Custom Search

Wednesday, September 28, 2011

Another Billion In Solar Energy Loan Guarantees Finalized While Solyndra Failure Still Being Investigated

By Susan Duclos

I am looking at multiple dueling headlines which leave me shaking my head and wondering what the hell the Obama administration and the Energy Department are thinking.

What you will see below, in short is that Solyndra defaulted on its $535 million loan and has shut down (Headline one), two other solar industry companies that received money from Obama's stimulus plan have filed for bankruptcy or bankruptcy protection (Headline two). The Deputy Secretary of Energy wrote that a combination of issues including the 42 percent plummet of the price of solar cells has "taken a serious toll on solar manufacturers everywhere," (Headline two) but the Energy Department has gone ahead and finalized more than $1 billion in loan guarantees for two separate solar energy projects (Headline three) and will announce on Thursday whether nine federal loan guarantees amounting to $6.5 billion for green energy projects will get final approval, to create jobs which will cost $23 million per job. (Headline four)

First headline- "Solyndra Said to Have Violated Terms of Its U.S. Loan."

Solyndra LLC had such steep financial problems in late 2010 that the company violated terms of its loan-guarantee agreement with the Department of Energy and technically defaulted on its $535 million loan, according to people familiar with the matter.

The failed solar-panel maker, which is under numerous criminal and congressional investigations, ran so short of cash in December 2010 that it was unable to satisfy certain terms of its U.S. loan agreement, these people said. The agreement required Solyndra to provide $5 million in equity to a subsidiary building its factory but cash-flow problems prevented those payments.

WSJ's Ryan Tracy reports a new Congressional report says warnings about Solyndra's competitive abilities came out before the government awarded the company a $535 million loan guarantee and the company's subsequent collapse.

The Energy Department ultimately restructured the loan agreement to help keep the company afloat and Solyndra continued to draw money from its loan.

Solyndra's cash-flow problems in late 2010 had previously come to light but it was not known that the company technically defaulted on its loan and violated its agreement with the U.S. government.

The company's financial problems prompted the Energy Department early this year to allow it to reshuffle its debt. Under the arrangement, private investors agreed to provide a new $75 million loan and won the right to be paid ahead of the government if the company was liquidated.

The default is the latest indication of the serious financial troubles afflicting California-based Solyndra, which filed for bankruptcy protection earlier this month. It will likely add to questions surrounding the Obama administration's backing for the company even as its financial problems mounted.

Solyndra is not the only solar industry company to have filed for bankruptcy or bankruptcy protection.

Second headline - "Solyndra Not Sole Firm to Hit Rock Bottom Despite Stimulus Funding."

At least four other companies have received stimulus funding only to later file for bankruptcy, and two of those were working on alternative energy.

Evergreen Solar Inc., reportedly received $5.3 million of stimulus cash through a state grant to install 11,000 photovoltaic panels installed at 11 colleges and universities, a recycling facility and an education center in Massachusetts.

The company, once a rock star in the solar industry, filed for bankruptcy protection last month, saying it couldn't compete with Chinese rivals without reorganizing. The company intends to focus on building up its manufacturing facility in China.

SpectraWatt, based in Hopewell Junction, N.Y., is also a solar cell company that was spun out of Intel in 2008. In June 2009, SpectraWatt received a $500,000 grant from the National Renewable Energy Laboratory as part of the stimulus package. SpectraWatt was one of 13 companies to receive the money to help develop ways to improve solar cells without changing current manufacturing processes.

The company filed for bankruptcy last month, saying it could not compete with its Chinese competitors, which receive "considerable government and financial support."

On Tuesday, Deputy Secretary of Energy Daniel Poneman wrote an editorial for "USA Today" in which he blamed China in part for the failure of U.S. solar energy manufacturers to compete.

"Winning will require substantial investments. Last year, for example, the China Development Bank offered more than $30 billion in financing to Chinese solar manufacturers, about 20 times more than U.S.-backed loans to solar manufacturers," Poneman wrote.

"Unfortunately, expanding production has coincided with short-term softening demand, a product of the banking crisis in Europe and its wider economic effects. The combination has had a dramatic effect on the price of solar cells, which has plummeted 42 percent in the past nine months. This has taken a serious toll on solar manufacturers everywhere, including the U.S," he continued.

Notice the last part of that which I emphasized and then read the next headline.

Third headline- "Energy Department approves $1B in solar energy loan guarantees."

The Energy Department announced Wednesday that is has finalized more than $1 billion in loan guarantees for two separate solar energy projects.

The decision comes several weeks after Solyndra, a California-based solar manufacturer that received a $535 million loan guarantee from the Obama administration in 2009, filed for bankruptcy and laid off 1,100 workers, setting off a firestorm in Washington.

DOE announced a $737 million loan guarantee to help finance construction of the Crescent Dunes Solar Energy Project, a 110-megawatt solar-power-generating facility in Nye County, Nev. The project is sponsored by Tonopah Solar, a subsidiary of California-based SolarReserve.

The Energy Department said the project will result in 600 construction jobs and 45 permanent jobs.

Fourth headline- "DOE Mulls Green Energy Loans At $23 Million Per Job."

The Department of Energy is set on Thursday to announce whether nine federal loan guarantees amounting to $6.5 billion for green energy projects will get final approval.

The number of full-time, permanent jobs they would create? According to the DOE's own figures, a grand total of 283. That is nearly $23 million per job.

Again please notice how I emphasized the words "permanent jobs" and let's take a trip down memory lane to Joe Biden during a video-chat on the same day as a new Solyndra plant opened.

“Once your facility opens, there will be about 1,000 permanent new jobs here at Solyndra and in the surrounding business community and hundreds more to install your growing output of solar panels throughout the country,” Biden said. “It’s important. It’s important because these jobs are permanent jobs.”

When Solyndra shuttered, 1,100 people lost their jobs.

You can even visit YouTube and hear Biden say it if you don't believe ABC's quote. It is a 25 minute video but he says the now famous line at the 4 minute 30 second mark.

Have I not had enough coffee today? Is it just me? Or is something seriously wrong with this picture?