You Thought Solyndra Was Bad? There's More On the Way

You thought Solyndra’s green energy taxpayer rip-off was something? Well there are plenty more equally colorful crony catastrophes where that came from. I’ll mention just a few that haven’t gotten much attention.

Of the stimulus grants so far, more than 80 percent have gone to wind farms (covering up to 30% of all project costs). A Meadow Lake wind development project in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant.

When it comes to breezy U.S. wind shenanigans, Robert Bryce, a senior fellow at the Manhattan Institute, believes that General Electric’s Shepherd Flat project in northern Oregon is worst in blowing lots of taxpayer resources. Not only did the Energy Department give GE and their partners a $1.6 billion loan guarantee, but as soon as the turbines start running, the Treasury Department will ante up an additional $490 million cash grant.

According to plan, an important intent of this charity is to create 35 permanent new “green energy jobs”. Focusing upon just the $490 million cash grant alone, some skeptics may question whether the taxpayer cost of $16.3 million for each of those jobs might be just a little bit steep.

The Shepherd Flat deal is so lucrative for investors that even some of President Obama’s top advisors including former energy policy czar Carol Browning and economic advisor Larry Summers thought it was lousy. Their October 2010 memo observed that the project backers had “little skin in the game” while the government would be providing “a significant subsidy (65+ percent).” The memo went on to say that while the sponsor’s contribution amounted to only about 11 percent of the total cost, they would receive an “estimated return on equity of 30 percent.” It also explained that the carbon dioxide reductions associated with the project “…would have to be valued at $130 per ton for CO2 for the climate benefits to equal the subsidies…more than six times the primary estimate used by the government in evaluating rules.”

Here’s another one for our Left Coast friends. Idaho Winds LLC which represents eight wind farms has hatched a plan to take advantage of California’s carbon cap-and-trade lunacy. They have petitioned the Federal Energy Regulatory Commission to approve the sale of renewable energy credits to a third party. Idaho Winds would then immediately buy the power back, leaving just the credits which the third party would sell to a California utility. So in essence, no energy would actually be sold…just California credits for wind power sold in another state.

The shell game is driven by laws in California and other western states requiring that renewable sources provide a certain percentage of the state’s energy use, and providing that each unit a utility buys or produces receives credit. A loopy loophole allows California utilities to “unbundle” the energy and energy credits following an initial purchase, and then just buy the credits. Idaho doesn’t have such a law, so its utilities don’t need the credits. If allowed by FERC, it will enable Idaho to literally create energy credits out of thin air and sell them to California utilities that pass on those costs to their unlucky customers.

Our U.S. Navy is spending lots of our green to go green too. They recently committed $12 million to purchase 450,000 gallons of biofuel at about $26.75 per gallon in order to offset requirements for standard JP-5 aircraft jet fuel that costs less than $3 per gallon. The good news is that the total fuel price will be only about five times more (rather than 9 times) after it is mixed with the standard stuff.

But then again, the real cost to American taxpayers is more than that. The biofuel is being produced through a contract with Dynamic Fuels, a partnership of three firms including Solazyme which previously received $27.7 million from the American Recovery and Reinvestment Act (stimulus money) to build its biorefinery. Coincidentally, T.J. Glauthier, a Solazyme strategic advisor, served on the Obama White House transition team where he focused on Recovery Act energy issues.

And get this…that green fuel purchased with green tax money will be consumed in naval air exercises near Hawaii next summer by…now get ready for this…the “Great Green Fleet Carrier Strike Force”.

Do you suppose their mascot will be the Jolly Green Giant? (Ho-Ho-Ho.)

How much are you willing to pay for a plug-in hybrid electric car? A Chevy Volt with a $41,000 sticker price maybe? Would you buy one of those if someone else threw in a $7,500 cash-back incentive; and an additional $5,000 if you live in California? Okay, okay… what if the real vehicle production cost amounted to thousands of dollars more, and someone else chipped in the difference?

Well someone already is, whether you buy one or not. Any guess who that might be? Look in the mirror for a clue.

Subject to meeting various employment and other milestones, U.S. taxpayers will kick in about $3 billion in federal and state loans, rebates, grants and tax credits towards Volt production. This includes $2.4 billion from the federal government, plus $690.4 million from the state of Michigan.

Some of these contributions will go to GM directly, while others will flow through companies that supply Volt parts to them. For example, the Department of Energy awarded a $105.9 million grant to GM’s Brownstone plant that assembles the batteries, and its Hamtramck assembly plant received nearly the same amount in state credits to construct facilities for electric drive systems.

Delphi Automotive Systems, a former GM division, received $89.3 million to expand manufacturing facilities for electric drive power components, and Compact Power, a company that supplies Volt batteries, has been awarded up to $100 million in refundable battery credits through a combination of tax breaks and cash subsidies.

But even with spectacular deals like these, GM has so far only managed to sell about 8,000 of their vaunted Obamacars. And despite another big gift we gave them in the form of a huge TARP bailout, the prognosis doesn’t look good at all. Volt’s lack of spark promises to be yet another in a long series of Obama green program fizzles.

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This article is available online at:
http://www.forbes.com/sites/larrybell/2012/02/16/you-thought-solyndra-was-bad-theres-more-on-the-way/