More Obama Solar Failures and Some Simple Solar Math

Yesterday, we reviewed some of the mega disasters that Obama’s crony capitalism has dumped on the American taxpayer when it comes to alternative energy and alternative vehicle companies. Most, if not all, of his financed alternative energy “bets” have either gone bankrupt, are going bankrupt, or in a stall mode. None of them have produced anything of any promise, all at a cost of billions and billions of dollars.

While Solyndra was the poster child for this wasting of taxpayer wealth, yesterday we focused on the latest two disasters, Abound Solar and Compact Power. Abound Solar filed for bankruptcy after it was found out that its solar panels underperformed in the real world vs. what Abound promised and had the annoying little habit of catching on fire due to a design flaw, causing what ever structure it was attached to also catch on fire.

The worst part is that the company knew about the design flaw before it applied for and was granted a loan guarantee by the Obama administration, indicating that either the company, the Energy Department or both are culpable for wasting $70 million taxpayer dollars.

Compact Power doubled down on the waste, losing about $150 million of taxpayer wealth. Compact was supposed to be turning out thousands and thousands of car batteries for electric cars by now. Unfortunately, after receiving their $150 million gift from the American taxpayer, the company’s factory has turned out exactly no batteries. And for the foreseeable future, it will not be producing any batteries for a myriad of reasons. However, the $150 million is unlikely to ever be repaid.

Today, we will review some more Obama administration failed alternative energy escapades, as if there are any other kind besides "failed." In the process, we will have some fun with some whimsical yet simple math calculations to show how much better our billions of dollars could have been spent using existing technology that would have reduced energy consumption and our carbon footprint, not wasted billions of dollars for nothing in return.

The latest example of such mutual funding of each other is the company Congentrix. Congentrix is an energy producer which received $90 million from the American taxpayer via the Energy Department. It turns out that Congentrix just happens to be a wholly owned subsidiary of the mega bank, Goldman Sachs. Goldman Sachs makes tens of billions of dollars of profits every year; if Congentrix was such a great idea it should have funded it itself. The fact that Goldman Sachs and its top managers have been heavy contributors to Obama’s election campaigns should come as no surprise.

Another potential solar company failure, NRG, was documented in an article from the November, 2012 issue of Reason magazine, written by Veronique de Rugy and titled, “The Constancy Of Crony Capitalism.” If NRG goes bankrupt like most other Obama administration efforts, it will not be because it did not have enough upfront government money. Ms. De Rugy cites a New York Times investigative report as her source:

• Before getting to the NRG situation, the article reviews the billions of dollars already spent and wasted.
• The Energy Department has already handed out $16 billion of taxpayer wealth to 26 companies, many of which have already failed like Solyndra.
• NRG received a Federal loan guarantee of $1.2 billion to build a “solar ranch” in California.
• The interest rate is 50% lower than what the company could have gotten if they had to get the $1.2 billion on their own. Thus, not only has the American taxpayer guaranteeing the loan, they are allowing NRG to pay back the loan, if ever, at an unrealistically low interest rate.
• That low rate will save the company about $205 million over the life of the loan which inversely costs the American taxpayer an additional $205 in finance costs.
• But it gets better since this is the most recent loan guarantee. The company had previously received Federal loan guarantees totally $2.6 billion.
• The article reminds readers that when the Feds back a project such as NRG, it makes the effort more attractive to private investors, further reducing NRG’s financing costs and making it more financially competitive vs. its competitors. Thus, this government meddling unfairly distorts the marketplace and its competitors' relative positions.
• But it gets even better. NRG has already received more than three dozen money grants form the 2009 economic stimulus program that wasted over $800 billion of taxpayer wealth. Note that these were outright grants, not loans or loan guarantees, they get to keep the money without any conditions.
• Still more, according to the article. The company will receive a cash payment worth over $400 million from the Federal government if and when the solar ranch is up and working.
• But all of this money is not just from Federal taxpayers. NRG does not have to pay property taxes on the land in California where the solar ranch will be located, saving the company about $14 million a year.
• And finally, California state tax law offers depreciation tax breaks for renewable energy efforts, breaks that reduce the company’s state income tax levels by $110 million.

Unbelievable, taxpayer money at the Federal and state level getting thrown around for a project that does not yet exist, may never exist, and may never live up to its expectations and promises. If it has the same track record as other Obama alternative energy projects, we can probably kiss that $1.2 billion good bye.

But that article goes on to review another solar energy disaster, First Solar:

• First Solar received a $646 million loan in 2011 through its partner, Exelon, and than got another Federal loan guarantee of $547.7 million to subsidize the sale of its solar panels to commercial solar farms.
• Recently the Washington examiner reported that another Federal government program, the Ex-Im Bank (Export-Import Bank), gave a Canadian company, St. Clair Solar, $192.9 million in a loan to purchase solar energy from solar facilities.
• Not only is giving a Canadian company $192.9 million loan a disgrace relative to American taxpayers, but it just so happens that St.Clair Solar is a wholly owned subsidiary of…. First Solar.
• Thus, the Federal government is funding a solar energy generator company to sell solar generated energy to a Canadian company which is a solar energy user but which also received a Federal government loan which is really the same company that is selling the solar energy.
• In essence, the American taxpayer is funding a company to sell its product, solar energy, to itself. Only the political class could come up with such an inane process and waste.

Oh, we are on a roll. But let’s leave the other solar energy scandals for tomorrow. Let’s do some simple math. The article reports that the Obama administration has already wasted $16 billion on alternative energy companies that have produced no societal benefit in return. If we add in the additional $1 billion or so that the administration has thrown at alternative vehicle companies, Telsa and Fisker, companies that may eventually produce electric cars that the vast majority of Americans will never be able to afford, we end up with a total waste of $17 billion.

Using an experiment that was conducted by the PBS television show Nova, related to making an American home energy independent using solar energy, we have previously shown that it would cost a homeowner about $50,000 to make his or her home solar energy proficient. This experiment used existing solar technology so it does not require a hope and a prayer that shaky companies like Solyndra and the others might eventually, down the road, deliver cost efficient power.

Simple math. If the $17 billion had been used to put solar panels on American homes, the Federal government would have already had 340,000 homes energy independent, powered totally by solar energy. This would have been 340,000 more homes that are likely to get solar independence via the Obama administration’s efforts. This would have made almost 20% of Arizona’s detached single family homes energy independent. Certainly a better record than what the Energy Department has.

Some more math. Let’s get a little more conservative and not make the entire home energy independent. Rather than extensive solar panels, let’s just try to make some American homes' hot water needs more energy independent. According to a Consumer Reports investigation several years ago, they estimated that home hot water heaters use up about 30% of a home’s energy needs.

What if we eliminated this use of energy by replacing traditional home hot water heaters with tankless water heaters. These heaters flash heat water on demand, eliminating the need to use a steady load of energy to keep a large tank of water at a high constant temperature. The Consumer Reports investigation found that the typical installation of such an energy saving device would cost about $1,200 on average.

Thus, if we if we do some simple tankless water heater math we find that we could retrofit over 14 million American homes with these heaters. These heaters, according to Consumer Reports, reduce a home’s energy needs by 22%. Thus, this approach shows that if we had redirected Obama’s solar energy and auto giveaways into this already proven technology, 14 million homes would have reduced their energy consumption by almost 7% (22% efficient reduction times 30% of a home’s energy needs).

340,000 homes via solar retrofits or 14 million homes via tankless water heaters, so much better options than giving political cronies and political fund raisers free taxpayer money for shaky alternative energy projects. It is that simple. Unfortunately, it is too complex for the political class and this administration to understand.

Tomorrow we will review more solar energy busts that the Obama administration has failed to do it due diligence on, a failure that continues to cost American taxpayers millions of dollars.

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