Skip to comments.Taxpayers Take Hit as Solar Industry Implodes
Posted on 01/04/2012 12:23:21 PM PST by jazusamo
In a year where Solyndra became the face of the solar industrys chronic failures, even the holiday season could not prevent one last flurry of layoffs in 2011.
The Mountain Enterprise (based in Frazier Park, Calif.) reported over the weekend that First Solar, Inc. which the media sometimes identifies as the largest solar company in the world laid off half its employees on Friday at its Antelope Valley Solar Ranch One project. The facility has been the subject of controversy in the local community over the effects it will have on land use, wildlife, and water usage.
In a September 30 press release that announced the sale of the 230-megawatt photovoltaic farm to Exelon (First Solar will still build, manage and operate the project), up to 400 construction jobs and as many as 15 operations positions were supposed to result. TheDepartment of Energy, which provided a $646 million loan guarantee for AVSR1, pegged the job creation at 350 construction and 20 permanent.
We are pleased to be working with Exelon to realize the AV Solar Ranch One project, providing clean, affordable energy and hundreds of construction jobs to California, said Frank De Rosa, a First Solar senior vice president.
The cutbacks follow the announcement earlier in December that First Solar would eliminate 100 positions, including 60 at a research and development center in Santa Clara, Calif. Among those departing were the companys chief technologist, Markus Beck, who served in the same role for Solyndra before joining First Solar in 2008.
The company, like the entire solar industry, has survived on government grants and guarantees. Besides AVSR1, for example, the DOE partiallyguaranteed $1.46 billion in borrowing for its Desert Sunlight Solar Farm west of Blythe, Calif. And $967 million in DOE loans covered First Solars Agua Caliente Solar project in Yuma County, Ariz. Also, the U.S. Export-Import Bank backed $455.7 million in loans to First Solar for projects in Canada. Add millions of dollars more in manufacturing tax credits, state and local incentives, plus mandates to force utilities to buy renewable power, and youve got an industry that is wholly dependent on taxpayers, not on its own technologys capabilities.
Worse, the Venture Capitalist-in-Chief (and his top bettor, Energy Secretary Steven Chu) seem to have placed several piles of chips on another business in freefall. 24/7 Wall Street identified First Solar (FSLR) as one of the 13 worst big stock stories of 2011, with prospects looking poor for this year as well. Shares peaked just above $175 in February, but now stand at around $33, despite being named one of Forbess 25 fastest growing tech companies in America nearly a year ago.
First Solar Inc. went from the U.S.s solar sector poster boy to perhaps the worst performing S&P 500 stock, the sites analysts wrote.
The companys stock collapse is alarming considering the massive infusion of government support, and the healthy boost it received when it was sold in 1999 to an investment firm that handled the Walton familys money. The late John Walton, son of Walmart founder Sam Walton, reportedly infused First Solar with $150 million and took a seat on the company board. His estate unloaded much of its First Solar stock in mid-2009. Good timing.
The downturn in value led to the firing of company CEO Rob Gillette in October, which 24/7 Wall Street characterized as strange and sudden. Co-founder Michael Ahearn was brought back to replace him. This followed expenditures of $2.2 million on lobbying since 2007, according to Bloomberg News, which also reported representatives met Obama administration officials before winning the aid, government records show. First Solar outspent Solyndra by about $1 million on lobbying during the same period.
In addition the company spent heavily in that gravy train of states for renewable incentives, California. Bloomberg reported the company gave more than $150,000 to Golden State political campaigns last year more than triple what BP gave and has received $3.43 million in state sales tax credits.
Its a pretty substantial amount for an emerging-tech company, said Phillip Ung of California Common Cause. We can only assume theyre giving that much to legitimize themselves in the political system. Access got them some benefits.
Similarly, First Solar extracted at least $51.5 million in incentives from state and local government in Arizona to build a manufacturing facility in Mesa. Ahearn and his wife Gayle also listed as a co-owner donated $65,000 to the Democratic Party of Arizona since the 2008 electoral cycle, according to the Center for Responsive Politics.
Federal candidates also reaped benefits of the Ahearns, and several other First Solar employees, largesse. Michael Ahearn donated $40,400 to the Democratic Senatorial Campaign Committee since 2008. Company executives and staffers also gave $37,158 to President Obama and various other Democrat candidates for Congress during that time.
Now though, despite its past dependence on pursuit of political favor, First Solar says it will move away from subsidized markets and will bet its future on sales in countries in which solar companies that can provide low-priced equipment and engineering services will make money and stay in business, according to a report on technology Web site Gigaom.com. Company officials said they will soon announce a three-year plan to stay in markets that arent heavily dependent on government incentives and political whims that can dramatically shrink their appetite for solar electricity, the Web site reported, after listening on a conference call led by Michael Ahearn.
Good luck with that. Just where those unsubsidized markets are in the world, Im not aware of them. And its not like I havent been asking.
First Solar will also quickly learn such markets for its energy technology do not exist. Its stock price has tanked even with those subsidies, so look for the job losses and taxpayer outrage to increase, just like with Solyndra.
Paul Chesser is an associate fellow for the National Legal and Policy Center.
More subsidized failure!
Better too many than none. :-)
Thanks for pinging your list on these threads!
Another Obama/Soros vote-getting “green” sham going down the tubes. I hope our Repub nominees are keeping track of how many of these criminal scams that Obama has used to launder campaign and payback money.
I could kick myself for not climbing into the feeding trough this absolutely bogus nonsense has become. The whole solar thing fails scrutiny via sixth-grade math. The thieves who managed to bamboozle this administration with their BS will walk with tens of millions of dollars and some other pile of folks will buy the assets for 7 cents on the dollar.
Should have known, but, more, should have somehow profited. Once again, it is demonstrated that there is nothing Wall St loves more than a heaping pile of steaming BS.
Wow, what better headline to go along with this “Jimmy Carter on Steroids” administration?
Wouldn’t that create a Black Hole? Like, “S&%$! All the money must have gone down a big, black hole!”
Amen...Jimmy Carter on Steroids administration is precisely right.
Great tagline, Chief Dan George said it like no one else can.
There was no bamboozling going on (except for the idiot media and unwitting taxpayers). 0 knows this is a useless hopeless enterprise — he just wants to get in on the looting of the Treasury.
The solar “industry” fails every time the sun goes down in the evening and when there are cloudy or rainy days.
I would say that the bamboozling occurred by the proprietors of these solar cos. Why do I say that?
Because our current government/corporate structure (and...it is an interesting point of ponderment whather giovernment learned from business or business learned it from government)
1: establish a business entity, or, create a line of business within an existing business, whose success is contingent upon a terminable government mandate. Eg; CRA, “solar is good, never mind the math”.
2: Obtain significant funding, either by registering and selling securities or obtaining government grants, based upon goofball, totally unrealistic business plans and projections.
3: Raid the coffers of the organization in favor of the management, to the extent that the enterprise is likely to fail, whether from lack of/depletion of capital, or by the “catch up” of the realities of the market, (via simple math) such non-reality being hidden by the influx of mass capital at the beginning of the enterprise.
4: Declare bankruptcy “unexpectedly” in such a way that the bonuses, etc; paid to management are forgotten about.
5: Sell, if possible, the assets purchased by the company to insiders at dime-on-the-dollar prices.
6: At that point, there is no corpus to claw back. Just lie low until the statue of limitations tolls.
How American business now operates.
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