That’s What Worries Me

Solar Trust of America, recipient of one of the largest loan guarantees ever from the Department of Energy, has filed for bankruptcy:

(Reuters) – Solar Trust of America LLC, which holds the development rights for the world’s largest solar power project, on Monday filed for bankruptcy protection after its majority owner began insolvency proceedings in Germany.

The Oakland-based company has held rights for the 1,000-megawatt Blythe Solar Power Project in the Southern California desert, which last April won $2.1 billion of conditional loan guarantees from the U.S. Department of Energy. It is unclear how the bankruptcy will affect that project.

Glenn Reynolds adds “And note the video of California Governor Jerry Brown and Interior Secretary Ken Salazar praising the plant as our economic future.” Actually, that’s what worries me. They may be right. An endless procession of rent-seeking boondoggles may, indeed, be our future.

The question I have is to what degree were Solyndra and Solar Trust merely vehicles for extracting rents? Solar Trust of America bellied up at least in part due to German parent Solar Millennium’s problems which were at least in part due to the German government changing its policy on photo-voltaic projects. Then Solarhybrid, the white knight that was to acquire Solar Millennium, ran into troubles of its own due to the change in policy. I’m not sure whether dominoes, “house of cards”, or “pyramid scheme” is the right metaphor for what’s going on here.

I guess the other question I have is can’t anybody at DoE read a balance sheet? Or don’t they care?

9 comments… add one
  • Nah. They transferred from DoD.

  • Come’on Dave, if you want to make an omelet, you’ve got to break a few eggs.

  • If you want chickens in the future, you’ve got to let some of those eggs hatch and mature. I’m beginning to think that rent-seeking is where entrepeneurialism goes to die.

  • Jeff Medcalf Link

    They have Truth on their side, and Truth can’t be deterred by pesky things like balance sheets, or the law, or the Constitution.

    Rent seeking is where the haves go to kill off the opportunities of the have nots to become haves.

  • Drew Link

    Heh. Private equity guy here.

    This of course is the most recent solar debacle I’ve referenced in a couple comments. I never put rent seeking past anything that is government funded or subsidized, but I must tell you that having been in the high risk investment world for 20 years now you can’t imagine or underestimate a) the stars is some peoples eyes and b) the arrogance of those with a certain expertise who viddy themselves as investors. And I’m talking about you, Chu. (and others, some of whom comment on this site)

    If they acted on their pontification, they’d all have smaller bank accounts as a result.

    The things that can go wrong even in the staid type of businesses we invest in would boggle the mind. In the venture world? Times 20. That’s why I find the pronouncements and decisions of Chu, Obama and all the other would be venture capitalists to be almost clownish to the point of wanting to avert your eyes. Does anyone really think that government officials, playing with other peoples money and none of their comp or capital at risk to make good investment decisions? No political considerations? And to Dave’s original point, no rent seeking? Guffaw.

    We have received (and we are not solar type investors) at least two dozen come ons to invest. Most in failed enterprises. Can you imagine the VC types and the come ons they get?? Every time a PE deal gets done a little plastic thingy gets made advertising the company, investment, financing etc. They are little plastic trophys. In the trade they are called tombstones. With solar investments, a truer description cannot be had.

    Solar is great as a micro-niche. Its bad as a broad based investment, or a potential source of energy of any materiality.

    WTF is Chu thinking? Oh, yeah. The stars in eyes. WTF is Obama thinking. Oh, yeah. Politics.

    WTF are taxpayers thinking. “Well, we can postpone the vacation……..”

  • If you’ll reference my blog, which is among the silliest things to do , I said that that that the next bubble would be environmental investments. I can’t even refer you to a date.

  • Drew Link


    The fracking issue is real. Fortunes are being made, even in the face of irrational environut objections. Think about the pumps, the pipe, the gears, the valves, the control systems, the conveyors, the crushers, the cookers, the earth moving equipment, the operators, the maintenance workers, the surveyors etc etc etc. Now that’s how job creation works.

    Solar and wind? Heh. Not so much. Ivy League grads turned professors and community organizers, turned politician opium den pipe dreamers………

  • Sugar, a rounder like you?

  • Icepick Link

    Dave, it isn’t rent-seeking, it is the new (and much more cynical) spoils system. Getting these companies to work isn’t even the goal, it is simply to latch onto a gravy train long enough to funnel federal money into private bank accounts. Rent-seeking implies a desire to succeed even if it requires government intervention, and I just don’t see that here. This nation, and others, have been pushing this kind fo crap since the 1970s, with an almost unbroken string of failures. They knew these companies would fail, they just wanted the pay and bonuses to accrue to their people. (As well as capital gains from sale of stock to any available suckers.)

    Crank up the cynicism levels and it all makes perfect sense. Leave the cyncism levels where they are and the only explanation is that the people running the country are completely retarded. Given that Obama has had to walk-back his “Never” comments about the Supreme Court over-turning laws passed by Congress (apparently the brilliant constitutional law scholar and professor had never heard about this happening before – he should sue Harvard Law School for giving him a shit degree, and the students from his classes should sue to get their money back for being taught by an incompetent), it is just possible that he really is an idiot. However, whatever Chu’s other faults, he isn’t an idiot. Occam’s Razor suggests they just don’t care, so long as their friends (who will no doubt take care of them later) get theirs.

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