The House Oversight and Government Reform Committee is in the news for its investigation into Fast and Furious. The committee has not let go, however, of the investigation into the “cozy ties” between the Obama administration and green energy projects funded through Department of Energy (DOE) loan guarantees. A hearing was held on Tuesday, during which emails were released showing that a senior advisor in the DOE loan program was “too close” with a loan recipient—“giving the company access to pre-decisional information encouraging the company to make edits to internal documents.”
Tuesday’s hearing is one of the latest attacks on the loan guarantee program that have intensified since the public collapse of Solyndra drew attention to the department’s policies. The story is much bigger than Solyndra and wider than the DOE.
US energy subsidies, including spending, tax breaks and loan guarantees, increased from $17.9 billion in 2007 to $37.2 billion in 2010. The Obama administration would likely have us believe that the money spent is to reduce dependence on foreign oil while increasing international economic competiveness, to create jobs, and to address environmental degradation. However, as Peter Foster stated in his Financial Post column about the failure of the Rio +20 conference that ended on Saturday, “bogus eco scares” are being manufactured “as a rationale for payoffs”—which is certainly what has happened for the DOE subsidies.
At Tuesday’s hearing, the CEO of the company in question defended the project saying that it would “generate significant solar energy output and thereby contribute to the goal of energy independence.” What? Solar energy creates electricity. The US already has the resources to be electricity independent with enough coal, uranium, and natural gas to generate all the needed electricity for hundreds of years—if not thousands. Peter Foster’s assessment is more realistic: “a rationale for payoffs.” The subsidies to green energy projects are rife with implications of “payoffs” to Obama administration insiders, campaign donors, and other top Democrat insiders.
For example, according to the Washington Free Beacon, “Seven solar companies received fast-tracked approval by the Department of the Interior to lease federal lands in a no-bid process: Abengoa Solar, BrightSource Energy, First Solar, Nevada Geothermal Power, NextEra Energy Resources, Ormat Nevada, and SolarReserve.” Each of these seven companies received billions of DOE funds under the 1705 loan program as well as renewable energy grants from the Treasury Department—despite “junk bond” status. (Note: a junk bond is defined as a “high-risk, non-investment-grade bond with a low credit rating, usually BB or lower. … Opposite of investment-grade bond.”) And each has “connections.”
· Abengoa has two solar projects: Solana and Mojave Solar. Solana’s Fitch rating is BB+. Just before Christmas, 2010, the company received $1.45 billion from the DOE for a solar thermal plant, to use parabolic trough technology, in Gila Bend, AZ. Mojave Solar’s rating was BB. Yet the company received $1.2 billion in September 2011 for its solar assembly collection project in San Bernardino County, CA. Abengoa has connections to California’s Democratic Senator Dianne Feinstein.
· BrightSource Energy has a three-unit power system project known as “Ivanpah,” located near the California/Nevada border, south of Las Vegas, that uses a proprietary power-tower solar thermal system. Ivanpah I and III have a BB+ rating while Ivanpah II is BB. On April 11, 2011, the DOE announced the finalization of $1.6 billion in loan guarantees for BrightSource’s Ivanpah project. The apparent “payoffs” to Democrats are myriad—having donated at least $21,600 to Democrats since 2008 (and zero dollars to Republicans). According to a Washington Free Beacon report, Senator Harry “Reid received almost $4,000 from Brightsource executives in the 2010 cycle, including $2,400 from CEO John Woolard, who hosted a fundraiser for the majority leader. Woolard is also a Barack Obama donor and has visited the White House 10 times since Obama took office.” Additionally, Sanjay Wagle (a significant 2008 Obama campaign supporter and contributor), a principal at Vantage Point Partners (the major stakeholder in BrightSource) was an advisor at the DOE at the time the loan was approved. And, John Bryson, BrightSource CEO, became Obama’s Secretary of Commerce (although he resigned his post late Wednesday) and has ties to an organization that helped craft the stimulus package.
First Solar manufacturers “thin film” solar modules and is now moving into project development. While First Solar is not in the “junk bond” list, they do hold the unique distinction of being the single worst performer in the SPX in 2011. Additionally, they are linked to three junk-bond projects: Aqua Caliente (AZ), BB+; Antelope Valley Solar Ranch (CA), BBB-; and Desert Sunlight (CA), BBB-. First Solar was an early green investment of Goldman Sachs—which gave more than $1 million to the 2008 Obama campaign. Goldman Sachs executives sat on Obama’s 2008 Finance Committee and others were bundlers. In Throw Them All Out, Peter Schweizer reports on First Solar investor Paul Tudor Jones, who was a 2008 Obama bundler, and First Solar CEO Michael Ahearn, who “gives generously (and exclusively) to Democrats.”
· Nevada Geothermal Power (NGP) holds leasehold interests in six geothermal projects located in the Western United States. They hold a BB+ rating and received a $78.8 million loan, guaranteed by the DOE, in September of 2011. Executives from NGP contributed heavily in 2008 to Harry Reid’s campaign.
NextEra Energy Resources calls itself a leader in clean energy including “operating the largest US solar energy site.” Despite its self-proclaimed “leader” status, two of its projects: Genesis Solar and Desert Sunlight, hold ratings of BBB+ and BBB-. The Genesis Solar project received $681.6 million in August 2010, and Desert Sunlight: $1.2 billion. Here, there is an obvious conflict of interest as NextEra’s CEO, Lewis Hay, serves on the President’s Council on Jobs and Competitiveness.
· Ormat Nevada is a wholly-owned subsidiary of Ormat Technologies Inc., whose website touts “green energy you can rely on.” They have an S&P rating of BB and received $350 million in partial loan guarantees. Ormat’s lobbyist Kai Anderson and Director of Policy and Business Development Paul Thomsen were both former senate aides to Harry Reid and donors to his campaign.
· SolarReserve’s Crescent Dunes project is a solar thermal power tower plant utilizing the advanced molten salt power tower technology with integrated storage located in Tonopah, NV. The company's Fitch rating is BB, yet in September 2011, it was the recipient of $737 million in DOE loan guarantees. Obama’s law school buddy and 2008 Obama campaign bundler, Michael Froman, was managing director of alternative investments at Citigroup—which became a major investor in SolarReserve. Froman currently serves on the White House staff. Additionally, other high profile Democrats are involved with SolarReserve.
These seven green energy loan recipients are just a sampling of the risky investments the Obama administration made with our dollars, and I’ve only covered a few highlights. An entire book could be written tracking all of the interconnected dots. Since the time Obama entered into his public equity business, his success rate has been dismal—with the majority of the “high-risk” investments not producing a high-yield (in fact, at least 25 of the “investments” have gone bankrupt or are facing imminent closure).
On Friday, June 22, a guest on Varney & Co. suggested corporations use our money to spend on political campaigns and Charles Payne pointed out it’s not our money as we pay for goods and services by exchanging money that then becomes the corporations’ money. In fact, it is Obama who is using our money—the taxpayer dollars (and those borrowed from China) to fund his campaign by giving our money to high-risk projects in which his friends are involved, who then donate some of it back to him. Watch your mail box for the “thank you” note for your Obama campaign donation.
Author’s note: Thanks to Christine Lakatos, the Green Corruption blogger for research assistance.
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