Another DOE Loan Scandal: Are We Bailing Out Spain’s Solar Collapse?
Yet again, evidence of impropriety surrounds the issuance of federal Department of Energy “green” loan guarantees — in this instance, loans were granted to a foreign company with Democratic Party ties.
Over the last two years, DOE Secretary Steven Chu has awarded Spain-based Abengoa — a sprawling, multi-national industrial firm operating in 70 countries — loan guarantees worth a staggering $2.78 billion for solar and ethanol plants.
Abengoa is a Madrid-based conglomerate that operates throughout Europe, the Middle East, Latin America, and Asia. It is not starved for cash: according to its 2009 annual report, the firm was valued at $25.5 billion, enjoying a cash flow of $4 billion and a net profit of $288 million. It is traded on the Madrid and Barcelona stock exchanges and employs more than 25,000 workers.
At first glance, Abengoa does not appear to require U.S. government-backed loan guarantees. In 2010 it qualified for private bank loans in 11 countries worth $161 million. In July 2009 alone, Abengoa issued convertible bonds in Europe worth $688 million.
Overall, the Energy Department has awarded Abengoa three separate loan guarantees.
One was awarded on September 29, just before the deadline for the end of the fiscal year. This $132 million loan guarantee went to Abengoa Bioenergy Biomass of Kansas for the construction of an ethanol plant to be built in Dodge City. Earlier in September, a $1.2 billion loan guarantee was awarded to Abengoa to construct a solar facility in the Mojave desert. And in July 2010, DOE awarded a $1.45 billion loan guarantee to Abengoa’s Solana solar project. It is a highly leveraged arrangement: the deal was structured in such a way that the company has to put up very little of its own money:
Abengoa’s Solana 250 MW (net) project in Arizona finalized its Loan Guarantee from the DOE, which will cover up to $1.45B of the total $2.0B in project cost.
A small percentage of the balance will come from Abengoa. The piece that remains (around 25% of the total cost) will need to come from direct equity investors (such as NRG) and tax equity investors (such as Morgan Stanley and Union Bank).
Congressional leaders say the September issuance of DOE loan guarantees — including the two for Abengoa — may have been part of a group of loans that were rushed by the DOE to meet a September 30 funding deadline. In a September 20 letter to Energy Secretary Steven Chu, House Energy and Commerce Chairman Fred Upton (R-MI) wrote:
We are concerned that another rush to meet stimulus deadlines will result in DOE closing those deals before they are ready.
DOE ignored Upton’s letter: by September 30, DOE had released more than $4.7 billion in federal funds to several “green” energy firms.
According to DOE, the $1.45 billion loan guarantee will employ or “save” 60 permanent jobs at the Solana solar plant, working out to $24.2 million per permanent job “created or saved.” The Mojave solar plant is similar. It will save or create 70 permanent jobs, which is $17.1 million per permanent job. The biomass plant will create 65 permanent jobs. That is a real job creator, generating each permanent job for $2 million.
The firm’s global profitability is due to non-renewable industrial activities; yet Abengoa’s U.S. solar and ethanol projects would not exist without the existence of Obama administration money. The $2.78 billion constitutes an American bailout of Spain — and Europe’s — collapsed solar industry.
As the Solyndra bankruptcy illustrates, solar technology is not profitable or sustainable without major government subsidies. Spain briefly enjoyed one of the most advanced solar industries in the world when it was subsidized by $26 billion in grants from the socialist-led Spanish government. However, the short-term injection of government funding was not sustainable. When the money ran out the Spanish solar industry collapsed, and more than 30,000 solar energy workers lost their jobs.
For years, Abengoa has been extolled by former Vice President Al Gore, including during a high-profile speech he delivered at the company’s Spanish headquarters in October 2010. Gore himself invested in the company in November 2007. The day he announced his investment, the company’s stock jumped 7 percent.
The Spanish firm has connections to Democratic operatives. According to federal lobbying records, Democrat Mark Rokala — a top Washington lobbyist who worked at the now-discredited Democratic lobbyist firm PMA — headed up Abengoa’s effort.
In 2008, PMA was embroiled in a government ethics “pay-to-play” scandal in which the late Democratic Rep. John Murtha directed $137 million in government contracts to PMA clients. PMA and its clients in turn donated $2.37 million to Murtha and other Democratic congressmen who sat on a defense appropriations subcommittee.
In 2007, the non-profit Citizens for Responsibility and Ethics in Washington named Murtha one of the “most corrupt” members of Congress. Rokala’s boss and PMA president Paul Magliocchetti is now serving a 27-month federal sentence for illegal campaign contributions. PMA has shuttered its doors, but since 2006, Rokala has led the lobbying effort on behalf of Abengoa at another D.C. lobbying firm, Cornerstone. Since 2006, Cornerstone has received $870,000 in lobbying fees from Abengoa.
Abengoa’s reputation on the European Continent does not fare much better. In 2008, the company shared the “Worst EU Lobbying Award” given out by environmental groups including Friends of the Earth Europe. The company was cited for making “false media claims about research that shows the EU can sustainably grow enough agrofuels to meet demand without needing imports.”
President Obama could be the “salvation” for the European solar industry, says Gabriel Calzada, president of Spanish think tank Instituto Juan de Mariana. He tells PJ Media:
Companies like Abengoa have invested heavily in solar. … The subsistence of those branches of the company depend on the construction of new “profitable” plants since Spain (and Europe for that matter) is not anymore that profitable.
Calzada believes the Obama administration may be bailing out Europe’s ailing solar energy industry:
The creation of new plants in countries like the U.S. that would now substitute the subsidies they have lost in Europe would represent their salvation.
Regarding Spain’s solar collapse, a solar industry representative tells the New York Times:
[The crash] was an inevitable consequence of a policy that was not … a long-term sustainable market design,” said Julie Blunden, vice president of public policy at U.S.-based SunPower Corp. “Whenever you’ve got something that’s unsustainable, eventually it gives. And lo and behold, that happened.”
According to Chris Horner, a senior attorney at the Competitive Enterprise Institute, Abengoa is not an exception, but the rule for the Obama administration’s artificially stimulated “green” industry. He tells PJ Media, “This is not unique to Abengoa. It defines the [green] industry, which exists in any meaningful way solely due to political creation, not performance or economics.”
ALL bailouts are unconstitutional, as well as morally wrong and economically counterproductive.
Bailouts waste our money by propping up economically unsound activities, rather than letting the market clear itself so that it can begin to recover. Bailouts only prolong and intensify the agony.
Bailouts are often a disguised payoff to some individual or entity that has helped, or will help, someone win an election. They never really have anything to do with preventing economic catastrophe.
Yes, and in actuality, does one deeper source of the complex of problems which your comments touch, have most to do with school board elections and PTA meetings and so forth—as controlling the schools—for, if “Knowledge is power.”, can mere fragments or selected bits of knowledge, or deprivation of knowledge be a lever for manipulation and control, or even, a weapon of oppression?
I hope “conservatives” will denounce as well the proposed bailouts and loan guarantees for oil and nuclear.
Ok so name one oil and nuclear company that went bankrupt without government funds then we can start talking.
Not to mention if I put a gallon of the evil oil company’s gasoline in even my old beater, I get to drive about 18 miles. Like most of this country, I’ve never gotten ANYTHING from solar or wind power but an abundance of wasted tax dollars.
Thank you. We have solar that we run a 2,700 square home on, and it isn’t the solar panels that are worthless, it’s the batteries, they are not worth a damn. Solar cost a bundle to buy and have installed, to the tune of $25,000.00, that’s a lot of electricity.
There hasn’t been a nuclear power plant built since 1990, thanks to the greens? No amount of loan guarantees would ever remedy that. But at least we know that nuclear power works. As for the oil companies, if they ever needed loan guarantees from the government the environmentalists and “liberals” would have put them out of business a long time ago, by withholding them. Like Aeroguy says, name some names.
he or she can’t. It’s a liberal canard that oil companies get subsidies. What they get are tax deductions that most if not all manufacturing/production companies get. I would appreciate someone – anyone – naming one tax subsidy that oil companies, and oil companies alone, get. I’m willing to be educated.
the problem is we have an over abundance of STUPID IDIOTS in washington since the obama regime took over. he is doing his very best to totaly BANKRUPT AMERICA him and his minions should be held accountable for every penny they have squandered. and forced to pay the tax payers back every penny, of course they dont have that kind of mone BUT they could learn how it is to eat peanut butter sandwiches while they work toward paying us,
Where is Van Jones mentioned in all of this?
What nobody seems to answering in our Federal government is, after all these billions of dollars have been wasted on solar power plants, where is the payoff? What did we get for our money? Has there been some tremendous breakthrough in solar energy that will allow us to power every home with solar energy, saving us trillions of dollars? NO? Not even close?
Solar energy engineering has been tinkered around with since the late 1970s, and nothing has become of it. It heats a few buildings here and there, but it is still very expensive to install and its savings will not pay for the investment the individual homeowner has to make into it. In other words, it’s a nice idea, but it doesn’t work on a large scale. And you don’t have to take my word for it. Just look at what a financial disaster all of this “green” technology has been in countries like Spain and England. Yet Obama and his minions insist on dumping billions more into this madness.
Stop it. Throw the Obama and his pals out in 2012. Then maybe we can actually save some money to develop a real energy policy.
” Where is the payoff? “. Great question but I would teak it slightly. Who gets the payoff?
http://biofuelsdigest.com/bdigest/2011/10/09/first-reserve-invests-300m-in-abengoa/
Quite right, Liberty.
More than 40 years later, solar energy technologies still can’t produce sufficient wattage to make widespread use practical. Unless there’s a significant technology breakthrough, this limitation is unlikely to change.
More bad news. Worldwide, solar panels are commodity products. High manufacturing costs and low selling prices mean the only way solar energy even approaches cost-competitiveness is with … wait for it … government subsidy.
Solar energy is a money pit. We’d be better off burning the money and harnassing the BTUs.
“where is the payoff?” The payoff is that Democrats (and let’s face it, some Republicans, too) can enjoy the self-satisfaction of “doing something for the environment” or “doing something to end our addiction to oil.” To liberals, it’s not about good results, it’s about good intentions. And campaign donations.
I recall an article somewhere that quoted a Spanish finance minister(?), or banker or something, saying that in order to survive, the European wind and solar industry needs to get America to buy their debt. I have searched my brain cell and just cannot come up with the quote though… Looks like they succeeded.
Washington needs to wake up and see that no matter how stupid they think WE are, we are all smart enough to realize the government is the problem, starting at the top and moving down to the lowliest clerks. They all HAVE TO GO and the sooner the better. Drain the swamp!
Remember in the old textbooks that actually had American history- there was always a two page spread with appropriate local political cartoons, explaining the labyrinthine details of some swindle of the government? And we always read it as a “loons back then made bad choices”? What did we do to get landed in the loon illustrations?
Housing bubbles, paying off foreign companies, loan guarantees that could sink our government? It’s bad enough to get tested on it in school, it’s worse to live through it, knowing that our great- grandchildren are going to wonder how and why we were so foolish.
Is there some way, anyway, to disassociate ourselves from the president and all his fools?
“Is there some way, anyway, to disassociate ourselves from the president and all his fools?”
YES! My musket’s a little rusty & I don’t know the way to Lexington OR Concord, but at this point I’m willing to try just about anything. Or maybe we could try withholding our “withholding”…no violence, no one gets lost on the way to the Revolution, nobody has to look stupid in a tricorne hat & the govt has as little tax money to play favorites with as possible.
Carolannie,
Careful, girl, it is a Federal crime to encourage others NOT to pay their taxes.
Your point’s well taken but beward your liability.
FYI
ON JANUARY 1 ST 2012, THE GOVERNMENT IS REQUIRING EVERYONE TO HAVE DIRECT DEPOSIT FOR SS CHECKS. WONDER WHY?
1% tax on all bank transactions HR4646
Watch for this AFTER November elections; remember this BEFORE you VOTE in case you think Obama’s looking out for your best interest.
1% tax on all bank transactions HR 4646
This government just cannot think of enough ways to hurt the American people! I sure hope this dies!!!!!
FORWARD THIS TO EVERYONE YOU KNOW!
1% tax on all bank transactions HR 4646 – ANOTHER NEW OBAMA TAX SLIPPED IN WHILE WE WERE ASLEEP. Checked this on snopes, it’s true! Check out HR 4646.
President Obama’s finance team is recommending a one percent (1%) transaction fee (TAX) Obama’s plan is to sneak it in after the November elections to keep it under the radar.
This is a 1% tax on all transactions at any financial institution – banks, credit unions, savings and loans, etc. Any deposit you make, or even a transfer within your account, will have a 1% tax charged. ~If your paycheck or your social security or whatever is direct deposit, it will get a 1% tax charged for the transaction. ~If your paycheck is $1000, then you will pay Obama $10 just for the privilege of depositing your paycheck in your bank. Even if you hand carry your paycheck or any check into your bank for a deposit, 1% tax will be charged. ~You receive a $5,000 stock dividend from your broker, Obama takes $50 just to allow you to deposit that check in the bank.. ~If you take $1,000 cash to deposit at your bank, 1% tax will be charged.
Mind you, this is from the man who promised that, if you make under $250,000 per year, you will not see one penny of new tax. Keep your eyes and ears open, you will be amazed at what you learn about this guy’s under-the-table moves to increase the number of ways you are taxed.
Oh, and by the way, if you receive a refund from the IRS next year and you have it direct deposited or you walk in to deposit that check, you guessed it. You will pay a 1% charge of that money just for putting it in your bank. Remember, any money, cash, check or whatever, no matter where it came from, you will pay a 1% fee if you put it in the bank.
Some will say, oh well, it’s just 1%. Are you kidding me? It’s a 1% tax increase across the board. Remember, once the tax is there, they can also raise it at will. And if anyone protests, they will just say, “Oh,that’s not really a tax, it’s a user fee”! Think this is no big deal? Go back and look at the transactions you made from on year’s banking statements. Then add the total of all those transactions and deduct 1%. Still think it’s no big deal?
It appears to be true. I checked it out on snopes: 1. snopes.com: Debt Free America Act •••
Is the U.S. government proposing a 1% tax on debit card usage and/or banking transactions?
…It is true. The bill is HR-4646 introduced by US Rep Peter deFazio D-Oregon and US Senator Tom Harkin D-Iowa. Their plan is to sneak it in after the…
…moved beyond proposing studies and submitted the Debt Free America Act (H.R. 4646), a bill calling for the implementation of a scheme to pay down the…
…[2010] by Rep. Chaka Fattah (D-Pa.). His “Debt Free America Act” (H.R. 4646) would impose a 1 percent “transaction tax” on every financial transaction…
Tue, 18 Oct 2011 11:27:16 GMT http://www.snopes.com/politics/taxes/debtfree.asp
snopes also points out that that bill has no co-sponsors and rates it’s possibility of passage at zero..
On his website Congressman DeFazio flatly states he did not introduce the bill, nor does he sponsor or endorse it. H.R. 4646 was introduced in 2010 by Rep. Chaka Fattah of Pennsylvania, and as vangrungy has already pointed out, it has no cosponsors.
This has all the hallmarks of the bursting of yet another financial bubble. As an investor myself, I understand these things will happen. However, I am appalled that this is happening YET AGAIN with the support of my tax dollars.
The Dot Com boom and bust happened with very little tax money directly involved. This solar business thing, however, is awful. Haven’t the people in Department of Energy learned a damned thing from the TARP bail-outs?
There are no shortcuts to building an industry. It takes technological innovation and entrepreneurship. The former can be subsidized by government without doing too much harm. The latter? Leave it alone!
“Haven’t the people in Department of Energy learned a damned thing from the TARP bail-outs?” – and from Solyndra?
This is politics, pure and simple. Intelligence has nothing to do with this.
The Financial Times ran some articles sometime back about the Mafia penetration of the green energy industry in Europe. In searching for those articles, came across so many refs that i’ll just link the Bing and invite you to scan the headers for the quick n dirty.
If they remade The Graduate, that one-word career advice for young Ben couldn’t be ”plastics” –it’d have to be ”Genovese”.
What did you expect? The dollar is the reserve currency of the world and we have the first post American president of the world to divvy out the dollars. So, when the world’s bondholders get done with the make believe Euro who do you think is next?
It is worth noting that in 2010 Spain’s solar industry was caught feeding electricity created by diesel generators into the national grid in order to receive generous subsidies for providing “green” energy.
Also, the Obama Administration also granted a $2 billion loan guarantee to Areva, a corporate arm of the French government to build a uranium enrichment plant in Idaho.
Another company was already building a similar plant in New Mexico and Areva was to license the same centrifuge technology as the New Mexico plant. Plus, a US company USEC, was denied a loan guarantee for its enrichment plant for very fuzzy and undisclosed technical reasons.
I wrote about this in American Thinking in 2009:
http://www.americanthinker.com/2009/12/uranium_enrichment_us_governme.html
Besides the lack of rationale and appropriateness for the Areva loan, I also explained how the loan guarantee program could be turned into a boodle fund by the Administration, as came to pass.
I’ve made 6 trips from Madrid to Burgos (in northern Spain) over the past 3years for business. The trips have been in every seasons & all types of weather. I will spend almost an hour out of the ~3hour drive looking @ wind farms and wondering, why aren’t the turbine blades spinning?? I never got a good answer from the locals, the people building them were from other places, no one knew anyone that worked there. The locals said that they also noticed that the blades were rarely turning.
The customer I was visiting said that since the government had installed the wind farms, the power grid became so unstable that they had installed 4 – 8,000hp diesel generators to supply reliable power for their facility, as well as selling their surplus electric power to several other large factories in the immediate area.
I have bugs in my yard smarter than Steven Chu.
All in all, the Ovomit cabinet is comprised of a bunch ass kissing dummies who are not expected to make a rational decision.
This is the most pitiful Executive Branch of government in the history of the country. No one, including POTUS has any idea what the hell they are doing.
Been saying for *a while* over at TPP to keep an eye out for energy stories on White House + Spain.. Oil was what I had in mind but this certainly is interesting..
$64,000 Question :: Did all this occur before or after FLOTUS took her spa-batical over there (last year’ish)..?
$128,000 Question :: Who has the lowdown on the prevalence of Spain/Nigeria ties and how they are exerted on politics internationally..?
Nope, not just pulling this out my…. motherboard.. Have observed some occasional strange “coincidences” that started out with a FlagThis Twitter stalker I picked up back when the White House pulled that….. [garbage] about two years.
Check this one out. DOE *loaned* a Canadian company $161 MILLION to build an electrical system between Montana & Alberta, and they are in deep, financial trouble. This just came out yesterday.
http://conservative-outlooks.com/2011/11/10/taxpayer-now-helping-canadian-green-energy-companies-to-fail/
When commencing upon a risky scheme, always do (if you can) with OPM!
Some one needs to give Sec. Chu a “political” thumping.
I agree to your site because very information i hope do not stop your work.
Web Chat New Media
I Am Lonely is about learning to live with yourself—a necessity for anyone, and especially the last man alive.
But what if the last man alive…
Thank you..