Renewable Energy - We Pay, they profit.

[Susan Rose]

Wind Jammers at the White House
A Larry Summers memo exposes the high cost of energy corporate welfare.
President Obama continues to advertise the $814 billion stimulus and its green energy subsidy programs in particular as unqualified successes. But a remarkable memo from Mr. Obama's own advisers tells the real story, neatly illustrating what happens when his anticarbon agenda meets the political allocation of capital. The eight-page October 25 memorandum to the President was written by soon-to-depart chief
economic aide Larry Summers and senior policy aides Carol Browner and Ron Klain, and it's been kicking around Capitol Hill and industry circles for the last week. The trio walks through an interagency dispute about Energy Department subsidies for wind, solar and other forms of "renewable" power, which DOE claimed were being held up by the joint Treasury and White House budget office (OMB) reviews. Recall that the stimulus transformed the government into the world's largest private equity firm.
The many tools now at DOE's disposal include $6 billion to guarantee loans and another
dispensation so that the department can convert an energy investment tax credit equal to 30% of a project's cost into a direct cash grant to green developers.
The Summers memo notes that these two provisions alone reduce "the cost of a new wind farm by about 55% and solar technologies by about half relative to a no-subsidy case." So taxpayers are more than majority partners in these private projects, except they get no upside. DOE wanted the White House to cut OMB and Treasury out of deal-by-deal approval oversight so it could get the money out the door quicker. The department was coming under political attack "from Hill supporters and stakeholders for slow implementation," according to the memo, and impatient Democrats had already raided the $6 billion fund to pay for cash for clunkers. But OMB and Treasury found severe problems with "the economic integrity of government support for renewables." Developers had almost no "skin in the game," meaning that their equity in projects was well below ordinary standards in the private market. They were also "double dipping," obtaining loan guarantees for projects that "would appear likely to move forward without the credit support" in the stimulus because of other subsidy programs. The reason for the roadblock was "an insufficient number of financially and technically viable projects." Treasury and OMB singled out an 845-megawatt wind farm that the Energy Department had guaranteed in Oregon called Shepherds Flat, a $1.9 billion installation of 338 General Electric turbines. Combining the stimulus and other federal and state subsidies, the total taxpayer cost is about $1.2 billion, while sponsors GE and Caithness Energy LLC had invested equity of merely about 11%. The memo also notes the wind farm could sell power at "above-market rates" because of 11/11/2010 Review & Outlook: Wind Jammers at the Oregon's renewable portfolio standard mandate, which requires utilities to buy a certain annual amount of wind, solar, etc. But then GE said it was considering "going to the private market for financing out of frustration with
the review process." Anything but that. The memo dryly observes that "the alternative of private financing would not make the project financially non-viable."
Oh, and while Shepherds Flat might result in about 18 million fewer tons of carbon through 2033, "reductions would have to be valued at nearly $130 per ton CO2 for the climate benefits to equal the subsidies (more than 6 times the primary estimate used by the government in evaluating rules)."
So here we have the government already paying for 65% of a project that doesn't even meet its normal cost-benefit test, and then the White House has to referee when one of the largest corporations in the world (GE) importunes the Administration to move faster by threatening to find a private financial substitute like any other business. Remind us again why taxpayers should pay for this kind of corporate welfare? The memo's tone suggests that Messrs. Summers and Klain and Ms. Browner are on the side of the adults at Treasury and the budget office, and they propose several reforms. But they also say that "Failing to make progress on renewables loan guarantees could upset the Hill ([New Mexico] Sen.
[Jeff] Bingaman, Speaker Pelosi)" and changes could "signal the failure of a Recovery Act program that has been featured prominently by the Administration." Well, that answers our question. Meanwhile, the loan guarantee program continues apace.

[Susan Rose]

Unfortunately for American taxpayers, the Department of Energy's loan guarantee program is even worse than the Journal thinks. Running a bank is outside the DOE's core competencies to begin with, but a recent report by the Government Accountability Office suggests that the DOE is rash, too. According to the July report, the DOE issued half its conditional loan guarantees before full reviews had been conducted.

Perhaps this explains why the DOE's first loan guarantee is proving such a monumental bust. A year ago, California-based solar power manufacturer Solyndra received a $535 million loan backed by stimulus funds. In June, it pulled back on a planned public offering after a PricewaterhouseCooper's audit found that the company's finances "raise substantial doubt about its ability to continue as a going concern." Last week, the company announced that it would shutter a plant and lay off 170 employees.

William Yeatman

Competitive Enterprise Institute

Washington

[XLFD]

Thanks for bringing this to our attention, Susan.  Our American governments have seemed to forget about cost-benefit analyses, particularly when they see the world through lime-colored glasses.  The wind industry's proponents promote its green-ness, but fail to disclose that much of their investments come from the taxpayers, plus the costs are prohibitive for investment by the private sector, and the environmental impacts which can be greater than getting fossil fuels has been.

 

But the supply of oil, gas, and coal is not infinite, and we will someday have to utilize alternate energy sources.  I would like to see more of these subsidies used for alternate energy research uncorrupted by eco-guerillas and their mindsets. 

 

GE's ties to Obama idolators NBC, MSNBC, CNBC, etc. should also put up a red flag, when we find they may get quite a bit of money from the feds.

[Willy]

All this taxpayer money in subsidies and grants is why these developers are going to litter Lake Michigan and Mason county contryside with wind towers. None of the alternative energy that has being offered has been perfected as yet and at this time is a waste of taxpayers dollars. In essence we are putting the cart before the horse and trying to push the cart without wheels.

[Guidothesemipsuedocaptitalistpig]

These towers and generators cost millions if they need to be replaced millions more once government subsidies come off the towers just turn into rusting high tension poles and eye sores. I am still trying to get a few daylight minutes to show you the ones in this area. They line the mountain ridges and are often shut down  for maintenance.

 

The Nuclear plant here on the other hand is fully operational and employees over 1000 with 4-50 dollar an hour jobs. I can see the Nuclear plant cooling towers from my back yard here. It just looks like two large tom toms sending steam signals. It does not take up all the mountain view here at all.

[Sweater Cows!]

I wonder if Homer Simpson is running those towers. hehehe

[Guidothesemipsuedocaptitalistpig]

Well if it is homer the locals are happy with him at the Helm... the plant has all the permits to build a third reactor on the same site. That takes an act of god in today's environment. I will try to get some pictures here of both the Reactors and the Local wind farms and let you guy's/ ladies be the judge as to what would offend the environment worse.

They say Partly cloudy tomorrow, and I don't work so maybe.

[charlemagnetism]

not meaning to rile decembers govner of the lud torch a wot bit but your page says you are from ludville so as unless we got some nukes or windmills in some alternate universe ludtown or your on some happy pills this fri night i think you must be someplace else govner than where im at.   

[Guidothesemipsuedocaptitalistpig]

Oh sorry Charle... You don't know me as many on here do and I have yet to update my new info on my profile.

I just moved from Hamlin Township my home for most of my 50 years out to PA. Near Wilkes Barre. I did so so my wife could be closer to her children and grand kids. So Ludington is now a 2 week summer home rather than my year round home.

And And... This place has lower taxes and and jobs en stuff??!!! what a deal.

[Guidothesemipsuedocaptitalistpig]

Up until September I lived in Hamlin near Aquaman...

[charlemagnetism]

tainted h2o in that area no doubt to make him have the powers of that dc superhero and to give you such a long name.  nice to see you move close to your pa most kids move farther away.  but where is wilkes barre somewhere near flint maybe.

[Guidothesemipsuedocaptitalistpig]

Wilkes-Barre, Pennsylvania. Just think Mountains and Eastern side of PA. 2 hours father east and I would be in New York city. But the hills are pretty here.. At least the ones without windmills  lol.

My real estate taxes came down enough here to compensate for the couple items I found to be higher so far anyhow.

[Guidothesemipsuedocaptitalistpig]

Ludington has now become a fudgey stop in the summers for me  now... I think with my money savings I may be able to afford it now... how ironic.

PA less expensive than MI to live.. And more jobs also.