What Solyndra Fiasco?
Review & Outlook WSJ.com 9/28/11
The Department of Energy keeps shoveling out taxpayer money
If you thought the $535 million Solyndra scandal had chastened the fearless venture capitalists of the Obama Administration, think again. The Department of Energy shovelled out $1.1 billion in new loan guarantees to solar projects in Nevada and Arizona Wednesday, and more deals are pending before the $18 billion program funded by the 2009 stimulus expires Friday.
We'll go out on a limb and say the rush raises questions about how carefully these outlays are being vetted, especially in light of solar-panel-maker Solyndra's August bankruptcy. The FBI, Treasury Department and Congress are all investigating who approved the politically connected California company's loan guarantee and why. The case is an embarrassment for the White House, which touted Solyndra as a model for its green jobs agenda.
Yet the Department of Energy seems oddly removed from the uproar. In a statement yesterday, Secretary Steven Chu said: "If we want to be a player in the global clean energy race, we must continue to invest in innovative technologies that enable commercial-scale deployment of clean, renewable power like solar." Translation: China is throwing taxpayer money into solar, so Americans should, too.
That comparison isn't straightforward; without a free media, it's impossible to know how many Solyndras Beijing is creating, much less how many are making any money. We doubt most Americans want its government to get in the business of competing dollar-for-subsidy-dollar with the politically directed credit decisions of the Chinese Communist Party. If solar energy collection technology has a chance to be a commercial winner, someone will invest in it. If no one does, there may be a very good reason.
One of those reasons may be this: The Energy Information Administration estimates that new natural gas-fired plants will create electricity at a cost of $63.10 per megawatt hour, compared to the Administration's "green" favorites, offshore wind and solar thermal plants—like the one in Nevada funded yesterday—which cost $243.20 and $311.80.
Even if you believe in the "green job" mantra, here's some more math: Yesterday's $737 million loan guarantee to Tonopah Solar Energy will create "600 construction jobs and 45 permanent jobs," according to the company. The $337 million loan guarantee to Sempra Energy "will fund up to 300 construction jobs." That's $1.1 billion for 45 permanent jobs. [or $24.4 million per permanent 'green job']
By comparison, the proposed Keystone XL pipeline to carry crude oil from Western Canada to refineries on the U.S. Gulf Coast would create some 13,000 union jobs and around 118,000 "spin-off" jobs—if the U.S. State Department ever gets around to approving it. And taxpayers wouldn't have to risk a dime.
It's always possible that some of the Energy Department's latest investments will turn out to be winners, but if they do then the profits will go to the private shareholders. If they fail like Solyndra, then taxpayers will get stuck with the bill. Come to think of it, that really isn't all that different from China's political business model, a free press and democratic Congress aside.