Biting The Hand That Feeds You


Resourceful Earth wrote about SolarCity last year, as it was under investigation by the IRS for some potentially funky accounting after it had received a loan guarantee from the Department of Energy. It seems that SolarCity is back in the news, and not for reasons you’d expect:

Now, SolarCity is pushing back with a lawsuit that alleges the opposite: some of the taxpayer-funded grants it received weren’t as big as originally promised.

The suit, filed quietly in February in the U.S. Court of Federal Claims, comes as SolarCity and other industry players are defending solar-friendly government policies, and it could undermine the industry’s message that solar power will soon be viable without government help.

The case is the latest salvo in the tiff over a federal grant program that has paid out about $4.1 billion to solar projects since the 2009 economic-stimulus law created it.

Even before the Treasury Department’s inquiry into grant applications filed by SolarCity and other installers, House Republicans had questioned the program’s effectiveness in creating jobs. Congress declined to renew the grant program at the end of 2011, and only projects that were being planned by that date can receive grants today.

The government is looking into whether SolarCity and other firms misrepresented the fair-market value of solar systems in order to boost the value of the grants they received. In its suit, SolarCity says two of the company’s subsidiaries received smaller-than-expected grants. The company doesn’t say exactly how much funding it applied for originally, but it says the final grants issued by the Treasury Department were $8 million less than was proper under the law.

The lawsuit alleged that the federal government undervalued the “assets” of SolarCity in one way or another, causing them to award SolarCity less grant money.

This about sums up the state of these programs that hand out money to renewable energy companies. The companies themselves are suing the federal government — the one who writes the checks in the first place — alleging that the checks weren’t big enough.

Walter Russel Mead has more:

It’s he-said, she-said right now, and we’re not sure who’s word will be final. What we do know is that suing the government for more free grant money isn’t good publicity, especially in a time of rancorous debate over budget deficits and costly failures in green industries.

Amazingly, federal bureaucrats don’t seem to be doing a very good job of “picking winners” in the solar industry. And the Europeans and the Chinese don’t seem to be doing much better… It’s almost as if the underlying tech isn’t ready for prime time.

Indeed, the public relations aspect of this is encouraging for those who don’t feel that the loan guarantee program is a responsible use of taxpayer dollars.

Speaking of Department of Energy programs, the Institute for Energy Research has compiled a new graph with updated information from the Department of Energy regarding the performance of their loan guarantee program.. Follow through the link to view it. It is useful in pointing out that the entire program has only created roughly 2,300 permanent jobs despite providing $26 billion in loan guarantees. I am not sure I completely agree with their estimated cost per job figure, as the government won’t actually be spending $26 billion dollars (it spends money if companies go bankrupt or if the terms of the loan provided are below the market interest rate). Nonetheless, it really puts the idea that we need the government to create hundreds of thousands of new “green” jobs to rest.



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