Scandals make private investment more difficult for promising industry
If you’re a small-business person running a solar energy company, this is the right time to start getting pretty steamed. By now, it’s apparent government solar subsidies are less about generating electricity than about generating ineptly concealed payback for political supporters and appeasing a political base.
All this, because federal and state governments, including Colorado, felt they could direct one of the largest segments of any economy — energy— better than the marketplace and technology. With solar energy, we even have a past example of the cart-before-horse problem with new technology.
During the energy crisis of the Carter administration, some people sitting in those gas lines while the sun beat through their windshields felt it might be helpful to use that heat in houses. Environmentalists at that time gave a rebel yell to the idea of doing away with fossil fuels, in the interest of the mighty sun.
A lot of people and companies got very excited and the sweater-wearing, malaise-inducing Carter administration thought this was a swell idea. However, they didn’t throw money at the issue like we do now. We’ve had to recalibrate a whole new level of government hubris to get those numbers. Innovative ideas were found but were not up to the challenge and, after things started picking up, the failed economics of the idea became apparent and interest waned.
As a result, in communities like Boulder, you can still see dilapidated passive solar collectors tumbling down the sides of homes, never achieving any cost parity through energy savings and eroding the value of homes they had attempted to upgrade.
Now the idea comes full circle, only this time with a philosophy of gigantic government subsidies funneled through large corporations, often coincidentally owned, operated or managed by political donors. Failure is not an option; it doesn’t even seem a concern.
Shortly after the $500 million, taxpayer-subsidized Solyndra collapse, the U.S. Department of Energy finalized more than $1 billion in loan guarantees for two more solar energy projects. Some $737 million went to a company with ties to an Oklahoma billionaire who, the Daily Caller reports, raised $53,000 for President Obama, while another person on the company’s board contributed $30,000 to the president. The Daily Caller also reported that SolarReserve, the company receiving the guarantee, has ties to House Minority Leader Nancy Pelosi’s family.
In Colorado, questions have been raised about government subsidies for Abound Solar, which the Colorado-based Independence Institute found had an unusual relationship with Colorado billionaire and big-time Democratic supporter Pat Stryker.
It seems that, in addition to the $400 million in loan guarantees the company received in 2010, it is also the beneficiary of an investment by Stryker, who was a supporter of Colorado’s former 4th Congressional District Rep. Betsy Markey.
Markey supported the Waxman-Markey (different Markey) cap-and-trade bill, a gift for alternative energy projects that would have artificially raised the cost of other energy. After Markey’s vote, Abound Solar and others ran television ads thanking the congresswoman for her vote. Nevertheless, she lost to Republican Cory Gardner last November.
All this “investment” continues in the face of continuing solar industry layoffs and bankruptcy in the private sector. In Colorado, companies like Simple Solar found itself in bankruptcy court and Advanced Energy has announced its moving part of its workforce to China.
However, for companies with government loan guarantees, lucky investors aren’t on the hook for the money. We are. How does that happen? Well, the Denver Business Journal reported that Markey and others in the Colorado congressional delegation had pushed for approval of the Abound loan guarantees.
Government boondoggles on solar energy are destroying the next 10 years of solar investment. As scandals and questionable deals color the public perception of solar energy, support from future investors becomes doubtful. The public perception begins to identify it as an enterprise unable to be self-supporting and more akin to investing in a science-fair project than an industry.
As a coda to all of this, historian Victor Davis Hanson notes that the notion of “green” has eroded “to a tawdry profit-and-job scam for sordid hucksters and snake oil salesman.”
This is a sad turn of events for a promising technology.
Rick Wagner offers more thoughts on politics at his blog, The War on Wrong.