U.S. Government Loans

After trolling the internet, I encountered troubled solar manufacturers hidden in the shadows as supply partners for solar energy generators under the American Recovery and Reinvestment Act of 2009. The total U.S. government guaranteed loans for all solar energy generation contract firms is about $12 billion, and four of the twelve generating facilities are associated with distressed manufacturers that have not been identified as loan recipients—with  a combined loan guarantee of  $4.3 billion.  These four manufacturing loan guarantees were awarded at the time of the Solyndra bankruptcy news release wherein the taxpayers lost $565 million which is peanuts as compared to $4.3 billion.

 

Subsequently, the questionable efficacy of the U.S. Government investments in solar energy is growing wings.  Whereas Solyndra had received 72 percent of the $1.38 billion solar energy manufacturing loan guarantees (yes, this was a guarantee which translated into funding and lost taxpayer dollars), the solar energy generators representing over $12 billion must be looked at with a jaundiced eye.

According to the DOE Loan Programs Office website, the First Solar logo is front-and-center on the Exelon (Antelope Valley Solar Ranch), NextEra Energy Resources, LLC (Desert Sunlight), and NRG Energy (Agua Caliente) project description pages, and the Information Sheets state (under the heading of “Supply Chain”) that “First Solar spent more than $1 billion with U.S. suppliers.”  The same applies to SunPower and NRG Energy (California Valley Solar Ranch) and others. Even with the clear display of each log, the U.S. DOE is not clear as to the association(s) in the murky waters of government failed clarity.  Yet, on the back side of failed clarity, a line of logic emerges.

Solar energy construction firms require solar energy products. This cannot be refuted!  The “solar generation” firms are not in the business of manufacturing solar energy components (e.g., thin-film solar panels).  Solar generation firm areas of expertise are that of design, construction/installation, management, and marketing power plants. If the identified manufacturer and/or alternative manufacturer(s) go belly-up, construction products becomes problematic. Without solar energy components, construction comes to a stand still.  Well, First Solar, is showing signs of financial distress and is undergoing a class action law suite.  Many of the other U.S. solar manufacturing firms appear to be following the Pied Piper over the cliff into the abyss.

Whereas signs of financial distress are to be dealt with on a company-by-company basis, the First Solar class action law suite may be just the tip of the iceburg. It deserves discussion and others may follow.  According to the National Legal and Policy Center, the New York-based Pomerantz, Haudek, Grossman, & Gross Law Firm filed against taxpayer-backed First Solar, alleging that:[i]

  • First Solar executives made false and/or misleading statements, as well as failed to disclose material adverse facts about the company’s business, operations, and prospects.
  • First Solar failed to disclose the massive costs it was incurring due to defects in the solar panels, leading investors to believe the company’s stock was worth more than its actual value.

That said, the house of cards began to fall:

  • Much of the First Solar’s money troubles apparently stem from the thin-film solar panels it is deploying at . . .government-backed desert sites.
  • Financial ails were manifested in First Solar layoffs which resulted in layoffs at the U.S. DOE Loan Program at the Antelope Valley Project managed by Exelon.

Presently, investors in First Solar who purchased stock (FSLR) between April 2008 and April 2012 may be eligible to join the lawsuit. Where does this leave the three loan projects that were to be supported by First Solar? And, once again, is First Solar only the tip of the iceburg?  Even if they take a pass and the solar generation firms are able to outsource and go elsewhere, all the U.S. solar energy manufacturing firms appear to be heading south financially—doubling down on bad risks. So, if the U.S. Clean Energy Projects are to proceed, who remains standing?  China!

Will the U.S. DOE solar energy generators be forced to spend stimulus funds on Chinese solar energy products?  The end game just changed. U.S. taxpayer dollars will stimulate the Chinese government while the U.S. Government borrows from China. And so the cycle continues as Americans must purchase that which is “Made in China.”

 

SunPower

SunPower (NASDAC: SPWRA) which has devalued greater than 95 percent in four years is an identified partner with California Valley Solar Ranch. The California Valley Solar Ranch Project was slated in August 2011, on the eve of the Solyndra failure, to receive $1.237 billion.[ii] At the time of the award, co-partner Sun Power stocks were worth $19.15 (6 percent its value in 2008).  Nine months later, the stocks reached an all time new low of $5.10 (4 percent its value in 2008), and the SPWRA stocks continue to decline in value. The future does not look bright!

The California Valley Solar Ranch Project projected the creation of 350 construction jobs, 15 permanent jobs.[iii]  Yet, many of these jobs are farmed out to a Singapore-based chip manufacturer—to keep the costs down. The Milpitas, California, production facility has only 100 employees to assemble the panel components. To make matters worse:

Module prices are anticipated to fall even further . . . as Chinese solar module makers—reputed to be running at less than 50% capacity due to weak demand in Europe—flood global markets with even cheaper products across the PV supply chain.[iv]

In October 2012, in response to financial pressures, SunPower announced it was moving its panel assembly plant from Milpitas, California to Mexicali, Mexico. So, in the final analysis, “Where are the jobs?” Certainly not on U.S. territory. And so it would appear that the U.S. tax dollars, once again, float away to never-never-land—stimulating jobs in other countries.[v] However, the reality remains unclear as they claim to maintain a manufacturing company in the U.S. in order to accommodate the taxpayer backed California Valley Solar Ranch Project.  With financial woes and falling stock prices, how much longer will SunPower remain afloat?

 

First Solar

First Solar (NASDAC: FSLR) which has devalued greater than 90 percent in four years is an identified partner with Exelon (Antelope Valley Solar Ranch), NextEra Energy Resources, LLC (Desert Sunlight), and NGR Energy (Agua Caliente).  These projects were slated in September 2011 to receive $646 million, $1.46 billion, and $967 million, respectively.[vi] At the time of the awards, First Solar stocks were worth $90.10 (30 percent its value in 2008).  Nine months later, the stocks reached a new low of $14.26 (4 percent its value in 2008), and their stocks continue to decline in value. A dark cloud descends.

The Antelope Valley Solar Ranch Project projected the creation of 300 construction jobs, 20 permanent jobs; the Desert Sunlight Project claim was the creation of 550 construction jobs and 15 permanent jobs; and the Agua Caliente Project was to create 400 construction jobs and 10 permanent jobs.[vii] In September 2011, First Solar announced its intent to construct a $300 million manufacturing facility in Mesa, Arizona.  They alleged that they would hire as many as 4,800 workers. Yet, nine months later, First Solar announced they would fire 2,000 workers worldwide, close a plant in Germany, and reduce production in Malaysia.[viii]  It is not clear as to the impact on the U.S. workers. As of March 2012, First Solar has become subject to a class action law suite. But it doesn’t end here.  The plot thickens!

According to Green Tech Media, “First Solar continues to provide engineering, procurement and construction (EPC) services for Exelon” on the Antelope Valley Solar Ranch Project.  Well, this comment alone refutes limited association with construction of the Antelope Valley Solar Ranch under the guise of Exelon.  Where does it end?  During construction, theft, ferocious desert winds, venomous snakes, and hard desert terrain threatened the project and last loan guarantee deadline.

  • Stolen thousands of dollars worth of copper wire from the site.
  • The roof of a temporary office building almost blown off by ferocious desert winds in February.
  • Venomous Mojave green rattlesnake and tarantulas.
  • Hard desert terrain challenges.

The article referenced the “last loan guarantee” as though it was funded money, not just a guarantee.  What gives?  Solyndra was a loan guarantee also.  So, how did that work out for the taxpayers?  The American taxpayer lost $535 million down the sewer on Solyndra.  At stake in the Antelope Valley Solar Ranch is $646 million. And if the other solar energy management projects that First Solar is tied to get fully funded and go under, the stakes are $3.07 billion taxpayer dollars.

 

BrightSource Energy

First Solar (NASDAC: FSLR) which has devalued greater than 90 percent in four years is an identified partner with Exelon (Antelope Valley Solar Ranch), NextEra Energy Resources, LLC (Desert Sunlight), and NGR Energy (Agua Caliente).  These projects were slated in September 2011 to receive $646 million, $1.46 billion, and $967 million, respectively.[ix] At the time of the awards, First Solar stocks were worth $90.10 (30 percent its value in 2008).  Nine months later, the stocks reached a new low of $14.26 (4 percent its value in 2008), and their stocks continue to decline in value. A dark cloud descends.

The Antelope Valley Solar Ranch Project projected the creation of 300 construction jobs, 20 permanent jobs; the Desert Sunlight Project claim was the creation of 550 construction jobs and 15 permanent jobs; and the Agua Caliente Project was to create 400 construction jobs and 10 permanent jobs.[x]

In September 2011, First Solar announced its intent to construct a $300 million manufacturing facility in Mesa, Arizona.  They alleged that they would hire as many as 4,800 workers. Yet, nine months later, First Solar announced they would fire 2,000 workers worldwide, close a plant in Germany, and reduce production in Malaysia.[xi]  It is not clear as to the impact on the U.S. workers. As of May 2012, First Solar is subject to a class action law suite.

 


[i] Chesser, Paul: Class Action Filed Against Taxpayer-Backed First Solar. National Legal and Policy Center (Mar. 19, 2012).  http://nlpc.org/stories/2012/03/19/class-action-filed-against-taxpay-backed -first-solar

[ii] U.S. Department of Energy: The Financing Force Behind America’s Clean Energy Economy. https://lpo.energy.gov/?page_id=45/

[iii] Ilbid.

[iv] 24/7Wall St: Job Destruction at First Solar and Sunpower. (Oct. 6, 2011). www.247wallst.com/2011/10/06/job-destruction-at-first-solar-and-sunpower-spwwra-fslr/

[v] Ilbid.

[vi] U.S. Department of Energy: The Financing Force Behind America’s Clean Energy Economy. https://lpo.energy.gov/?page_id=45/

[vii] Ilbid.

[viii] Martin, Christopher and Ehren Gossens: First Solar, SunPower See 2012 Gains After Quarterly Loss.  Bloomberg (May 3, 2012). http://www.bloomberg.com/news/2012-05-03/first-solar-sunpower-see-2012 gains-after-quarterly-loss.html

[ix] U.S. Department of Energy: The Financing Force Behind America’s Clean Energy Economy. https://lpo.energy.gov/?page_id=45/

[x]  Ilbid.

[xi] Martin, Christopher and Ehren Gossens: First Solar, SunPower See 2012 Gains After Quarterly Loss.  Bloomberg (May 3, 2012). http://www.bloomberg.com/news/2012-05-03/first-solar-sunpower-see-2012 gains-after-quarterly-loss.html