As the following article by Diana Furchtgott-Roth points out,

the Department of Energy is hell-bent on spending taxpayer dollars on

not-yet-proven renewable energy technologies.

They are not only unproven, but their results in almost every case are

not cost-effective.

By spending more taxpayer dollars on these efforts, the DOE continues to heap debt on the heads of taxpayers. Kind of makes one wonder why!

The DOE Hasn't Learned Its Solyndra Lessons
By Diana Furchtgott-Roth

RealClearMarkets.com
October 6, 2011.

Some might think the Energy Department learned from the September Solyndra bankruptcy, in which taxpayers have a $528 million exposure. Surely September would have been a good time to halt the Energy Department's loan guarantee program and understand why this program has become the poster child for crony capitalism.

But instead of pausing, the Energy Department recklessly issued another $8 billion of loan guarantees in September under the Energy Policy Act of 2005.

Why last month's haste to put taxpayers at even more risk? No doubt, the administration was aware that the legal authority for the loan guarantee program was going to end on September 30. Rather than understand why the program was defective, the administration, ardently committed to promoting renewable energy, rushed ahead where a more angelic government might have feared to tread.

Twelve companies received loan guarantees last month, including First Solar ($2 billion), Sunpower Corporation ($1.2 billion), and Abengoa Solar (a second load for $1.2 billion, following a first loan for $1.4 billion in December). This brings to $16 billion the sum of guarantees issued by the government under the program since 2009, according to Energy Department spokesman Sonia Taylor.

Which one will be the next Solyndra?

Will it be 1366 Technologies, Inc, located in Lexington, Massachusetts, which received $150 million on September 8? The company's plan, as stated in an article by Katie Fehrenbacher in Gigaom.com in March 2011, is to break ground on its factory in March 2012 and start shipping silicon wafers in 2013.

Ms. Fehrenbacher, by the way, is the reporter who forecast the Solyndra failure back in 2010. Just like Solyndra, 1366's sales are two years in the future.

On its Web site, 1366 Technologies states, "The science is understood. The material is abundant. The products work. All that is left is to build the largest manufacturing industry in the history of mankind. This is what we intend to do."

Then why can't 1366 Technologies attract private financing? Perhaps because the schedule is unrealistic. Surely, the break ground date is pushed back since loan was only just now approved. So, how can wafers start shipping in December 2013?

It probably takes one year to build the plant. Then, three months to commence production. Of course, there is selling, delivery and finally collection of accounts receivable. That's bumping up against two years. The loan is interest-only for about two years. But 1366 still has to pay interest, so it will be under financial stress. This is very Solyndra-like.

Another Solyndra-type loan is POET LLC, in Emmetsburg, Iowa, which received $105 million to make cellulosic ethanol on September 23. Cellulosic ethanol, a fuel made from plant waste products, is still too costly to be commercially marketable.

Although cellulosic ethanol consumption is mandated by the 2007 Energy Independence and Security Act (250 million gallons in 2011, 500 million in 2012, gradually increasing to 16 billion gallons in 2022) no one has yet worked out how to make it in large enough quantities to make it cheap enough to succeed as a commercial source of energy.

The Energy Department has obviously not learned from the example of Range Fuels, a cellulosic ethanol plant in Soperton, Georgia. It closed in January 2011 after receiving $156 million in federal grants and loans in 2007 and 2008 from the Bush Administration, $6 million in grants from the State of Georgia, and $100 million from private investors. POET's prospects are similar.

Why is the government, under pressure from voters and rating agencies to reduce the budget deficit, issuing these loan guarantees at all?

The answer, we repeatedly hear, is fear of China, the new Red Scare. In the 1950s we were afraid that the Soviet Union might get ahead of us. "We will bury you," threatened Nikita Khrushchev.

Now we are throwing billions of dollars at renewable energy, electric cars, and high speed rail, projects that are too weak to attract private funding, because we're concerned that China is getting ahead of us and stealing our jobs.

On Monday, in a TV interview with ABC, President Obama said, "And what we always understood was that not every single business is going to succeed in clean energy, but if we want to compete with China, which is pouring hundreds of billions of dollars into this space, if we want to compete with other countries that are heavily subsidizing the industries of the future, we've got to make sure that our guys here in the United States of America at least have a shot."

Similarly, Brookings scholars Mark Muro and Jonathan Rothwell conclude in an article that loan guarantees are necessary because America is battling China for technological advantage in renewable energy.

And Jonathan Silver, Executive Director of the Loan Programs Office at the Energy Department, testified at a House Energy and Commerce subcommittee on September 14, "But no country has been as aggressive as China, which last year, alone, provided more than $30 billion in credit to the country's solar manufacturers through the government-controlled China Development Bank."

Surely we have descended to great depths as a nation when we have lost confidence in our own reason and instead can think of nothing better to do than mimic the actions of a commercial rival.

Despite substantial government investment and industrial policy, the Soviet Union is no more, and Russia's economy is collapsing. In the 1970s and 1980s we were worried that Japan, whose government poured money into cars and shipbuilding and high-definition TVs, would race past us. But Japan's growth has been slow for the past two decades.

If we are afraid of China's growth, domestic industrial policy is not the answer. Rather, we should improve economic growth through more efficient tax and regulatory policies. China is more to be feared with government loan guarantee programs than without, because they slow our economy and make it less efficient. America is more likely to best China without government help.

America grows when it relies on the strength of market forces, rather than when our government attempts to pick winners and losers. Loan guarantees are not a sign of confidence in markets but the exact opposite, and make no sense in these economic times, when corporations are flush with cash.

The reason that these renewable energy projects need to turn to the government for loan guarantees is painfully obvious. Their prospects are weak, and private investors and lenders would not fund the project otherwise. China and other countries might want to invest in projects that have no business case, but the American taxpayer deserves better. Much better.

Solyndra came to the attention of the American public at the end of August. Since then, the Department of Energy worked overtime to sign more loan guarantees that private investors and lenders are unlikely to make.

Some of the new Energy Department loans may actually be repaid. But others may not. Perhaps the administration can make money by organizing bets on which of its loans will go bad. Call it the Solyndra Derby.

Diana Furchtgott-Roth is a senior fellow at the Manhattan Institute.

Does Obama ever really mean what he says? He asks for bipartisanship, but doesn't listen to anyone but Democrats.

Does Obama really want to create jobs? Mostly he seems to do everything he can to kill them.

Read on to find out what happens to Republican ideas.

Obama’s ‘Save My Job’ bill versus real jobs bills

By: Ron Arnold | 09/29/11 8:05 PM

By now, most of us have digested or discounted President Obama's jobs speech before a joint session of Congress three weeks ago: "You give me $447 billion more in taxpayer funds to spend on government subsidies and I'll give you a $240 billion payroll tax cut for employers and employees."

Even on that symbolic night, Obama's applause line, "Pass this bill," had degenerated by the 15th repetition into near-mania. It sounded more like, "Pass this Save My Job bill."

It still does. Obama's bumper sticker slogan has lived on in constant White House nagging at Congress, from speeches in Raleigh, N.C.; Richmond, Va.; and Cincinnati's decaying Brent Spence Bridge -- all in swing states he wants to win to get re-elected in 2012.

But Congress, even Harry Reid's Democrat-controlled Senate, is in no hurry to pass Obama's American Jobs Act -- October, maybe, once they figure out who's going to pay for all the pieces.

However, in his joint session speech, the president may have made a strategic blunder. After his all-drama-Obama histrionics, he closed by saying that he "would consider all good ideas."

Two Republicans took him up on it. Sen. John Barrasso (Wyoming) and Rep. Steve Pearce (N.M), respective chairmen of the Senate and Congressional Western Caucuses, gave him more than 40 good ideas.

They wrote a joint letter to the president and sent him their detailed "Jobs Frontiers" report with more than 40 bills "as a collection of ideas for your additional consideration."

The "Jobs Frontiers" bills weren't just ideas. They had already been introduced in one or both chambers of Congress with triggers for instant shovel-ready jobs, unlike Obama's bureaucrat-laden, grow-the-government, beyond-the-horizon loans and grants and hopes.

Barrasso and Pearce were determined that their good ideas would not dissolve into Obama's predictions of 13 million new jobs -- with two years of help from a Democrat-controlled House and Senate -- that instead lost 2.3 million jobs, and sent unemployment climbing from 7.8 percent to 9.1 percent.

The Jobs Frontier bills deliberately and defiantly cut bureaucratic red tape, proposed developing American energy on American soil, and sought right-now, boots-on jobs in the West and across the country.

Barrasso and Pearce gave Obama examples: "For instance, Mr. President, the Southeast Arizona Land Exchange and Conservation Act offered by Congressman Paul Gosar [R-Ariz.] would pave the way for a copper mine in Superior. Arizona, and immediately bring 1.400 new jobs to an area in desperate need. The San Joaquin Valley legislation offered by Congressman Devin Nunes [R-Calif.] would bring 25,000 to 30,000 jobs back to California."

The two caucus leaders patiently explained some of their other bills. "The three Outer-Continental Shelf bills offered by Congressman Hastings [R-Wash.] would create 250,000 short-term jobs and over 1.2 million jobs in the long term. The Domestic Jobs, Domestic Energy and Deficit Reduction Act offered by Senator David Vitter and Congressman Rob Bishop would create over 2 million jobs and $10 trillion in Gross Domestic Product at zero cost to the taxpayer."

The two lawmakers closed politely: "We take you at your word that you will consider all good proposals."

The letter and report appear to have submerged into the White House oblivion file.

It was predictable. The White House regularly takes action against specific industries with lots of jobs to kill: My tally of Obama targets and how many existing jobs need protecting: Oil and gas (9 million jobs); coal (550,000); hydropower (200-300,000); geothermal (13,000); meat production (6.2 million); forest products (900,000); hunting and fishing (1.1 million jobs).

My vote for worst Obama job killers goes to Interior Secretary Ken Salazar and Environmental Protection Agency head Lisa Jackson. I'm not pointing my finger at them, I'm just pointing to the door where they should march immediately, then out to the unemployment line with their countless victims.

Examiner Columnist Ron Arnold is executive vice president of the Center for the Defense of Free Enterprise.

Read more at the Washington Examiner: http://washingtonexaminer.com/opinion/columnists/2011/09/obamas-save-my-job-bill-versus-real-jobs-bills#ixzz1ZYEByfLo

How do you say "payback?"

The Solyndra deal sure smells fishy on the part of the Obama administration!

Read CARE favorite Diana Furchtgott-Roth's research on the situation?

Solyndra and the Perils of Industrial Policy 


By Diana Furchtgott-Roth



RealClearMarkets.com


September 22, 2011.

There is no better proof of the risks of "green" industrial policy, or the misuse of "stimulus" funds, than the case of Solyndra, the California solar company. It declared bankruptcy this month after receiving a total of $535 million in federal loans. 



The tangled tale of Solyndra, a California company that thought it could make solar panels that turn sunshine into electricity and sell them profitably, ably illustrates the perils of "industrial policy," a shorthand phrase for the government's deciding which new industries or start-up companies to support with federal money or loan guarantees. 



Republican and Democratic administrations have endorsed so called "green" energy ventures/enterprises that promised to pursue renewable, noncarbon-based energy production or energy conservation. (By now, even the most casual observer has noticed that companies are eager to call themselves "green.") 



President Obama, seeking to burnish his Administration's image as pro-environment, has made numerous visits to companies that tout themselves as "green." 



Solyndra received a $535 million loan from the Federal Financing Bank, guaranteed by the Energy Department under its loan guarantee program for innovative clean energy technologies. 



The company, founded in 2005 and based in Fremont, California, had used $460 million of these loans by February 2011 to build a second factory, even though it still had excess capacity at its first plant.

With Solyndra's bankruptcy, the bulk of these funds are lost to taxpayers. 

By January 2011, it was clear that the company was going to fail. Still, the Energy Department helped shore up Solyndra by allowing it to draw on another $68 million in government loans. In addition, according to Bloomberg, based on government reports, the administration allowed $385 million in government loans to take a back seat to $75 million in new investors' funds. 



This was done because the Energy Department thought that the January deal represented the highest net benefit for the taxpayer, according to government reports. The $75 million from investors became senior to all government debt except $143 million. 



The remaining $385 million in government loans, first issued in 2009, have equal status to $175 million in original investor funds, and can only be recuperated after the investors get back their $75 million and the government gets back its $143 million. This reduced the value of the $385 million by about a third, because the government would not get back all its money. 



Confidential emails published by the House Energy and Commerce Committee depict White House and Energy Department officials rushing to sign off on the project in 2009 so that Vice President Biden could appear at the Fremont plant in September 2009 to trumpet the administration's support for green jobs. President Obama visited Solyndra in May, 2010. 


Solyndra's bankruptcy has been attributed to factors beyond its control, such as falling prices for polysilicon products, such as solar panels, and lower costs and pricing in China. But documents filed with the Securities and Exchange Commission in September 2009, ahead of an initial public offering that was withdrawn in June 2010, show that the company was fully aware of all the risks. 

Presumably the Energy Department was aware, also. This is the essence of industrial policy: the government takes on risk because it wants to encourage indigenous production of a new product. 



Here is some of the back story: Solyndra was founded in May 2005 to produce a less expensive alternative to solar panels. It manufactured panels consisting of forty cylinders coated with solar cells. 



A competing technology consisted of flat solar panels, made of polysilicon. Polysilicon was expensive, and, according to Solyndra, the panels were more costly to attach to the roof. 



By November 2008, Solyndra had raised $450 million from investors, and was applying for a loan guarantee from the Energy Department under the Energy Policy Act of 2005. 



But the loan was turned down in January 2009, while the Bush administration still held office, on the grounds that "there is presently not an independent market study addressing long term prospects for this company" and "there is concern regarding the scale-up of production assumed in the plan for Fab 2," the second factory. 



Lachlan Seward, director of the loan program at the Energy Department, wrote on January 13, 2009 that "after canvassing with the committee it was a unanimous decision not to engage with further discussions with Solyndra at this time." 



After President Obama took office days later, the tone changed. In a confidential email dated March 10, 2009 released by the Energy and Commerce Committee, a senior adviser to the Energy Secretary wrote, "The solar co board approved the terms of the loan guarantee last night, setting us up for the first loan guarantee conditional commitment for the president's visit to California on the 19th." 



As it turned out, Mr. Obama only came in 2010, and Vice President Biden came in 2009. 



Another official, presumably from the Office of Management and Budget, replied, "DOE is trying to deliver the first loan guarantee within 60 days from inauguration (the prior administration could not get it done in four years). This deal is NOT [sic] ready for prime time." 



Concerns were still apparent later that summer, on August 19, 2009. An official, name blacked out, wrote presciently, "While debt coverage is robust under stress conditions, the project cash balance goes to $62,000 in September 2011. Under the assumption that a small amount of cash is tied up in working capital, the project will face a funding shortfall. Even one day of [missed] A/R results in a negative cash balance, for example." 



Yet, the administration pushed ahead, planning for a presidential or vice presidential visit. 



As of August 27, the loan was not approved. An Energy Department official wrote, "Can you confirm whether there are any issues regarding a closing on Sept. 3 for a Sept. 4 VP event on Solyndra?" 



On August 31, 2009 an unidentified OMB official wrote to Terrell McSweeny, domestic policy adviser to Mr. Biden, saying "We have ended up in the situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of this week.) We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around." 



The loan was approved on September 3 and Mr. Biden announced it via satellite at Solyndra's plant on September 4. 



Fast forward to January 2011, when Solyndra's cylindrical panels were not competitive. The price of the polysilicon used by its rivals on their flat panels, the product competing with Solyndra, had fallen from about $375 a kilogram in 2009 to around $60, making flat panels far more attractive. First Solar, a U.S. maker of flat panels, could generate solar power for 75 cents a watt, compared to $4 for Solyndra. 


Still, when Solyndra came calling, the Energy Department insisted on throwing good money after bad, to the frustration of an unnamed OMB official. He wrote, on January 31, 2011, "If Solyndra defaults down the road, the optics will be arguably worse later than they would be today." [sic] He added that the public might understand one mistake, due to the complexity of dealing with innovative companies, but not two mistakes. 



Despite the government's rescue effort in February, 2011, Solyndra filed for bankruptcy in September 2011.


It was not as though Solyndra's problems were a secret. On May 27, 2010, in trade journal GigaOM, reporter Katie Fehrenbacher suggested that the Energy Department guarantee for Solyndra was a mistake. She wrote that Solyndra's manufacturing and capital costs far exceed those of its rivals, and that its technology was uncompetitive. 



PricewaterhouseCoopers, Solyndra's auditors, also expressed public concern about the company. The combination of its deficit, operating losses, and negative cash flow raised doubts as to its viability. 



And Solyndra itself, in a public S-1 filing at the S.E.C. in September 2009, dutifully offered 22 pages of reasons why it might fail. In case anyone missed the point, the report included a table of historical financial and operating data from 2006 to 2009, showing six different measures of gross and net losses. Not one positive number. 



Why did the government pour more funds into Solyndra, and accept a subordinate status on the loan? Could it be because one of President Obama's campaign contributors, George Kaiser, was a major investor in Solyndra through Argonaut Private Equity? Mr. Kaiser raised between $50,000 and $100,000 in donations for the president, and donated over $50,000, split between the Democratic Senatorial Campaign Committee and Obama for America, according to campaign records. 


Solyndra shows that the government should not try to pick industrial winners. The temptation for politics to trump sound judgment and waste millions in taxpayer money is always there. 



Diana Furchtgott-Roth is a senior fellow at the Manhattan Institute.


Cronyism, politics as usual, taxpayer subsidies.

When will Americans wake up and not let OUR government continue to spend OUR money on frivolous "green" technologies that cannot pay their way? Does no one learn from last month, much less last year?

Let CARE favorite Paul Driessen and John Nichols enlighten you and give you a call to action!

Delaware’s very own Solyndra

Will Delaware and US citizens get stuck with a Bloom Energy fuel cell boondoggle?

Paul Driessen and John Nichols

Delaware’s political establishment thinks First State electricity consumers should subsidize the manufacturing of super-sized fuel cells, under the auspices of California-based Bloom Energy, to replace natural gas and coal-fired power plants in generating electricity.

The politicos want to build a factory in Newark, where rail service is available to ship Bloom’s 10-ton, 100-kilowatt, “eco-friendly” Energy Servers to presumed eager buyers across America.

Bloom claims its “revolutionary new design” and “breakthroughs in materials science” make its new solid oxide fuel cell (SOFC) technology “clean, reliable and affordable.” Governor Jack Markell, Department of Natural Resources Secretary Colin O’Mara, Department of Economic Development Secretary Alan Levin and assorted legislators insist their plan will create jobs and put Delaware at the forefront of the Green Revolution.

If that’s the case, and if Bloom had a viable business plan, investors would be clamoring to get in on the action. There would be no need to stick Delaware ratepayers with a bloomin’ tariff (“green premium”) that will add at least $600,000,000 to household and business electricity bills over the next 20 years – above what they would pay for electricity generated by combined cycle natural gas plants. There would be no need for the Economic Development Department to contribute another $16,000,000 in startup costs.

Actually, the green premium could be much higher – based on a 2016 “levelized cost” of $215 per megawatt hour for the fuel cell tariff versus $66 for combined-cycle natural gas generators. The $149 difference times 5,200,000 MWh from fuel cells is $774,800,000!

Tariff proponents will likely argue that this cost must be reduced by $426,000,000 in renewable energy certificates (ie, energy taxes) that Delmarva Power is required to purchase under Delaware’s Renewable Portfolio Standards Act. However, this just means the same families and businesses must pay the bill in two ways: as taxpayers and as electricity ratepayers.

In other words, Free State families and businesses will be “free” to pay an extra $600,000,000 to $775,000,000 in any combination of taxes and tariffs they “choose” – for the “privilege” of being able to say part of their electricity comes in a greed or greenbacks shade of green.

Those higher electricity costs translate into higher prices for goods and services. They pull money out of productive sectors of the economy and transfer it to politically connected operators and campaign contributors. In the process, they destroy traditional jobs – as they did in Spain and Scotland, where overpriced “green” energy killed 2.2 to 3.7 jobs for every “green job” created.

Bloom also expects to receive a substantial US Department of Energy grant, if it can get swift approval of the Delaware tariff. That federal grant will come from borrowed money, in the midst of an economic and budgetary crisis, and in the wake of scandalous green energy bankruptcies.

This crony capitalism means Bloom Energy gets risk-free cash, so that it can proceed with an initial public stock offering. As a privately held company, it gets to keep its finances a secret, even as it gets millions in taxpayer aid, with little or no transparency or due diligence in assessing the financial arrangements. That means US and Delaware taxpayers are forced to take another big risk, while families and businesses must pay well above market rates for electricity.

This sweetheart deal is shocking in its audacity. But then, as Green Tech Media reports, “Bloom plays the subsidy game like a pro, receiving more than $218 million in subsidies in 2010 from California’s [Self Generation Incentive Program].” It gets worse.

This time around, Bloom persuaded the Delaware legislature to enact a special provision. If any future legislature ever modifies the Bloom tariff, the company will receive a lump-sum payment of the entire 20-year tariff, which Delmarva Power meantime will tack onto all ratepayers’ utility bills. Without this guarantee, Bloom would have a hard time peddling its IPO.

It’s equally amazing that Bloom can even qualify for renewable energy subsidies. For that it can thank the Delaware legislature, which adopted Markell and O’Mara’s expanded definition of renewable energy, to include Bloom’s natural gas-fueled SOFC Energy Servers.

They pulled this off by enabling only Bloom fuel cells to qualify under the Renewable Portfolio Standard, originally intended for wind and solar facilities, by claiming Bloom’s equipment “could” run on biofuels, like methane from cows or landfills. It never will, but it “could.”

As to being clean and green, Bloom’s Energy Severs require substantial amounts of rare earth elements, like yttrium and cerium. Prices are soaring – by 500-2000% over the past twelve months, according to a recent General Electric report. The United States imports 100% of all the rare earths it uses in countless energy, military, electronics and other applications, with 97% coming from China.

Now the Chinese have restricted rare earth exports, and sell mostly finished products, often using our technology. Worst, the rare earths are mined, processed and turned into these products under health and environmental conditions that severely damage farmland, wildlife habitats, miners and factory workers.

With the shale gas revolution driving natural gas prices down, there should be no need for fuel cells to replace gas-burning generators. With China and India building new coal-fired power plants every week, and emitting far more carbon dioxide than all our job-killing regulations and climate change initiatives can ever offset, even diehards like Al Gore cannot justify Bloom’s systems on global warming grounds.

Then there is Solyndra. One would think that scandalous debacle – $535 million in taxpayer cash blown in two years, and Solyndra executives now pleading Fifth Amendment rights against self-incrimination – would ensure at least a modicum of sanity, honesty, transparency, accountability, and reluctance to use more taxpayer and consumer dollars to benefit special interests. Apparently not, at least in Delaware and the US Energy Department.

On September 27-29, the Delaware Public Service Commission will conduct public comment sessions on Bloom Energy’s application for special treatment and subsidies. Every American who cares about our economy and unemployment, every citizen who is disgusted with our wasteful, crony-capitalist, bureaucrats-pick-losers system, can send comments to kevin.neilson@state.de.us and then let their elected officials know enough is enough.

That may help inoculate America against the risk of the California and Delaware “green disease” becoming an uncontrollable national Contagion. We need to stop these costly bloom-doggles!

______________

Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow. John Nichols is a financial consultant and citizen activist in Delaware.