The story of SoloPower Systems is one of pure solar corporatism: the manipulation of government to steal tens of millions from taxpayers and all for naught.
It was St. Patrick’s Day, 2011, when Neil Z. Auerbach, Founder and Managing Partner of Hudson Clean Energy Partners, appeared before the U.S. Senate Committee on Energy and Natural Resources to make an appeal for the green. He was there to promote “green energy” and to make the case for the taxpayers to fund his projects with truckloads of green of another sort. He made a great pitch for a company called SoloPower Systems in which his equity firm was then invested. Seven years later the whole thing stands as a horrid example of solar corporatism and everything that’s wrong with renewables subsidies.
Here’s some of what Auerbach told the Senate Committee in his pitch for taxpayer subsidies (emphasis added):
Another example of how the Loan Guarantee Program is helping companies in our portfolio select the United States as the home of their next manufacturing facility is SoloPower. SoloPower is a California based manufacturer of unique lightweight, flexible, high-power solar panels that possess critical advantages for both rooftop and ground mount solar market applications…
Demand for SoloPower’s product far exceeds its current manufacturing capacity, and the company has decided to build a large-scale manufacturing plant in the state of Oregon. The company selected Oregon because of the attractive incentives made available at the state and local level, including: low-interest loans, cash grants, and a state tax credit that can be converted into upfront cash through partnership with a local taxpayer. In addition, SoloPower received a conditional commitment from the U.S. Department of Energy for a $197 million loan guarantee. Without these incentives, SoloPower probably would have located its manufacturing operations outside of the United States.
A little of two years later things had already gone to the dogs (or, perhaps, the vultures). A OregonLive story from 2013 tells the story:
SoloPower, the startup pitched as the most innovative player in Oregon solar manufacturing, will suspend its Portland operations in June and gut its remaining workforce.
It’s unclear whether production will ever start back up, or whether the state will recoup millions of dollars in incentives meant to fuel the company’s growth and create hundreds of well-paying jobs.
The development apparently came as a surprise Monday to the two state agencies charged with tracking its performance…
The California company’s Portland operation was already on the decline. SoloPower executives and public officials had projected the first manufacturing line would start up in early 2012, with enough work to keep 140 employees busy. Once the planned $340 million factory was complete, its workforce was to grow to 450.
In September, it employed about 60. By February, a former employee figured, some 20 to 25 remained…
State officials, too, were working to get in touch with the company, which has received a $10 million loan and a $20 million tax credit. It also is in line for a $197 million federal loan, meant to help fund later stages of growth.
The Oregon Department of Energy, which signed off on the $10 million loan, was unaware of SoloPower’s plans to halt production, spokeswoman Diana Enright confirmed. The money was backstopped, in part, by the Portland Development Commission, whose representatives did not return calls seeking comment.
Dana Haynes, spokesman for Portland Mayor Charlie Hales, said the city is waiting to see what happens next…
“It sure sounded like a great idea,” Haynes said, “then the economy went the way that it went, and it didn’t pan out.”
Well, it may have sounded great but political correctness of the sort found in places such as Portland often comes at an especially steep price to taxpayers as Mayors and the like shrug their shoulders. Altogether, according to the article, SoloPower got $48.5 million in subsidies from Oregon taxpayers. Sadly, though, there are no limits to the stupidity of those who suppose they are of superior moral authority when it comes to energy choices and smarter than the average Oregon bear.
Step forward five years to August of this year and another OregonLive story:
There were so many reasons to say no: the eight years of consistent failure, the loan defaults, the shuttered factory, the management turnover.
But when SoloPower Systems called last summer, Oregon answered. The state that already had given the Portland company $13.5 million in tax credits, $10 million in direct financial assistance and millions of dollars’ worth of tax breaks ponied up another $641,835 in rent.
Thirteen months later, SoloPower appears to be dead. The state doesn’t expect to recoup its loans, and the company owes Multnomah County $1.8 million in property taxes.
In a final twist, the county could seize the company’s equipment to cover the unpaid taxes, but it’s steeped in a toxic stew of cadmium and hydrochloric acid.
“This stuff is very caustic,” said Michael Vaughn, Multnomah County assessor. “And there’s lots of it. It’s one big mess.”
Read the whole disgusting story of how SoloPower (on which board there is currently only one member listed, that being Neil Z. Auerbach) took Oregon state and Portland City for the suckers they are. The company not only managed to keep the ruse going for another five years but also stuck taxpayers for rent and taxes as it left them with an environmental mess to clean up. What’s left in the way of equipment is being auctioned off in a couple of weeks and can be expected to generate mere pennies on the big dollars invested by those taxpayers without their permission.
A state audit of the Oregon Department of Energy’s abysmal performance found the following:
We question the appropriateness of the department’s payment of rent on behalf of a delinquent borrower. Department management was not able to provide adequate documentation to support the appropriateness of paying $641,835 in delinquent rent payments on be half of a borrower…
The borrower has a history of loan default, forbearance, and restructuring with SELP. In 2011, SELP agreed to loan the borrower $10 million. SELP restructured the loan in 2013 due to the borrower’s financial difficulties. The department has identified the restructured loan as high risk since 2014, and included the loan in the allowance for doubtful accounts for fiscal year 2017. In addition to defaulting on its rent-lease payments, the borrower defaulted on its loan repayments to SELP in September 2016, and has not made any repayments since. Further, at the time department management elected to cure the lease defaults, the borrower’s property tax payments were delinquent…
According to department management, they paid $641,835 in rent-lease payments for the borrower in July and August of 2017 based on the borrower’s verbal representation that SELP would be reimbursed out of the proceeds of a future capital investment by a private investor. Also, in an intradepartmental memo, department staff stated the expenditure was prudent because the borrower’s primary investor indicated they were optimistic about the future capital investment; however, the primary investor sits on the borrower’s board of directors and was not in a position to provide independent assurance…
The investment from the private investor never occurred.
Honestly, could it get any worse? This is corporatism of the worst sort; an investment group that repeatedly conned Oregon and Portland politicians and bureaucrats into spending other people’s money for which they had fiduciary responsibility on a politically correct fool’s errand, only to bail at the end. The same solar corporatism or milking of the taxpayer is going on in New York and several other states. The Governor of Pennsylvania would dearly love to do it as well.
Some will say, as they did with Solyndra and dozens of other such fiascos, that oil and gas companies fail, too. That’s true, but they do so with the money of investors who chose to take the risk and know what they are getting into. This is the opposite; demagogic politicians who have wasted other people’s money, taken by the force of law, on investments for their own personal self-aggrandizement. It’s the essence of fraud and it’s time to end all such subsidies and let the market decide what makes economic sense, because this solar corporatism makes none.
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