because your government gave your money to the company that built the plant and then “sold it” to a subsidiary of their own making, so they could then charge you more for electricity your power company has to buy that you would never really want or need if you understood that you are just a mark in an environmental confidence scheme, getting taken at so may level it’s hard to keep track.

For the record, Abengoa claims it has paid back a billion, by the way, and that US taxpayers won’t lose any money, but we have no reason to believe them. They are, after all, a huge global company with $17 billion in debt. America is a huge solar investor with $20 Trillion dollars in debt, and a gambling habit. That makes them as likely to give them more as to settle accounts.

I honestly would not be at all surprised if they doubled down. It is, after all, not their money.