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Blog

    Solargate

    10/03/2011


    As documented in two previous posts about the solar-gate debacle, government handouts to favored interests to supposedly promote job growth and innovation (in this case "green energy" solar panel companies) have a less than successful track record. It turns out that Solyndra is only one of four companies to have received stimulus funding from the $800 billion stimulus bill passed in 2009 only to later file for bankruptcy, and two of those were also working on alternative energy.

    1. "Evergreen Solar Inc., indirectly received $5.3 million through a state grant to open a $450 million facility in 2007 that employed roughly 800 people. The company, once a rock star in the solar industry, filed for bankruptcy protection last month, saying it couldn't compete with Chinese rivals without reorganizing. The company intends to focus on building up its manufacturing facility in China."

    2. "Spectrawatt, based in Hopewell Junction, N.Y., is also a solar cell company that was spun out of Intel in 2008. In June 2009, SpectraWatt received a $500,000 grant from the National Renewable Energy Laboratory as part of the stimulus package. SpectraWatt was one of 13 companies to receive the money to help develop ways to improve solar cells without changing current manufacturing processes. The company filed for bankruptcy last month, saying it could not compete with its Chinese competitors, which receive 'considerable government and financial support'."

    3. "Another winner of stimulus who ultimately lost is Mountain Plaza Inc. Despite declaring bankruptcy in 2003, the company received $424,000 from the Tennessee Department of Transportation as part of a grant aimed at installing 'truck stop electrification' systems that allow idling truckers to plug-in during extended stops and turn off their exhaust-belching, environment polluting diesel engines. Mountain Plaza had filed for bankruptcy protection again in June 2010. TDOT, which received a $2 million stimulus grant from the Environmental Protection Agency for the project, said it didn't learn about the bankruptcy until October, but it is closely monitoring the project."

    4. And finally, "Olsen's Crop Service and Olsen's Mills Acquisition Co. also failed despite Olsen's Mills receiving $10 million to increase employment, add equipment and machinery, refinance existingdebts and work capital for operations and acquire land. The payout—part of a $64 million package to nine rural businesses in Wisconsin for economic development loan assistance—was delivered in January2010, after Olsen's Mills filed for bankruptcy protection for defaulting on a $60 million bank loan.”

    So what did Spectrawatt CEO Brad Walker have to say about his company's failure? “United States-based manufacturers are under a great deal of stress because of the emergence of manufacturers in China, who receive considerable government and financial support. This support, coupled with China’s inexpensive production costs,have created a competitive advantage for Chinese manufacturers and allowed them to become price leaders within the industry.” Ah yes, if only they had been given more taxpayer money they would have been able to compete. Why do they even pretend to be a private company? Of course their failure had nothing to do with the fact that they had a "noncompetitive production line", have to compete with "China's inexpensive production costs" which are a result of much cheaper Chinese labor and the fact that "green energy" is still not an economically viable technology that can compete without subsidies.

    The lesson here should be that the magical "green jobs" industry that will save America through millions of new jobs and energy independence is a myth and a fantasy perpetrated by special interests and ideologues concentrated mostly—though not wholly—on the left and within the Democratic Party. They will continue to ignore economic laws and economic reality to push their "green energy" agenda through until we're all unemployed and living in grass hovels, but at least we'll be "green" and they'll feel good about it.

    However, we must remember that this is not just an Obama phenomenon. The federal government has been trying to micromanage and centrally plan the energy industry for decades all the way back to President Carter when the Dept.of Energy was formed and another government war was introduced, this time on foreign oil. "Energy Independence" has been a popular campaign slogan and plank for decades, but we are now more dependent on foreign energy than ever. Obviously something has gone terribly wrong and that something is decades of bad policy. It is an economic fallacy that government can provide cheaper and better products at lower costs than the free market, let alone create jobs or direct an entire nation's energy consumption. If we truly want to see an energy revolution in our nation, we should declare independence for the energy industry from the federal government and let loose the free market.