Thursday, September 29, 2011

Solyndra II

GOP's Solyndra probe threatens to ensnare Energy Secretary Chu

by Andrew Restuccia

The controversy over a $535 million loan guarantee to the now-bankrupt California solar firm Solyndra is threatening to dim the star of Energy Secretary Steven Chu, a physicist and Nobel Prize winner who has rarely been thrust into the political spotlight.  
Republican lawmakers have set their sights on Chu, who for three years has managed to avoid being dragged into a litany of political battles waged by Republicans and the White House on energy and environmental issues.  
The GOP has for weeks lobbed a slew of allegations at the administration, arguing officials rushed a final decision on the loan guarantee and missed a series of red flags that hinted at the company’s financial troubles. Solyndra declared bankruptcy two years after receiving the Energy Department loan, resulting in layoffs for 1,100 workers. 
Now, Republicans on the House Energy and Commerce Committee are increasingly turning their attention to the role that Chu played in overseeing the loan guarantee program.  

The ongoing fight over Solyndra could put Chu, who is not known as a political brawler, in uncharted waters.  
Republicans are pointing to a recent Los Angeles Times story that says Chu disagreed with Treasury Secretary Tim Geithner and others when they raised concerns about the loan guarantee program during a meeting last October.  
“We need to hear from Secretary Chu and [White House Office of Management and Budget Director Jack] Lew to fill in some of the blanks,” Rep. Michael Burgess (R-Texas), who sits on the Energy panel’s investigative subcommittee, told The Hill in a phone interview Wednesday. “The buck has to stop someplace and presumably it stops with the heads of those agencies.”  
Burgess and other Republicans on the subcommittee have called on Chu to testify on the Solyndra loan guarantee.  
Republicans on the panel wrote to Chu last week to request all communications between the Energy Department and the White House on the Solyndra loan guarantee.  
The document request is part of a broader effort by Republicans to determine if the White House rushed consideration of the loan guarantee.  
The committee, which launched its investigation into Solyndra in February, has already received more than 35,000 documents and has released select emails that Republicans say show that the White House tried to rush a decision on the company’s financing so that the loan guarantee could be announced at the Sept. 2009 groundbreaking of the company’s factory.
The administration has insisted that it thoroughly reviewed the project and has strongly denied any wrondoing.
Though Republicans say they want to hear from Chu, Sean Bonyun, spokesman for committee Chairman Fred Upton (R-Mich.), said the panel has not yet formalized plans for the secretary to testify.  
Democrats and clean energy advocates have criticized Republicans for their investigation, arguing it is a transparent attempt to score political points.  
"This is not about Solyndra, this is not about the loan guarantee program, this is about Republicans going after the president," Marchant Wentworth, who focuses on clean energy at the Union of Concerned Scientists, said.  
Before Obama chose him as his Energy secretary, Chu had little experience running a massive bureaucracy like a federal agency. In 2004, Chu became the director of the Energy Department's Lawrence Berkeley National Laboratory in Berkeley, Calif. The laboratory employs about 4,000 people. By contrast, the Energy Department employs about four times that number.  
Chu represents an unfamiliar target for the GOP, which has frequently sparred with top administration officials on energy policy.  
Republicans bashed Interior Secretary Ken Salazar in the aftermath of last year’s oil spill, arguing he imposed a “de facto ban” on drilling in the Gulf. 
And Environmental Protection Agency Administrator Lisa Jackson has testified before Congress so many times one congressman even joked that she should have her own parking space.  Jackson has borne the brunt of more criticism than any other top administration official for moving forward with a series of air regulations that Republicans say will place a massive burden on the economy.  
Though Chu has largely avoided controversy, he came under fire from Republicans before he was confirmed by the Senate for calling coal his "worst nightmare" during a 2008 speech.. Chu walked back those comments slightly during a Senate hearing in 2009, after he was confirmed, calling over-reliance on coal a "bad dream," but stressing that it will remain a major part of the country's energy portfolio.  
Chu has won the praise of clean energy advocates and is generally well respected by Republicans too.  
"He’s been public about renewable energy and energy efficiency and knowledgeable in a way that we have not seen in an Energy secretary for a long time," Wentworth said.  
Chu is best known for offering detailed and nuanced analyses of the energy landscape.  
He has been a staunch advocate of making large and consistent investments in clean energy, arguing that it’s the only way that the United States can compete with countries like China, which have put billions into solar and wind.  
Even amid growing criticism from Republicans, Chu has said the Energy Department will continue making such investments. The department, for example, announced the finalization of two loan guarantees for solar companies Wednesday totaling more than $1 billion  
At an event in Washington this week, Chu delighted a crowd of energy industry officials with a rough history of the automobile – an anecdote he used to encourage long-term investment in low-carbon technology to ensure the United States wins what he calls the “clean energy race.”  
“So, lesson number one,” Chu told the crowd. “The United States didn’t invent the automobile, it actually became the dominant automobile manufacturing force in the 20th Century by becoming the low-cost producer.”  
After the meeting, Chu huddled in the corner with a group of scientists and listened intently for about ten minutes.  
“These are his people. He’d stay here all day if he could,” one of Chu’s aides remarked.


by Joel Gehrke

Steve Mitchell and Argonaut Private Equity might have a chance to recoup some of their losses in the Solyndra debacle now that the Department of Energy has given a $737 million dollar loan guarantee to a company backed by Argonaut that also lists Mitchell as a "board participant."

Mitchell served on the Solyndra LLC Board of Directors and reportedly still serves on the board. Mitchell serves as a "board participant" for Solar Reserve, the parent company to Tonopah Solar (the Tonopah Solar email address even routes to a Solar Reserve account) and his Solar Reserve biography says that he "currently sits on the Boards of Directors of . . . Solyndra" and several other companies. Despite the Solyndra failure, the Department of Energy continues to provide loan guarantees to solar companies, giving Tonopah Solar a $737 million loan guarantee for a project in Nevada.
Mitchell owes his position at Solyndra and Solar Reserve, apparently, to the fact that his primary employer, Argonaut Private Equity, invested in both companies. Mitchell holds the title of Managing Director for Argonaut Private Equity. After Solyndra declared bankruptcy, two Democratic members of the U.S. House asked that House Subcommittee call Mitchell to testify about Solyndra. Though he has not appeared before Congress, he has "been asked to provide documents to Congress" pertaining to Solyndra.
The Mitchell connection to Solar Reserve brings George Kaiser into the spotlight with respect to this latest loan guarantee. Kaiser owns Argonaut and thus invested in both Solyndra and Solar Reserve (more heavily in the former than the latter). He alsobundled over $50,000 into President Obama's campaign.
Their poor track record notwithstanding, Kaiser and Mitchell now have another opportunity to profit from investing in a solar company funded by the Department of Energy.

Crony Capitalism: $737 Million Green Jobs Loan Given to Nancy Pelosi's Brother-In-Law

by Mark Hemingway

Despite the growing Solyndra scandal, yesterday the Department of Energy approved $1 billion in new loans to green energy companies -- including a $737 million loan guarantee to a company known as SolarReserve:

SolarReserve LLC, a closely held renewable energy developer, received a $737 million U.S. Energy Department loan guarantee to build a solar-thermal project in Nevada.

The 110-megawatt Crescent Dunes project, near Tonopah, Nevada, will use the sun’s heat to create steam that drives a turbine, the agency said today in a e-mailed statement. SolarReserve is based in Santa Monica, California.
On SolarReserve's website is a list of "investment partners," including the "PCG Clean Energy & Technology Fund (East) LLC." As blogger American Glob quickly discovered, PCG's number two is none other than "Ronald Pelosi, a San Francisco political insider and financial industry polymath who happens to be the brother-in-law of Nancy Pelosi, the Minority Leader of the United States House of Representatives."
But wait... there's more! One of SolarReserve's other investment partners is Argonaut Private Equity:

Steve Mitchell and Argonaut Private Equity might have a chance to recoup some of their losses in the Solyndra debacle now that the Department of Energy has given a $737 million dollar loan guarantee to a company backed by Argonaut that also lists Mitchell among its board of directors.

Mitchell served on the Solyndra LLC Board of Directors. He also serves as Managing Director for Argonaut Private Equity, a company that invested in Solyndra through the LLCs parent company. After Solyndra declared bankruptcy, two Democratic members of the U.S. House asked that Mitchell testify about Solyndra. Though he has not appeared before Congress, he has "been asked to provide documents to Congress" pertaining to Solyndra.
And for good measure, it's also noteworthy that Obama is about to hold a big money fundraiser at the home of Tom Carnahan in St. Louis:

Carnahan, a member of the prominent Missouri Democratic family, has been tapped by the Obama campaign as its chief Missouri fundraiser. He is chairman of the board of Wind Capital Group, a wind energy company that makes it corporate headquarters in St. Louis. He formerly was president and CEO of the company.

Last year, Wind Capital's Lost Creek Farm facility in northwest Missouri received a $107 million tax credit from the Treasury Department, among many such wind operations receiving support from from stimulus funds.
Tom Carnahan is the son of former Missouri governor Mel Carnahan and former U.S. senator Jean Carnahan. He's also the brother of current Missouri secretary of state, Robin Carnahan.
It's increasingly hard to tell the government's green jobs subsidies apart from the Democrats' friends and family rewards program.


Obama admin approves 2 solar loans worth $1B
by Matthew Daly

WASHINGTON (AP) -- The Energy Department on Wednesday approved two loan guarantees worth more than $1 billion for solar energy projects in Nevada and Arizona, two days before the expiration date of a program that has become a rallying cry for Republican critics of the Obama administration's green energy program.
Energy Secretary Steven Chu said the department has completed a $737 million loan guarantee to Tonopah Solar Energy for a 110 megawatt solar tower on federal land near Tonopah, Nev., and a $337 million guarantee for Mesquite Solar 1 to develop a 150 megawatt solar plant near Phoenix.
The loans were approved under the same program that paid for a $528 million loan to Solyndra Inc., a California solar panel maker that went bankrupt after receiving the money and laid off 1,100 workers. Solyndra is under investigation by the FBI and is the focal point of House hearings on the program.
SolarReserve LLC, of Santa Monica, Calif., the parent company for Tonopah, is privately held. The Energy Department said its rules prevented it from discussing the company's financial information. Sempra Energy of San Diego, which owns Mesquite, is publicly held.
Energy Department spokesman Damien LaVera said the two projects had extensive reviews that included scrutiny of the parent companies' finances.
Chu said the Nevada project would produce enough electricity to power more than 43,000 homes, while the Arizona project would power nearly 31,000 homes. The two projects will create about 900 construction jobs and at least 52 permanent jobs, Chu said.
"If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar," Chu said in a statement.
Senate Majority Leader Harry Reid, D-Nev., is a strong supporter of the Nevada project, which he says will help his state's economy recover. Former Gov. Jim Gibbons, a Republican, also supported the project.
The loan approvals came just two days before a renewable energy loan program approved under the 2009 economic stimulus law is set to expire. At least seven projects worth more than $5 billion are pending.
Rep. Cliff Stearns, R-Fla., chairman of a House energy subcommittee that is investigating Solyndra, said the impending deadline was no reason to complete loans before they are ready.
"Solyndra was the product of a bad bet rushed out the door, and taxpayers are now on the hook," he said. "We cannot afford DOE rushing out more Solyndras in these final hours."
A government watchdog group said the Solyndra bankruptcy shows the need for greater oversight of all the department's loan guarantee programs.
"It is time for a full audit of their activities, their management and their results," said Tom Schatz, president of Citizens Against Government Waste, Washington-based advocacy group.
"Candidly, it might be time for the federal government to rethink the whole idea of loan programs," Schatz added, calling the government's track record on loan guarantees "lousy."
Too often, the government either backs risky or failing ventures, resulting in a loss of taxpayer money, or subsidizes companies and industries that are mature and profitable and don't need the money, such as the oil and gas industry, Schatz said.
Scott Crider, a spokesman for Sempra Generation, a Sempra Energy subsidiary that is developing the Arizona project, said its loan guarantee was far less risky than the Solyndra loan. Most importantly, the project has a 20-year agreement with Pacific Gas & Electric Co. to buy power supplied by the solar plant, he said.
The purchase agreement is a key element of the project and will "provide assurance that there are sufficient revenues in place to support the loan guarantee," Crider said.
A similar agreement is in place in Nevada. NV Energy, the state's largest electric utility, has agreed to purchase power from the Tonopah tower, which will connect to NV Energy's power grid. The Interior Department approved the project, known as Crescent Dunes, last year.
Solyndra, of Fremont, Calif., was the first company to receive a loan guarantee under a stimulus-law program to encourage green energy and was frequently touted by the Obama administration as a model. Since then, the company's implosion and revelations that officials hurried review of the loan in time for a September 2009 groundbreaking has become an embarrassment for Obama as he tries to sell his job-creation program.


More solar companies led by Democratic donors received federal loan guarantees
by John Rossomondo

A Daily Caller investigation has found that in addition to the failed company Solyndra, at least four other solar panel manufacturing companies receiving in excess of $500 million in loan guarantees from the Obama administration employ executives or board members who have donated large sums of money to Democratic campaigns.
And as questions swirl around possible connections between political donations and these preferential financing arrangements, the Obama White House suddenly began deflecting The Daily Caller’s questions on Wednesday to the Democratic National Committee.
Asked Wednesday to comment on the connection between large Democratic donors and Obama administration loan guarantees to the companies they represent, the White House responded to TheDC with a single sentence: “We refer your question to the Democratic National Committee.”
Concerns about the long-term viability of Solyndra, first made public by The Daily Caller back in February, have now expanded to include the financial health of other loan-guarantee recipient firms as well.
These companies have suffered from declining stock prices despite their favored status in the White House. Yet as the end of the federal government’s fiscal year looms on Friday, a new series of loans could be finalized amounting to more than nine times what taxpayers have already lost on the failed company Solyndra.
“Who was visiting the White House during this period of time?” Texas GOP Rep. Joe Barton asked when contacted by TheDC. Barton is a former chairman of the House Energy and Commerce Committee. “Who were they talking to and what were they talking about? Are there more loans at risk of not being paid back? Are these good investments or political favors?”
“The American people just lost a half billion dollars and they deserve answers to these questions before more money is wasted. Until we know exactly what happened, I think we should slow down this loan program and take a closer look at each case.”
“It is becoming more clear with each revelation that warning signs were ignored in the Solyndra case,” Barton continued. “Yet in the next 48 hours — because of a deadline that can still be changed — the Department of Energy is going to hand out another $5 billion in loans.”
Companies like First Solar, SolarReserve, SunPower Corporation and Abengoa SA have already, collectively, received billions in loans through Obama administration stimulus programs to build solar power plants in the southwestern United States.
Yet each, with the exception of the privately held SolarReserve, has seen its stock price hammered at the same time it was lobbying the Obama administration and Congress for billions in loan guarantees.
The Hill newspaper reported Wednesday that the Santa Monica, Calif.-based SolarReserve has secured a $737 million loan guarantee from the Department of Energy for a Nevada solar project.
That company has ties to George Kaiser, the Oklahoma billionaire who raised $53,500 for President Obama’s campaign in 2008. Through his Argonaut Private Equity firm, Kaiser holds a majority stake in Solyndra.
Argonaut has a voting stake on SolarReserve’s board of directors in the person of Steve Mitchell, who also serves on Solyndra’s board of directors.
Additionally, Federal Election Commission records made available by the Center for Responsive Politics show that SolarReserve board member James McDermott has contributed $61,500 to various Democratic campaigns since 2008, including $30,800 to Obama’s presidential election campaign.
McDermott’s U.S. Renewable Energy Group has a significant financial stake in SolarReserve, and has drawn scrutiny for its ties with Senate Majority Leader Harry Reid — and for reportedly driving green jobs to China.
And Lee Bailey, a fellow SolarReserve board member and U.S. Renewables Group investor, has donated $21,850 since 2008 to Democratic candidates including President Obama, Senate Majority Leader Harry Reid, California Sen. Barbara Boxer and then-presidential candidate Hillary Clinton.
SolarReserve’s board of directors also includes Jasandra Nyker of Pacific Corporate Group Asset Management, where former Speaker of the House Nancy Pelosi’s brother-in-law, Ronald Pelosi, holds a leadership position.
Other data from the Center for Responsive Politics show that SolarReserve paid $100,000 in lobbying fees in 2009 to the Podesta Group. That firm’s principal, Tony Podesta, is the brother of John Podesta — who ran Barack Obama’s presidential transition team.
SolarReserve’s financials are not public since it’s a privately held company, but First Solar provides a more transparent example. That solar energy firm’s stock has lost more than $100 in value since it peaked at $170.80 on Feb. 17, 2011. The company was trading at $65.77 per share Wednesday afternoon.
This market tumble came despite First Solar’s success in winning approximately $2.1 billion in loan guarantees from the Department of Energy. The company announced Wednesday that it would not be able to qualify for a further $1.5 billion loan guarantee before the Sept. 30 deadline.
First Solar founder and Chairman Michael Ahearn, whom Reuters reported cashed in $68.9 million of his company’s stock last month, has donated $123,650, along with his wife, to the Democratic Party and Democratic candidates during the three most recent cycles, mostly in Arizona.
The solar energy giant, the nation’s biggest, also spent more than $1.5 million lobbying Congress and the Obama administration since 2009 on the stimulus and subsequent green-jobs plans. This included approximately $400,000 paid to the Washington Tax Group, which also represented Solyndra.
Investment website The Motley Fool reported Wednesday that First Solar faces a potentially bleak future as its technology increasingly is becoming eclipsed by its competitors.
“As [solar] panel costs fall the balance of system costs becomes more important, highlighting First Solar’s current conundrum,” Motley Fool contributor Travis Hoium writes. “A less efficient panel requires more land, more labor to install, and more auxiliary components than higher efficiency panels. And with feed-in tariffs now leaning on rooftop installations in Europe, First Solar is now behind the curve.”
First Solar’s competitor SunPower has similarly received a $1.3 billion loan guarantee for a solar project in California, but Wall Street has been less than optimistic about the company’s financial health.
SunPower’s stock, like First Solar’s has lost enormous value in recent months. The stock peaked at $21.40 on April 29, 2011, and now trades at $8.36 per share. Morningstar forecasts the company “will post losses in both 2011 and 2012.” SunPower’s technology, Morningstar warns, is likely to remain “too costly compared to its peers” and it expects “mediocre” returns from the stock in the foreseeable future.
SunPower has paid lobbyist Patrick Murphy, a close confidant of Senate Majority Leader Harry Reid, at least $290,000 in lobbying fees since 2009.
SunPower’s political action committee gave $15,650 to Democratic congressional candidates in 2010 and only $500 to a single Republican candidate. Reid received the largest slice of that pie, a $4,000 campaign contribution.
The Spanish firm Abengoa Solar received a $1.45 billion loan guarantee for an Arizona solar project, yet it has similar financial woes. Abengoa also recently reached an agreement for a second loan guarantee, $1.2 billion for another Arizona project.
Yet despite its success appealing to the Obama administration for financing, the company has consistently lost value since March. Its stock fell from a high of $16.50 six months ago to just $10.45 per share on Wednesday.
Abengoa Solar’s lobbying efforts are spearheaded internally by Fred Morse, a veteran of the Department of Energy from the Carter and Reagan administrations. Since 2009, the company has paid Ernst and Young $330,000 in lobbying fees, according to information made available by the Center for Responsible Politics.
Abengoa also enlisted the help of California Democratic Sen. Dianne Feinstein, according to the Institute for Energy Research, to pressure the Department of Energy to expedite the loan guarantees.
“It is wrong when we let the country pick the winners and the losers,” said Mark Kramer, a project faculty member of the University of Pennsylvania’s Wharton School of Business. “If they can’t get funding privately, they probably shouldn’t exist.”
In an interview with TheDC, Kramer described these companies as bad investments whose collapse taxpayers shouldn’t be bankrolling.
But Rhone Resch, CEO of the Solar Energy Industries Association, defends the loan guarantee program as an investment in clean technologies that has created thousands of jobs and has spurred innovation.
He contends the United States needs to invest in solar to allow it to thrive in the face of Chinese competition, which has made it difficult for American companies.
This stiff competition was described as a key factor when Massachusetts-based Evergreen Solar and New York-based SpectraWatt filed for bankruptcy protection earlier this year.

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