Department of Energy's "Innovative Energy Technologies" Guarantees $2.1 billion loan to German firms

Department of Energy chose two Germans firms under the program to guarantee $2.1 billion loan? Are there no American companies that would qualify? There is also no transparency according to GAO and DOE Inspector General. Bad enough the Government guaranteed the loans which was a new program as part of  the 2005 energy bill but then Obama comes along expanding the subsidies and removing the requirement that the recipients provide a 'down payment' to cover the risk. Sounded like a boondoggle from the beginning that has been made worse by Obama.

The 2005 energy bill authorized the Department of Energy to guarantee private bank loans for "innovative energy technologies." President Obama's 2009 stimulus bill expanded the subsidies and removed the requirement that the beneficiary provide a "down payment" of sorts to cover the risk. But the program has consistently received harsh critiques from the Government Accountability Office and the DOE's inspector general.

These two German firms are going to build a solar plant in the Mojave Desert and expect to create 1,000 construction jobs and 220 permanent jobs, but those numbers could fluctuate or not be there at all if this never really gets off the ground. We are talking about spending $2.1 billion for 220 permanent jobs? That is not a very good return. Do they even know if this proposal will work? Hard to tell since there is not very good record keeping at DOE on any of the projects under this program.

Where are they going to find workers to work in the Mojave Desert during the summer. We drove I-15 from San Bernardino to Las Vegas in the first week of August and there was a sign that said turn off your air conditioner for the next 20 miles so not to overheat your engine. We spent the night in Boulder after going to view the dam and at the pool the temperature at 6:30 at night was 115 degrees. Yet they want to put this project out in the desert. There is a reason there is not much there.

Now the taxpayers are on the hook if it fails like other projects in this program have in the past.  Not only are the taxpayers on the hook, but the lender is Deutsche Bank which means if the two German companies fail, the US taxpayer gets to pay a German bank back.  What a sweetheart deal these Germans have gotten from the Obama Administration:

Solar Trust of America is owned 70 percent by German company Solar Millennium and 30 percent by Ferrostaal, also of Germany. One of STA's finance partners is Deutsche Bank, which could end up being the lender. In that case, the guarantee would mean that if a German company fails to repay a German bank, U.S. taxpayers would foot the bill.

Maybe instead of awarding $2.1B to foreign companies, they might want to scrap the program and start over with a program that works as this one obviously has been a failure when you read the money spent and outcomes. Looks like transparency and accountability are non-starters for this program from DOE which mirrors the Obama Administration.

U.S. taxpayers guarantee $2.1b loan to German firms

By: Timothy P. Carney 04/20/11 8:05 PM
Senior Political Columnist http://twitter.com/TPCarney

A federal subsidy program with consistently poor marks on transparency and accountability has just announced its largest ever award: a $2.1 billion loan guarantee to a German-owned solar power company. The Solar Trust of America, the U.S.-based joint venture of two German companies, says the subsidized project will create 1,000 construction jobs and 220 permanent jobs in the desert where the new solar power plant will be built. Maybe so, but there are plenty of reasons to question the efficacy of this government job creation project -- including the fact that the key components of the plant will be built by robots.

(snip)

Federal loan guarantees put the U.S. taxpayer on the hook if the borrower cannot repay the loan. When it comes to nascent technologies in economically dicey industries like energy, default is a serious concern.

"Ability to perform and repay the loan," was one of the important things DOE officers sometimes failed to examine, according to an IG report issued in late 2007. In July 2008, the GAO concluded that "the Department of Energy was not well positioned to manage the Program effectively and maintain accountability," according to one summary. In early 2009, another IG report noted improvements, but still found the program lacking "procedures necessary to estimate potential losses in the event of default." A July 2010 GAO report found the program treating applicants inconsistently.

The latest IG report, issued in March, found widespread shortcomings in documentation and transparency. None of the 18 loan guarantees issued under the program had been properly documented. The program officers "did not always record the results of analyses" of loan applications. Program officers told the IG things about risk management efforts that clashed with the agency's written records.

In short, while there's no hard evidence of clean-energy loan guarantees being given out haphazardly, the Department of Energy can't prove they're being approved with proper care, either.

In this context, the department approved a $2.1 billion guarantee for a solar power plant in the Mojave Desert.

(snip)
STA's Blythe Solar Power Project in California's desert will have no solar panels, but instead uses large parabola-shaped mirrors to focus the sun's energy on a pipe filled with a synthetic oil. The hot oil is piped to a nearby building where it boils water, generating steam, which spins a turbine, generating current.

Excerpt:  Read more at the  Washington Examiner

Do we know how much energy will be generated? Then you learn that these job numbers may not hold as some of the effort will be done by robots.

A 2011 report from an executive at Flagsol, which will make the mirrors for Blythe, stated: "Each subprocess, such as assembling, bolting and cementing, will be performed in the future by robots."

When I see someone from John Kerry's staff was the lobbyist for this group, I have my serious doubts:

Former Energy Department official and John Kerry staffer David Leiter was one of STA's lobbyists working on "financial incentives for renewable energy, including protecting funding to DOE loan guarantee program," according to a lobbying disclosure form filed April 14.

All this looks to be an idea some group has to make electricl current. Reminds me of a science project for the Science Fair. What happens if this idea provides little electricity, and we are on the hook for $2.1B because not enough is generated to pay back the loan? We will be left with a facility in the desert with $2.1 B on the way to Deutsche Bank. There is no risk to anyone but the US taxpayers.

Is this program part of Greening up America that is going to cost the taxpayers dearly and have little to show in the end?