With the Democrats in control of all levers of power in Washington, the biggest winners could be the wind and solar companies. The shares of these companies continue to climb, largely as President 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 repetition of the litany of green “stimulus” fiascoes that Biden piloted in 2009 as Vice President 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 a federal loan of 700 million US dollars for the first time in 2011. 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 achieved 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 get back only $ 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 track record to date. 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.
Stephen Moore is a syndicated columnist.