The Article I Would Write, If I Didn't Have A Day Job

Update:  I found a bit more time to give some more background on First Solar and German feed in tariffs here.

If I had the time, I would love to try to research and list every subsidy recieved by a company like First Solar.  Here are just a few:

First Solar is an Arizona-based manufacturer of solar panels. In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio -- a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.

Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state's Air Quality Development Authority gave the company an additional $10 million loan.

After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.

In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two solar farms in Canada. That means if the solar farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.

But the buyer, in this case, was First Solar.

A small corporation called St. Clair Solar owned the solar farm and was the Canadian company buying First Solar's panels. But St. Clair Solar was a wholly owned subsidiary of First Solar. So, basically, First Solar was shipping its own solar panels from Ohio to a solar farm it owned in Canada, and the U.S. taxpayers were subsidizing this "export."

But this is just a few of them, even on this deal.  For example, the Canadian solar farm very likely picked up federal and provincial subsidies from Canada, and even more likely gets some kind of subsidized feed-in tariff (meaning that an above-market wholesale rate is paid for its electricity).  This sort of feed-in tariff, which is paid by electricity consumers, is wholly un-transparent and likely makes up the large bulk of solar subsidies.   I know the state of Arizona threw a lot of money at First Solar as well (which is headquartered in the Phoenix area.)

During First Solar's boom years, the company was mainly supported by sales to Germany, probably one of the worst solar sites in the world after perhaps Seattle.  But the German government mandated feed-in tariffs for solar that were five times (or more) the market price for electricity.  It was like saying that, while milk generally goes for $2 a gallon, the government mandated that milk from  brown cows could be sold for $10 a gallon, and what's more, consumers had to buy it.

The House Your Tax Money Built

  • me

    Ah, subsidies. They are awful in pretty much every case; it is worthy noting that other than direct subsidies that get happily abused as in this case by "leftist environmentalists", there are indirect subsidies happily abused by "rightwing warmongers" like war spending on Haliburton to the tune of 20B...

    Occasionally, there is a strategic role for subsidies. I can shed some light on the utility of solar subsidies in Germany (and confirm that the weather patterns are pretty similar to Seattle weather :)

    Germany has a huge industrial production sector and is densely populated. A significant portion of German Energy needs is based on imported coal, oil and electricity and existing infrastructure problems with internal Energy distribution (the existing networks are at peak capacity). Additionally, Germany had previous commitments to suspend coal and nuclear energy production inland and some interesting after-effects of network privatization (in essence the companies that bought the network infrastructure stopped all investment into maintenance and network buildup and jacked up prices, with the predictable after-effects; a reminder that privatization can work worse than government management if the incentive structures are set up incorrectly).

    As a result of the dependency on foreign energy sources, exposure to economical threats like Russia closing the gas pipelines is a real issue.

    The extremely high subsidies on sustainable energy sources (specifically wind and solar and to a smaller degree biogas) have led to a proliferation of local energy production (if you drive along the northern coastline, about every third house is covered in solar tiles and every larger meadow is full of windmills). As a result, 20% of energy needs can now be covered through local sources, with a profile that would be difficult to attack centrally (think attack on a single power station).

    This has a huge strategic impact, as it reduces the control of external agents. Not coincidentally, the subsidies have been in free fall since (with the predictable amount of complaints from rent seekers).

    This is one case in which it makes eminent sense for a state to subsidize some economic activity distinctively, and an example of this type of subsidy applied correctly (ie promising to keep the payment up forever to get the infrastructure built and then scaling it back once the strategic objective has been achieved and let market forces play).

  • DrTorch

    Opaque. The word you want is opaque.

  • Mesa Econoguy

    The errant court ruling in Miller v. ACC throws a wrench in the works of some legal opposition to the clearly abusive subsidies and cost-shifting currently going on in AZ, but a proposal (HB 2789) is working its way thru the legislature which would hopefully curtail this.

    It might be worthwhile to take another shot at the REST rule, possibly suing SRP (I’m unable to locate any subsidy information from their website or our bills).

    And now Florida is making the same dumb mistake:

    http://www.forbes.com/sites/jamestaylor/2012/03/21/the-florida-gop-loves-solyndra-and-expensive-energy/

  • http://www.firstsolar.com First Solar

    This column appeared in the Washington Examiner, and after reading Tim Carney’s column, “Firm sells solar panels - to itself, taxpayers pay,” readers might assume that First Solar sold panels to itself, and that taxpayer money was at risk. Neither is true. Though Ex-Im Bank did originally propose a financing arrangement to support the export of solar panels from our 1,250-worker Ohio factory to the project in Canada, the transaction recently closed without Ex-Im financing. No taxpayer money was involved. The owner of the solar panels, and the Canadian project they were exported to, is one of the world’s leading renewable energy investors, NextEra. And while Carney implies this was a hasty transaction, it was announced in 2010 (http://investor.firstsolar.com/releasedetail.cfm?ReleaseID=573598). Carney also references $15 million in loans from the State of Ohio, but those loans went to another manufacturer in no way related to First Solar. Finally, just to be clear, the solar panels are being used in a solar farm, not a wind farm, as Carney wrote. Such wanton disregard for the facts do the readers of The Examiner, as well as this blog, a disservice.

    Ted Meyer
    VP, Communications
    First Solar

  • me

    Wow, I am seriously impressed about that last post :)

  • John O.

    Using a press release to plug a hole, so this is how they fix a leaking dam?

  • http://sevencontinents@mindspring.com Benjamin Cole

    Solar subsidies are stupid. Still, the solar guys are pikers next to the corn growers and mandated use of ethanol.

    The solar guys should have said they are harvesting sunlight, and gotten under the USDA wing, where subsidies are permanent. The solar guys had a bad business model of one-off subsidies. What a bunch of rank amateurs.

  • http://www.charterpacific.com/about_us california commercial real estate

    Wow that is specific amount of data...

    I love blogging. In fact blogging is now my hobby..

  • Mesa Econoguy

    Mr. (Ted) Meyer, VP Communications, First Solar:

    Your attempt at defense of what you claim to be non-receipt of subsidy is at best weak, and at worst, lying.

    I would certainly recommend you address these purported inaccuracies with the author of the Washington Examiner Article, Tim Carney, beyond a letter to the editor ("Taxpayers did not finance solar farm in Canada").

    However, your company apparently has a recent problematic history of material misstatements, and is currently the subject of a shareholder class-action:

    http://www.businesswire.com/news/home/20120319006620/en/Law-Firm-Levi-Korsinsky-Notifies-Investors-Losses

    So I would not be surprised if your "evidence" is highly questionable.

    Your counterparty in the solar farm transaction, Next Era, appears to be a significant subsidy recipient in Canada as well, so the identical "subsidy sponge" criticism applies there.

    Regardless of the veracity of the details of the St. Clair transaction, your firm, First Solar, is a significant recipient of subsidies, federal, state, and local. That is indisputable, as evidenced above. And that money is taxpayer money at risk.