That’s right — losing over $500 million of taxpayer money wasn’t enough. The Obama administration wanted to throw away about double that to their politically-connected friends. And that one smelled bad enough. “Documents reveal a startlingly cozy relationship between wealthy donors and the president’s confidantes, especially in matters related to Solyndra,” Cliff Stearns (R-Fla.), chairman of the committee’s investigations panel, said, according to The Post.
Now we find another green technology and energy company receiving a large slice of American taxpayer dollars as part of a program the Obama administration set up to funnel money to assist green companies — SunPower.
Not Again? Yes, Again. And Even Worse.
According to SunPower’s own account, co-founder Richard Swanson, working on a doctorate in engineering at Stanford, contemplated the long gas station lines of the early 1970s caused by boneheaded Nixon administration price controls. Nevertheless, it got him thinking.
He noticed that solar cells were being used on satellites, and took up the challenge to figure out how to make the cells more cost-effective. By 1985, Swanson, by then a professor of electrical engineering at Stanford, received grants from the Electric Power Research Institute and the U.S. Department of Energy to support solar power explorations. He incorporated SunPower.
SunPower, Meet PowerLight.
At the same time PowerLight founder Tom Dinwoodie “was experimenting with what was to become PowerLight’s flagship product, PowerGuard solar roof tiles for commercial buildings,” according to SunPower sources. Dinwoodie convinced Pacific Gas and Electric Co. to install PowerGuard on a DOE building near Folsom, California, their initial foray in the large-scale solar photovoltaic (PV) market.
One of SunPower’s first major customers came in 1993 when Honda, gearing up for the annual Darwin to Adelaide solar car race across Australia, wanted efficient solar cells, which SunPower built for them. Honda won the race “by an entire day,” SunPower officials say, noting that subsequently NASA used SunPower’s cells for the world’s first solar-powered aircraft, the High-Altitude, Long Endurance UAV Project.
Around this same time PowerLight finished the first commercial PV installation in North America, in Hawaii, and did a rooftop solar system comprised of 14,000 panels on Long Island, the biggest such installation in America by the early 2000s. In 2004 the company completed, for the Bavaria Solarpark power plant in Germany, the world’s largest PV installation. So we’re talking companies who know what they’re doing.
In November of 2005 SunPower went public, and in January 2007 SunPower and PowerLight became one entity. Then in 2008 SunPower signed an agreement with PG&E to build the world’s largest – 250 MW – photovoltaic power plant, set to begin energy delivery in 2010.
So Far So Good? Not Exactly.
Now, friends, it doesn’t matter what your political orientation is, or what you think of the feasibility of solar energy as a power source, it’s hard on any grounds to justify giving $1.2 billion to SunPower’s project to help build the California Valley Solar Ranch in San Luis Obispo County under the rationale that it was “helping create green jobs.”
The project would create permanent jobs, all right — all 15 of them after a couple hundred construction jobs were over. Or about $80 million in taxpayer money for each job. Oh wait, there will be more jobs created by the company — at its Mexicali location. Thanks American taxpayers.
But the Obama administration forged ahead with the deal. In April of this year the Energy Department gave SunPower a conditional loan guarantee, “even though the company was receiving financing in the capital markets,” according to Investors.com, which noted that shortly after the conditional guarantee, “French energy giant Total bought a majority ownership in SunPower and extended a $1 billion credit line to the company.”
As business journalist Elizabeth MacDonald, following the story, put it, “Why hit up taxpayers to get backstops on loans?” She also noted in re the Total deal, “Soon after the project run by SunPower got this loan guarantee, SunPower sold a big stake in itself, an estimated $1.3 billion, to French energy giant Total, at a 46% premium to its shares at the time.”
This is not the kind of company that deserves such a publicly-financed loan. They posted $150 million in losses during the first half of this year. Its debt is nearly 80 percent of its market value, according to Fox News, which also reported that the company is facing class action lawsuits for misstating its earnings.
SunPower ‘Very Dependent On Government.’
In fact, according to MacDonald, “SunPower admits in its SEC filings that it is very dependent on government, without which its revenues would drop. It also says in its SEC filings that it doesn’t have long-term contracts with customers and could lose customers without warning, and that a big slug of its revenues depends on a limited number of customers.”
And the loan was made only hours before the DOE 1705 loan program expired at the end of Fiscal Year 2011 on Sept. 30. That the loan was made at all beggars belief, until one follows the whiffs of corruption surrounding the deal.
Democrat Rep. George Miller’s son, George Miller IV, is SunPower’s top lobbyist, and he was paid $178,000 to lobby on behalf of the company. And as Fox reported, “the elder Miller, a powerful California Democrat, toured the plant last October with Interior Secretary Ken Salazar.” The project is not in Miller’s congressional district. Miller’s office did not respond to a request for comment.
Industry observer Neil W. McCabe wrote that SunPower now carries $820 million in debt, “an amount $20 million greater than its market capitalization. If SunPower was a bank, the feds would shut it down. Instead, it received a lifeline twice the size of the money sent down the Solyndra drain.”
As McCabe reported, SunPower PAC filings show that for the 2010 midterm election campaign cycle, it donated $14,650 to Democrats and $1,000 to Republicans.
DOE Says Deal Made Solely On Its Merits. Really.
For its part, the Department of Energy has issued a press statement saying no, the deal was made solely on the wonderful merits of SunPower. DOE officials say the deparment conducted “months of rigorous technical, financial and legal due diligence” on this project so it met “the requirements of the program — helping America win the clean energy race and create new industries for American workers.”
Rep. Darrell Issa, chairman of the House Oversight and Government Reform Committee, who’s looking into the assorted green funding scandals in the Obama administration, sees connections between the taxpayer money doled out to Solyndra and SunPower, among other green firms — he said “We’re finding it’s not just Solyndra. It’s a pattern of these sorts of investments.”
It’s not that SunPower was doing so well — as McCabe wrote, “Although its stock has recovered from its all-time low Oct. 4 of $6.60 per share to trade between $8 and $9 per share, it has been a steep slide from its all-time high Dec. 3, 2007 of $133. Then, the company was worth $13 billion.”
Government Subsidizing Manufacturing Is A ‘Losing Game.’
The Houston Chronicle recently posted a blog saying the bigger problem in all this shady green business, with the SunPower loan, is similar to one that plagued Solyndra: “The government is essentially subsidizing manufacturing, which is a losing game. Public companies already have economic incentive to make manufacturing more efficient. Where government money can have a role is underwriting design and innovation that U.S. companies might not otherwise be able to fund. That, though, often has nebulous results that can’t be measured in jobs and therefore lacks political appeal.”
As the Chronicle blogger put it, “the government is still trying to buy jobs with economic development money instead of funding innovation that will lead to long-term growth for U.S. employers.”
Look, we’re all for green jobs. It says so on our title page, see? But we’re for the sort of green jobs that are actually jobs, not just government-subsidized boondoggles. We want green jobs that are actually market-efficient and desirable. This is why we tend to be suspicious of government involvement in picking winners and losers in the economy at large, not just green jobs — it skews reality.
If a company can make it on their own in the marketplace, it’s because they offer something people want at a price people want to pay for it. If they can’t, the way we see it, they need to change either what they’re offering or what they’re charging. Picking up the phone and calling in your cronies in the government to dip into public funds to subsidize you is a loser’s game. Unfortunately it seems to be the one this current administration wants to play.