With the Democrats about to control all levers of power in Washington, the biggest winners could be the wind and solar companies. These companies' stocks continue to soar, largely as President-elect Joe Biden pledged to invest hundreds of billions of dollars in green energy through a pipeline of tax-backed grants, loans, tax credits and loan guarantees.
This game plan looks suspiciously like a repeat of the litany of green “stimulus” fiascoes that Biden piloted as Vice President in 2009 with the $ 800 billion Obama stimulus plan. The experiment in government as an investment banker was fraught with embarrassing failures from Solyndra, Fisker Automotive, and Abound Solar. Taxpayers have lost billions of dollars on these lemons.
One of those disasters, the Crescent Dunes solar thermal power plant in the Nevada desert, is still embroiled in legal battles to find out who will pay for all losses. The Obama administration showered this project with money for the first time in 2011 with a federal loan of US $ 700 million. The Department of Energy stated that the plant should deliver half a million megawatt hours of electricity every year. Not quite. Thanks to design flaws, faulty equipment and unfortunate management, Crescent Dunes never met its production goal. Then, in 2017, Crescent Dunes knocked on the door of the Treasury Department again, this time receiving $ 275 million in cash grants instead of tax credits, in addition to $ 250 million in private capital. The plant also had to be shut down during this second round of life support. Last month, the bankruptcy court approved the reorganization plan for Chapter 11 of the entire operation.
But the story doesn't end there. Under the terms of the settlement, taxpayers will only get back $ 200 million of the remaining $ 425 million that has not yet been paid from the Department of Energy loan. The rest will be forgiven. Some of the credit losses could be offset if the investment hurts profitability. Expert testimony in the court case concluded that this outcome is unlikely given his previous track record. Bottom line: Expect taxpayers to swallow hundreds of millions of dollars in losses here.
What is particularly annoying about this whole mishap is the Spanish company Grupo Cobra, which botched the construction and received full payment for the construction of the facility. The Department of Energy has signed a contract with Grupo Cobra that will grant the outstanding US $ 225 million credit and allow Grupo Cobra to become sole owner of the project. The total losses to public and private investors could ultimately approach half a billion dollars. In the meantime, a foreign company will lose sole ownership of a US solar system. Grupo Cobra is rewarded for its incompetence.
Will the Biden administration learn from bankruptcies like Crescent Dunes? Don't bet on it. It wouldn't be surprising if Biden's “green energy” crusaders, flushed with taxpayers' money, dumped millions more dollars at Crescent Dunes.
Renewable energy scams like Crescent Dunes remind us that these “public-private” projects rarely produce a lot of electricity and do not save the planet from climate change. But they turn lobbyists and fraudsters into millionaires. My friends at the Heritage Foundation counted 25 separate green energy projects, each with multi-million dollar tax losses, like those from the Obama era. My advice to the Biden team is the old adage: make a fool of me, be ashamed. Make a fool of me twice, be ashamed of me.
Stephen Moore is a Senior Fellow at the Heritage Foundation and an economic advisor at FreedomWorks. He is a co-author of Trumponomics: Inside the America First Plan to Revitalize the American Economy. To learn more about Stephen Moore and read about the roles of other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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