From the Fiscal Times: Solyndra Went on a Spending Spree After Getting Loan
Former employees of Solyndra, the shuttered solar company that exhausted half a billion dollars of taxpayer money, said they saw questionable spending by management almost as soon as a federal agency approved a $535 million government-backed loan for the start-up.
A new factory built with public money boasted a gleaming conference room with glass walls that, with the flip of a switch, turned a smoky gray to conceal the room’s occupants. Hastily purchased state-of-the-art equipment ended up being sold for pennies on the dollar, still in its plastic wrap, employees said.
As the $344 million factory went up just down the road from the company’s leased plant in Fremont, Calif., workers watched as pallets of unsold solar panels stacked up in storage. Many wondered: Was the factory needed?
“After we got the loan guarantee, they were just spending money left and right,” said former Solyndra engineer Lindsey Eastburn. “Because we were doing well, nobody cared. Because of that infusion of money, it made people sloppy.”
…
On Friday, company executives are scheduled to appear before a House committee investigating how Solyndra obtained its loan and whether the Obama White House rushed its approval for political reasons. Chief Executive Officer Brian Harrison and Chief Financial Officer Bill Stover were supposed to face a grilling about the company’s spending and collapse, but they announced Tuesday that they would assert their Fifth Amendment rights because of a criminal probe of the company by the Justice Department.
Full story at the Fiscal Times h/t to Tom Nelson
The FBI raid seems suspiciously like a move to bury the evidence. Does anyone remember the FBI handling of the evidence at Waco? Lost video tapes, lost the front door, bulldozed the crime scene, etc.
It is a violation of federal law to place private investors ahead of taxpayers, as was done here, but I don’t know if criminal penalties attach. Anyone know?
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It’s okay, Obama can issue pardons in 2013 before he leaves office.
Then we can hire Micheal Meyers to do a docudrama about how the company was sabotaged by big oil and Republican politicians. If stupid people could just be better educated about climate change, this would never have happened. Another round of stimulus and a cap and trade law would have assured the success of Solyndra. See? The conservatives are destroying jobs again.
That’s how they’ll spin it.
Danny V. said:
“The Solyndra technology was based on non-silicon manufacturing process. Their bet was on continued high silicon pricing”
I would say their bet was on cap and trade as much as anything else. I wonder how much of the Federal money was spent trying to speculate on the carbon market before it collapsed?
I’m in favor of everybody paying the same rates. Be that is it may, how does $4 a gallon for gas fit into the this (it’s less than $3.50 here) fit into the ‘subsidies’ oil companies get? Won’t ending those ‘subsidies’ make gas more expensive? And if those companies were losing money, would they be ‘too big to fail?’
My final question to izen: If those ‘subsidies’ to oil companies are bad, how are subsidies to Solyndra good?
Uh oh…Money laundering alert…
FISHY: California Democratic Party Among Solyndra’s Creditors
…and this…
From Enron to Solyndra
“…like Solyndra, Enron was a favorite of environmentalists, and Enron was a huge backer of the Kyoto Protocol.”
Please remember the above when the government comes to you and asks that you pay more in taxes to help fund “government programs”…
Tom, I think your adding a zero to the amount to build a new silicon fab. Usually I see numbers in the $1.0-$3.0 billion range, with a good portion of that having to do with the building of a “clean” environment. Not sure if solar cells require the same diligence.
$500 Million to $750 million is the RIGHT cost for a COMPLETE SEMICONDUTOR FAB shop.
NOT 5 to 10 Billion. That’s the cost of a major (delayed by Enviros) nuclear power plant.
Max
There’s more than people hiding behind the gray smoke of global warming.
@- Nuke Nemesis says: September 26, 2011 at 9:57 am
“My final question to izen: If those ‘subsidies’ to oil companies are bad, how are subsidies to Solyndra good? ”
My post was intended to highlight the difference in attitude there tends to be towards subsidies – rather than a level playing field.
Either subsidies are good or bad – depending of your ideological outlook.
But both ‘sides’ tend to favor the subsidies for industries they support and attack subsidies for industries they dislike.
Actually ALL commercial enterprises are dependent on government subsidy to some extent whether direct or indirect. The social infrastructure of roads, clean water, sewage, police, fireman and power generation standards underpins the functioning and workforce of any industry.
kim says:
September 26, 2011 at 9:52 am
It is a violation of federal law to place private investors ahead of taxpayers, as was done here, but I don’t know if criminal penalties attach. Anyone know?
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That was a condition of the stimulus package…….. that any money the govt put up was suppose to be first to be paid back. Yes, it was a violation of federal law. Penalty? I’ll have to do some more digging.
izen:
Most of those $4.0 billion in “subsidies” are not specific to the oil & gas industry. They break down as follows:
$1.7 billion in Domestic Manufacturing Credits: Applies to all production companies equally. A reward for creating/leaving the jobs in the US economy. You can argue whether or not they can move this production from the US, since the oil is located here, but it is clear that they can move the exploration equipment to anywhere in the world and ship the oil in. There is no requirement that oil used domestically must be produced in the US. So given that, what other industries should we strip this credit from?
$1.0 billion in % depletion allowance: Applies specifically to the oil and gas industry as a mechanism for capital recovery. It takes the place of depreciating the assets in the ground. Of course we don’t like to talk about the dark side of this one, which is when oil prices are lower for a sustained period of time, it acts like an anti-subsidy, so this one can cut both ways and at time has. Easy solution is to use capital base instead of income. Over the long haul though, I doubt this equals $1.0 billion a year. Just $1.0 billion a year in the current price environment.
$0.9 billion in foreign tax credit: This one again, applies equally to all. The dodgy part with this is classification of royalty payments as income taxes. Some foreign governments have converted royalty payments to income taxes, allowing for greater deductibility under US tax law. This, however, is not unique to the oil industry. So again, who else would you like to strip this one from?
$0.8 billion in intangible drilling costs: This one is specific to the oil and gas industry. This however is not a subsidy. Period. Exclamation Point! At best, this is a shifting of tax payments to later years. It allows the oil company to deduct their exploration expenses immediately. When this rule was enacted, it actually made sense because 90% of those expenses were written off in the first year anyway because of the abysmal hit rate for new wells, as opposed to the alternative which is adding it to the depreciation base for a new well. Now that the hit rate is much better, maybe it’s time to rethink the break, but it will not provide an $0.8 billion dollar annual windfall. It might provided a short term difference, but after 4-5 years under the new rules, you’d be pretty much back to the same annual number for “tax breaks” resulting from intangible drilling costs.
While this is all interesting, the fact remains that the subsidized portion of big oil, pales in overall comparison to subsidies given to other industries. So if we’re going to cut it for “big oil”, why don’t we just cut them for everybody?
“Actually ALL commercial enterprises are dependent on government subsidy to some extent whether direct or indirect. The social infrastructure of roads, clean water, sewage, police, fireman and power generation standards underpins the functioning and workforce of any industry”.
Izen, I’d more or less agree with that. And providing that social infrastructure is just about the limit of government competence, ie (here in the UK for example) they can just about manage to do that, expensively, not very well, but tolerably. Its when they step outside of those limitations that they get almost everything hopelessly wrong.
>> izen says:
September 26, 2011 at 8:41 am
How lucky we are that the subsidies paid to oil companies are not squandered in the same way!
(sarc off) <<
1. Tax breaks are a lot different from direct pay subsidies like Solyndra got. If the oil industry doesn't make a marketable product the tax break is worthless. I'd be much happier to see the Solydras of the world just get tax breaks.
2. In the case of the oil industry, the tax breaks are the ability to write off the fees charges by other national governments to extract the oil. This comes within the realm of operating costs that pretty much every industry writes off.
Your equating the two was out of left field. Far Left field.
You were doing alright until your last paragraph, when you decided to tack-on that neo-Marxist claptrap. You’re trying to reframe the long-standing social contract in redistributionist terms.
>> izen says:
September 26, 2011 at 10:30 am
Actually ALL commercial enterprises are dependent on government subsidy to some extent whether direct or indirect. The social infrastructure of roads, clean water, sewage, police, fireman and power generation standards underpins the functioning and workforce of any industry. <<
In the US, most of those are local and state functions. If Kalifornia wants to subsidize near-criminal businesses I have no problem with it. There are 49 other states that would welcome my tax dollars.
Tom_R says:
September 26, 2011 at 11:03 am
Luke says:
September 26, 2011 at 10:44 am
Excellent points. Remember, though, that in enviro-speak any money
squanderedgiven to (now bankrupt) “green” companies like Solyndra are called “investments”.And I am STILL waiting on people who hate the oil industry like izen to STOP USING ALL PETROLEUM PRODUCTS. PERIOD! I mean…why won’t the eco
hypocritesgive up oil? I just don’t get it… /sarc“”””” Tom says:
September 26, 2011 at 8:35 am
I’m unsure on this. Silicon fab plants are expensive. Very expensive. The likes of Intel and AMD spend $10-$20bn on each new plant. Obviously solar panels are not on the same scale as this, but I don’t know if $350m to set one up is excessive or not. “””””
Well you obviously don’t know much about Solar cells, or Silicon Fab Technology. Intel and AMD spend that kind of money on equiplment that is capably of fabricating structures as small as around 20-30 nm; just one twentieth of the wavelength of yellow light, and “printing” billions of them on dinner plates as big as 12 inch gramophone records.
Silicon Solar cell makers on the other hand try to grow things that are four inches square or maybe six inches, that you can just about draw by hand.
And you, like evidently numerous others know nothing at all about the process that Solyndra used to make their solar “panels”.
Solyndra apologists blame the Chicoms and their “cheap” labor for putting Solyndra out of business. Nothing could be further from the truth; they never had a business in the first place. They never had a workable solar panel or solar cell technology to begin with.
They used a thin film solar sensitive “paint” to lay down their “solar cells” inside a hollow glass tube; perhaps about four inches in diameter. Now a four inch diameter glass tube intercepts exactly the same area of solar energy, as a four inch wide flat strip. And not coincidently, a four inch diameter glass tube contains three times the glass area as a flat strip has. Gee whizz, it also has three times the area of solar sensitive thin film as does a flat plate. Even thse materials cost money, and you can’t use Pi times the area of something, and beat out in cost, someone who doesn’t do that.
Well you see the sunlight only falls on half the Solyndra tube at a time; but the thin film doesn’t stop it all, so sunlight proceeds on through the top film, and impinges on the bottom film; and even then the film doesn’t stop it, so additional solar energy proceeds past the tube to a refelective mirror layer, that sends the remaining solar energy back through the tube.
If one assumes that the Solyndra Tube has the same conversion efficiency (20-23%) that say a conventional silicon cell from perhaps Sunpower, or similar Solyndra competitors get, the inference is that Solyndra’s thin film layer perhaps has less than 5% conversion efficiency. The multiple strike system implies that any single layer is very inefficient, in absorbing and converting solar energy into electricity.
An efficient solar cell would perhaps reflect ALL of the solar energy that the PV cell can not convert to electricity (the IR), and then absorb and convert the spectral portion it can convert.
Removing the part that only heats the cell, which lowers its efficiency, would be part of a good panel design.
Some vendors have a multijunction, multi bandgap cell sandwich, which captures a wider swath of solar spectrum energy.
Solyndra could make their solar tubes at zero cost; spray the material on the tube inner wall from a garden hose; and they still would have gone belly up.
In solar PV conversion NOTHING matters except conversion efficiency. Cell cost is almost irrelevent. Consumed land area is the name of the game, and nobody who researched the various solar vendor’s technologies, would ever have wasted their precious land area on anything but the highest conversion efficiency solar panels.
Try to google and see if you can find where they state what the solar to electric conversion efficiency is for their tubular panels.
And guess what happens when you parallel a solar cell that is directly facing the sun on the top of the tube, with another one; or portion of the same diode that is edgewise on to the sun, and receiving almost no solar energy at all. The second one current hogs the former.
The “media” has/ve focussed on the money and political shenanigans of the Solyndra debacle.
The real scandal is in the Solyndra “Technology”.
They went belly up, because nobody in their right mind, would have bought a Solyndra solar panel; taxpayer subsidized or not.
Just another example of a long line of examples of fatal conceit.
Bzzzzt!
Nope. Not quite …
.
izen says:
September 26, 2011 at 10:30 am
…………….
Actually ALL commercial enterprises are dependent on government subsidy to some extent whether direct or indirect. The social infrastructure of roads, clean water, sewage, police, fireman and power generation standards underpins the functioning and workforce of any industry.
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Good point, except you’ve gotten the subsidy relationship backwards. The infrastructure, water, sewage, police, etc. was accomplished only through the commercial enterprises’ subsidy to governments, via direct or indirect.
It is important to distinguish the difference, else, government tends to think they are the source of wealth, and thus the rightful owner of the wealth.
James
“”””” izen says:
September 26, 2011 at 8:41 am
How lucky we are that the subsidies paid to oil companies are not squandered in the same way!
(sarc off)
http://www.businessweek.com/ap/financialnews/D9N5V0VG2.htm
U.S. Sen. Charles Schumer, D-N.Y., is proposing to end what he says are $4 billion a year in tax subsidies to the biggest oil companies. “””””
Well guess who is the principal beneficiary of “big oil” with their “subsidies”.
The Federal Government makes far more money from “big oil” than do the oil companies; they aren’t about to kill the source of the goodies in the trough that the feds swill in.
But Silicon Valley has plenty of Corporate welfare deadbeats, eager to “educate” Washington politicians to the benefits of their support of “Green ” “technologies”, specially the ones those “moneybags” won’t risk their own money on.
Elizabeth – Elizabeth Warren, is that you?
.
I am just curious.
Suppose you borrowed a couple hundred thousand from a regular bank to run your business. Now suppose later on you couldn’t make your payments on time, and they asked you to come to a meeting so they could ask you some questions.
If you started pleading the 5th at that meeting the sheriff would show up in a few hours to arrest you.
Suppose it was found out that you had bought the president of that bank a new boat just before or after the loan was approved through his intervention.
The sheriff would be at his house shortly after picking you up at yours.
WHY IS IT OKAY FOR THE PRESIDENT TO GIVE HUGE AMOUNTS OF TAXPAYER MONEY TO HIS FRIENDS AND SUPPORTERS?
George E. Smith says:
September 26, 2011 at 11:26 am
They went belly up, because nobody in their right mind, would have bought a Solyndra solar panel; taxpayer subsidized or not.
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bingo……………………….
George, didn’t Calif pass some law about new construction, solar panels, etc specifically about buying in-state and Solyndra?
……..and also give Solyndra an in-state tax break or subsidy of some sort?
” izen says:
September 26, 2011 at 8:41 am
How lucky we are that the subsidies paid to oil companies are not squandered in the same way!
(sarc off)
http://www.businessweek.com/ap/financialnews/D9N5V0VG2.htm
U.S. Sen. Charles Schumer, D-N.Y., is proposing to end what he says are $4 billion a year in tax subsidies to the biggest oil companies.”
Firstly, all Oil Companies pay taxes on earnings just like any corporation. According to data found in the Standard & Poor’s Compustat North American Database, the industry’s 2009 net income tax expenses — essentially their effective marginal income tax rate — averaged 41 percent, compared to 26 percent for the S&P Industrial companies. The Energy Information Administration (EIA) concludes that, as an additional part of their tax obligation, the major energy-producing companies paid or incurred over $280 billion of income tax expenses between 2006 and 2008.
http://dailycaller.com/2011/04/25/the-truth-about-americas-oil-gas-companies-part-i/.
Secondly, according to the ONRR, annual revenues from federal onshore and offshore (OCS) mineral leases are one of the federal government’s largest sources of non-tax revenue. In 2010, Royalty Revenue amounted to around $8 Billion
http://www.onrr.gov/
Izen, before you shoot from the hip it would be worth your while to investigate how the Oil Industry stacks up. It is not just the tremendous value that Oil Companies create for all consumers and other industries that use the fuels but the employment they provide, as well as their contributions to taxes that makes them stand out as pillars of our society and the primary contributor to the comfortable life styles that most of the West & developing nations enjoy. Just think about how many products you touch daily that are from Oil. Just think about how often you use a car, or travel, or buy food/products that have been delivered using hydrocarbon fuels.
There is no comparison. Solyndra was a very unfortunate waste of taxpayer money, a net burden to Society. Oil Companies are huge net contributors to Society.