World's Largest Solar Power Plant Goes Bankrupt
On Monday, yet another Department of Energy funded solar energy company –the world’s largest solar power plant—filed for bankruptcy. Reuters reports:
Solar Trust of America LLC, which holds the development rights for the world's largest solar power project, on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany.
The Oakland-based company has held rights for the 1,000-megawatt Blythe Solar Power Project in the Southern California desert, which last April won $2.1 billion of conditional loan guarantees from the U.S. Department of Energy. It is unclear how the bankruptcy will affect that project.
The Reuters story states that the company won the loan, but as the Washington Post reported that the company turned down the loan in late September of 2011. The CEO of Solar Trust, Uwe T. Schmidt thought that the loan was "too risky". The Obama administration was willing to loan more than two billion taxpayer dollars to a company who was unwilling to take that kind of risk. The company's bankruptcy filings indicate they employed only nine people.
This $2.1 billion loan guarantee would have been equivalent to more than three Solyndra sized loans. Solar Trust is one of the companies Peter Schweizer mentioned in his book Throw Them All Out who were offered or received large Department of Energy loans or grants and also have ties to President Obama. Schweizer notes in his book that Citigroup Global Partners and Deutsche Bank have invested $6 billion in this project. Until recently, the vice chair of Citigroup Global Partners was Louis Susman who sat on the National Finance Committee for Obama’s campaign in 2008. In return, Susman left Citigroup to become President Obama’s ambassador to Britain.Another partner in this project is Chevron, who favored candidate Obamaover his 2008 rival Senator McCain in campaign donations.
In addition to the offer of financial benefits this politically tied company received, Solar Trust also received regulatory benefits. The Bylthe Solar Power Project is located on federal land. While the Obama administration is decreasing development of proven energy sources like oil on federal lands, they actually fast tracked thisproject’s permitting process:
Solar Trust partnered with Chevron (NYSE: CVX) to develop the Blythe project, which is located on federal land. It and eight other projects were selected by the Bureau of Land Management for a fast-track program that reduced the time it took to get land permits.
Reuters reports that NextEra Energy has committed to provide some financial assistance and has expressed some interest in bidding on some assets of the company. NextEra Energy received millions of DOE dollars in loan guarantees last summer themselves. NextEra Energy’s CEO is Lewis Hay, who sits on President Obama’s jobs council. The continued propagation of DOE loan guarantees from one politically connected green energy company to another brings a whole new meaning to Obama’s mantra of “spreading the wealth around”.
This debacle proves to be the epitome of President Obama’s energy policy—give preference to financially unsustainable, politically connected green energy companies over proven, revenue generating sources of energy. Sadly, as these green energy companies go bankrupt at the expense of the American taxpayer, it only further bankrupts the country.