FN - Solar Firm That Received $1.2 Billion Federal Loan Plagued by Financial Problems

[PeterMP]

In 15 years solar power will be energy of the past with science.

Why do you think that?

How long have we been using fossil fuels?

This is also why companies are going towards allowing you to "rent" your solar panels, but not in terms of doing away w/ solar, but moving towards the most recent solar technology.

[twa]

In addition, people want new technology perfect the first time. They don't understand the process. They don't get that Thomas Edison invented the light bulb 99 times before he finally invented one that really worked.

If these people had their way we'd still be using lanterns.

How many of those 99 did the govt buy?

Would the govt purchasing gross lots of # 71 have advanced the development of #99?

Peter a LCOE is only as good as the data used...."Levelized" cost analysis is a tool for the expression of bias

[Corcaigh]

In 15 years solar power will be energy of the past with science.

Why would you care about the technology? If it powers your home at low cost it might as well come from solar, natural gas or an army of hamsters on treadmills.

[Popeman38]

The problem with solar is the upfront cost. Take Rictus' quote of $30k (and bump it ti $32k for easy math) for a midsize home. My electric bill avgs $128/month. It would take ~250 months to reach the $32k in electric bills. That is 20 years. And having solar installed doesn't eliminate all electric costs. Let's assume that solar pays 75% of your avg bill. That leaves you with $32/month in electric bills. In those 20 years, you just spent $40k for what would have cost you $32k, and 20 years later the technology is now obsolete. That is not a practical model to sell to Americans.

I would love to have my roof made of solar panels, with a wind turbine on all four corners of my roof, a rain collection system to provide water for my yard and garden, and a geothermal heating and cooling system. I don't, however, have $150k in excess capital laying around waiting for me to spend it. AND, I won't be in this house 20 years from now. Solar, wind and geothermal are not options for avg Americans until costs are absorbed into new construction without doubling the cost of a home.

[PeterMP]

Peter a LCOE is only as good as the data used...."Levelized" cost analysis is a tool for the expression of bias

I agree. What data do you have that supports that the electricity generated is going to have increased costs?

I've never said it wouldn't. I said that your claim that the goverment was giving out loan guarantees was evidence that it was is wrong. The government does that in various cases with electricity generation where nobody doubts that at current prices the technology is very competitive, but the plant(s) wouldn't be built because they only turn a profit over longer periods of time where there is less of a guarantee about long term electric prices.

What other data do you have?

[rictus58]

The $32k quote also didn't include the thousands in tax incentives offered at the federal and state level.

To touch on what buford said earlier, people are more than willing to shell out hundreds of dollars on materialistic wants, but when it comes to needs, people complain about the price.

[twa]

I agree. What data do you have that supports that the electricity generated is going to have increased costs?

I've never said it wouldn't. I said that your claim that the goverment was giving out loan guarantees was evidence that it was is wrong. The government does that in various cases with electricity generation where nobody doubts that at current prices the technology is very competitive, but the plant(s) wouldn't be built because they only turn a profit over longer periods of time where there is less of a guarantee about long term electric prices.

What other data do you have?

I've listed the costs of different generating sources before,solar is not cost competitive w/o large subsidies and preferable rate adjustments(requirement to buy at peak rates ect)

The notion it is simply the large upfront costs preventing viability is a fallacy

[NoVaO]

And that, friends, is why the White House refuses to give us ANY estimate of how many jobs we can expect from the half a trill of our dollars they want for the "jobs" bill.

Please, people. Please wake the holy hell up.

Read it again, ONE POINT TWO BILLION DOLLARS FOR FIFTEEN JOBS!!!!!

There are numerous independent assessments over what this job plan would do. Read this article for a sampling...

http://money.cnn.com/2011/09/09/news/economy/obama_jobs_plan_impact/index.htm

High end estimate of around 2 million jobs saved or created, low end around half a million.

The plan is composed almost entirely of short term measures -- no loans to any solar companies appear in this bill.

The bill is not big enough to spur a major economic recovery. Keep in mind the output gap is between 2 and 3 trillion dollars. Combine this current bill with the original stimulus, and you are still 1 - 2 trillion short of filling that gap.

The bill is meant to be more of an insurance policy guarding against a double dip recession.

Some will argue, well these are only temporary jobs. But a temporary job is better than no job at all. And it gives a little more time for the private sector to recover and for individuals to get out of the debt they are currently under.

[PeterMP]

I've listed the costs of different generating sources before,solar is not cost competitive w/o large subsidies and preferable rate adjustments(requirement to buy at peak rates ect)

The notion it is simply the large upfront costs preventing viability is a fallacy

I'd be curious to see something up to date based on building a new plant (i.e. not comparing an old already built coal burning plant to a building a new solar plant) because everything I read says that they can be and/or are very very close to being cost competitive (including the link I've already put in this thread from the Motely fool, which isn't exactly pro-alternative energy). Solar production costs have come down quite a bit over the last 10 years and the effeciency of the related processes have gone up.

[ABQCOWBOY]

I can see no economic benefit from any of this. A company that was once located here is now relocating to Mexico. This company, the beneficiary of 1.2 Billion in Federal Funding, already had over a Billion Dollars from the French Government in start up money as well. Why they even got a loan is beyond me. This, to me, is why the Government has no business trying to be in the Banking business.

[PeterMP]

I can see no economic benefit from any of this. A company that was once located here is now relocating to Mexico. This company, the beneficiary of 1.2 Billion in Federal Funding, already had over a Billion Dollars from the French Government in start up money as well. Why they even got a loan is beyond me. This, to me, is why the Government has no business trying to be in the Banking business.

They are EXPANDING production facilities into Mexico. It'll help them costs down. You don't think that other types of electricity generating companies have things in made in Mexico to keep costs down (one of the reasons that solar is coming down is because production is leaving this country)? The company is staying here.

Where do you see anything about them being given a billion dollars for start up from the French government? They sold a large chunk of the company to a French company, which then gave them a credit line of a billion dollars, AFTER the loan guarantee.

Building power plants that generate electricity doesn't have an economical benefit?

There wouldn't be a single nuclear power plant built in this country if the federal government didn't do similar things for them, and there'd be a lot fewer of other types.

[ABQCOWBOY]

They are EXPANDING production facilities into Mexico. It'll help them costs down. You don't think that other types of electricity generating companies have things in made in Mexico to keep costs down (one of the reasons that solar is coming down is because production is leaving this country)? The company is staying here.

Where do you see anything about them being given a billion dollars for start up from the French government? They sold a large chunk of the company to a French company, which then gave them a credit line of a billion dollars, AFTER the loan guarantee.

Building power plants that generate electricity doesn't have an economical benefit?

There wouldn't be a single nuclear power plant built in this country if the federal government didn't do similar things for them, and there'd be a lot fewer of other types.

Specifically, I am talking about SunPower.

Here is a link with more information on how this all worked. It is a Conservative link so it is right leaning but it does present a clear picture of how the whole deal worked.

http://www.humanevents.com/article.php?id=46761

Here is part of the article that speaks to the financing that came from Frances.

Insiders get liquid through for $1.4 billion friendly buyout from France.

If that timing seems odd to you, consider the time line of company events around when the loan was announced April 12: just two weeks before France's Total Oil (TOT-NYSE) launched its friendly takeover.

The deal, made public April 28, was in effect a 60% buyout at $23.25, then a 60% premium over the stock's trading price, which allowed insiders to get liquid.

SunPower CEO Werner is typical of the insiders. On May 24 he exercised his right to purchase 428,343 shares at $3.30 per share, a $18 discount from the day’s trading range. He sold 478,084 shares June 15, the day the Total Oil takeover closed, at $23.25 for proceeds of $11,115,453.

Remember, Total Oil was offering at $23.25 per share in what was in effect a private sale. The SPWR, Class A or B, shares have not traded above $23 since June 10, 2010.

[PeterMP]

Specifically, I am talking about SunPower.

Here is a link with more information on how this all worked. It is a Conservative link so it is right leaning but it does present a clear picture of how the whole deal worked.

http://www.humanevents.com/article.php?id=46761

Here is part of the article that speaks to the financing that came from Frances.

Insiders get liquid through for $1.4 billion friendly buyout from France.

If that timing seems odd to you, consider the time line of company events around when the loan was announced April 12: just two weeks before France's Total Oil (TOT-NYSE) launched its friendly takeover.

The deal, made public April 28, was in effect a 60% buyout at $23.25, then a 60% premium over the stock's trading price, which allowed insiders to get liquid.

SunPower CEO Werner is typical of the insiders. On May 24 he exercised his right to purchase 428,343 shares at $3.30 per share, a $18 discount from the day’s trading range. He sold 478,084 shares June 15, the day the Total Oil takeover closed, at $23.25 for proceeds of $11,115,453.

Remember, Total Oil was offering at $23.25 per share in what was in effect a private sale. The SPWR, Class A or B, shares have not traded above $23 since June 10, 2010.

That agrees with what I said.

The money didn't come from the French government. The money came from a French company that bought a whole bunch of the company, and then gave the company money AFTER the US government guarantee.

The US loaned the SunPower. THEN a french company bought a whole bunch of the company, and said, here if you need more money, we'll lend it to you.

Are you trying to make a point about the CEOs stock moves? If so I don't understand it.

And I'm not clear how it is related to the US government loan guarantee. The US government frequently does similar things to build electric producing facilities in the US. It is an easy thing for them to do. They can borrow money very cheaply, it doesn't even really costs them anything, unless something happens to the company/electric generating facility (which is rare), and it saves us all money on our electric bills (that we take that "savings" and blow on junk from China is our fault.)).

[ABQCOWBOY]

That agrees with what I said.

The money didn't come from the French government. The money came from a French company that bought a whole bunch of the company, and then gave the company money AFTER the US government guarantee.

The US loaned the SunPower. THEN a french company bought a whole bunch of the company, and said, here if you need more money, we'll lend it to you.

Are you trying to make a point about the CEOs stock moves? If so I don't understand it.

And I'm not clear how it is related to the US government loan guarantee. The US government frequently does similar things to build electric producing facilities in the US. It is an easy thing for them to do. They can borrow money very cheaply, it doesn't even really costs them anything, unless something happens to the company/electric generating facility (which is rare), and it saves us all money on our electric bills (that we take that "savings" and blow on junk from China is our fault.)).

Did you read this article?

First of all, this Company does not produce electricity. It makes tiles and builds Solar Ranches.

More importantly, the money that was borrowed was intended to create jobs for Americans. That didn't happen.

How does a company who is being sued from several different parties for shady business practices, a company that has such a poor financial history get a 1.2 million dollar loan?

Yes, I do have a major problem with how they worked the stocks of this company. The money was not for the purpose of making a quick buck. It was supposed to be used for something else entirely.

How can you not have major problems with this entire deal? That, can't understand.

[PeterMP]

Did you read this article?

First of all, this Company does not produce electricity. It makes tiles and builds Solar Ranches.

More importantly, the money that was borrowed was intended to create jobs for Americans. That didn't happen.

How does a company who is being sued from several different parties for shady business practices, a company that has such a poor financial history get a 1.2 million dollar loan?

Yes, I do have a major problem with how they worked the stocks of this company. The money was not for the purpose of making a quick buck. It was supposed to be used for something else entirely.

How can you not have major problems with this entire deal? That, can't understand.

No, I didn't read the whole article. I thought you would have quoted the relevant part.

Solar farms generate electricity. The loan guarantee is for the project to build a solar farm. The proejct will result in the generation of electricity.

Generating electricity isn't required for jobs? Like somebody else in this thread already pointed out, how many permanent jobs does building a highway create?

Would you rather have them to spend the money on paying a whole bunch of people to dig, and the refill holes until all of the money was spent? More people would have been directly employed.

The money wasn't about making a quick buck. It was about helping a solar farm, which will generate electricity get built and isn't that different from what the federal government has done for all sorts of electricity generating facilities.

I don't have a problem because of things like this:

http://seekingalpha.com/article/296225-the-doe-shouldn-t-shun-solar-after-its-solyndra-mistake

"Of course, the loan guarantee for the Topaz project is not really an investment in First Solar. FSLR is only supplying the modules and fulfilling the engineering, procurement, and construction for the project. The project financing is really an investment in electricity generation, with the extra caveat of being additionally both clean and renewable. The solar farm’s peak 550MW generation capacity is estimated to produce 1,100GWh of electricity over a minimum 25-year period, for which PG&E announced a power purchase agreement. As long as the solar modules operated at specified levels, and as long as the sun shined at historical rates, Topaz would generate electricity, and thus revenues.

But was Topaz a good deal for investors? The economics depended on the project’s costs vs. the power generated. At 1,100GWh of power generation over 25 years, Topaz assumed to average roughly 2,000kwh of annual production per kilowatt of installed peak capacity. Thanks to the sunny Southern Californian climate, this translates to a capacity factor of about 23%, which is rather competitive with solar’s main renewable rival, wind power, which averages a 25-30% capacity factor.

Over a 25-year period, each installed kilowatt would generate 50,000kwh of electricity.

Based on the data sheet provided on the Topaz project, the material cost for the 550MW solar farm would cost $1.2 billion, while another $400 million of initial construction and annual maintenance would add to this total. While not at the lowest installed cost witnessed in the industry, the estimated 2.9/watt installed cost is fairly competitive, especially relative to its location."

[Thiebear]

So your saying we can't get sunlight to work for less than 30k up front?

There is a company i heard on the radio that will charge yo monthly...

Generating electricity isn't required for jobs? Like somebody else in this thread already pointed out, how many permanent jobs does building a highway create?

must be hundreds for Decades on the Springfiled / 495 area.

[ABQCOWBOY]

No, I didn't read the whole article. I thought you would have quoted the relevant part.

Solar farms generate electricity. The loan guarantee is for the project to build a solar farm. The proejct will result in the generation of electricity.

Generating electricity isn't required for jobs? Like somebody else in this thread already pointed out, how many permanent jobs does building a highway create?

Would you rather have them to spend the money on paying a whole bunch of people to dig, and the refill holes until all of the money was spent? More people would have been directly employed.

The money wasn't about making a quick buck. It was about helping a solar farm, which will generate electricity get built and isn't that different from what the federal government has done for all sorts of electricity generating facilities.

I don't have a problem because of things like this:

http://seekingalpha.com/article/296225-the-doe-shouldn-t-shun-solar-after-its-solyndra-mistake

"Of course, the loan guarantee for the Topaz project is not really an investment in First Solar. FSLR is only supplying the modules and fulfilling the engineering, procurement, and construction for the project. The project financing is really an investment in electricity generation, with the extra caveat of being additionally both clean and renewable. The solar farm’s peak 550MW generation capacity is estimated to produce 1,100GWh of electricity over a minimum 25-year period, for which PG&E announced a power purchase agreement. As long as the solar modules operated at specified levels, and as long as the sun shined at historical rates, Topaz would generate electricity, and thus revenues.

But was Topaz a good deal for investors? The economics depended on the project’s costs vs. the power generated. At 1,100GWh of power generation over 25 years, Topaz assumed to average roughly 2,000kwh of annual production per kilowatt of installed peak capacity. Thanks to the sunny Southern Californian climate, this translates to a capacity factor of about 23%, which is rather competitive with solar’s main renewable rival, wind power, which averages a 25-30% capacity factor.

Over a 25-year period, each installed kilowatt would generate 50,000kwh of electricity.

Based on the data sheet provided on the Topaz project, the material cost for the 550MW solar farm would cost $1.2 billion, while another $400 million of initial construction and annual maintenance would add to this total. While not at the lowest installed cost witnessed in the industry, the estimated 2.9/watt installed cost is fairly competitive, especially relative to its location."

OK, I'll play. How many jobs did it create? You are going to say that 1.2 Billion is worth the cost? I don't think so. How many people does it take to build a highway? I have some small experience here. Meanwhile, this companies executives are being sued by everybody. They walked away with a nice tidy profit but what the heck, you got a over priced Solar Farm. Something that will eventually pay for itself because while it's busy producing energy, the principles who own the Farm will charge a premium for the Energy generated and instead of paying for the farm wiht profits, those will go elsewhere. I can guarantee you this though, they won't come back to the Tax Payers. No, I guess the whole thing is lost on me.

[PeterMP]

OK, I'll play. How many jobs did it create? You are going to say that 1.2 Billion is worth the cost? I don't think so. How many people does it take to build a highway? I have some small experience here. Meanwhile, this companies executives are being sued by everybody. They walked away with a nice tidy profit but what the heck, you got a over priced Solar Farm. Something that will eventually pay for itself because while it's busy producing energy, the principles who own the Farm will charge a premium for the Energy generated and instead of paying for the farm wiht profits, those will go elsewhere. I can guarantee you this though, they won't come back to the Tax Payers. No, I guess the whole thing is lost on me.

It was a loan guarantee, and I'm betting it is specific to the project, and therefore not related to other debts (including the people suing them). Generally, the government gets the money back because somebody ends up completing the project in a case like this because it has general utility so unless things go bad, the costs to the government is 0 (well, realistically, it is the interest on the money, but for the federal government right now, that's not much at all).

Is there any evidence the solar farm is over priced? Everything I read,including the link I included, is that it is reasonably priced.

[ABQCOWBOY]

It was a loan guarantee, and I'm betting it is specific to the project, and therefore not related to other debts (including the people suing them). Generally, the government gets the money back because somebody ends up completing the project in a case like this because it has general utility so unless things go bad, the costs to the government is 0 (well, realistically, it is the interest on the money, but for the federal government right now, that's not much at all).

Is there any evidence the solar farm is over priced? Everything I read,including the link I included, is that it is reasonably priced.

It was a loan guarantee that leveraged funds that were supposed to be used to create jobs for Americans. We can dance around this fact all day but it doesn't change the simple fact that the funds were used incorrectly and that the American people will never see those tax dollars again.

As to your question of evidence, well, we have the 1.2 Billion Dollar Price tag. If your contention is that every solar farm, which essentially amounts to nothing more then a bunch of over sized solar panels, is going cost 1.2 Billion dollars to build, then you've answered your own question. That is a much too expensive way to supply energy. Do the math. How much is it going to cost to build these kinds of plants across the Nation? Not everyone of these plants are going to be built by Tax Dollars.

Lastly, you've gone out of your way to avoid the question of this companies legal issues. All of their investors and business partners have filed suit against them. I mean, is it your contention that this is an issue that simply doesn't matter? You also never addressed the question of how did they qualify for this loan. They were over 800 Million Dollars in the Red when they got approved for this on the very last day the program was available. You don't think that this raises any Red Flags?

[PeterMP]

It was a loan guarantee that leveraged funds that were supposed to be used to create jobs for Americans. We can dance around this fact all day but it doesn't change the simple fact that the funds were used incorrectly and that the American people will never see those tax dollars again.

As to your question of evidence, well, we have the 1.2 Billion Dollar Price tag. If your contention is that every solar farm, which essentially amounts to nothing more then a bunch of over sized solar panels, is going cost 1.2 Billion dollars to build, then you've answered your own question. That is a much too expensive way to supply energy. Do the math. How much is it going to cost to build these kinds of plants across the Nation? Not everyone of these plants are going to be built by Tax Dollars.

Lastly, you've gone out of your way to avoid the question of this companies legal issues. All of their investors and business partners have filed suit against them. I mean, is it your contention that this is an issue that simply doesn't matter? You also never addressed the question of how did they qualify for this loan. They were over 800 Million Dollars in the Red when they got approved for this on the very last day the program was available. You don't think that this raises any Red Flags?

Again, I'll ask. You don't need electricity to have jobs? Would you rather they used all the money to pay people to dig holes and refill them? More people would have been employed.

http://www.whitehouse.gov/the-press-office/obama-administration-announces-loan-guarantees-construct-new-nuclear-power-reactors

$8.3 billion dollars of loan guarantees to build two nuclear power plants. Is it your contention that nuclear power plants don't generate affordable electricity?

First, all of their business partners aren't suing them. The suit by their investors will turn into a class action suit. These things aren't uncommon. Haven't you ever owned stock? You get mail saying things like 'If you owned stock of company X from day Y to day Z, let us know because there is a law suit. The company normally doesn't go out of business.

Alternative energy companies haven't been making money because it wasn't cost competitive. It is now becoming cost competitive, and for an alternative energy company, they were in good shape and were starting to turn things around.

From the link I posted before:

"First Solar’s retained earnings at the end of fiscal 2009 was slightly over $1 billion, while the two most profitable US-listed Chinese solar companies, Suntech Power (STP) and Trina Solar (TSL), posted retained earnings of $417 million and $208 million, respectively, at the end of the same period."

[ncr2h]

exactly, its now the Prius model. Every generation there are improvements on the technology. But you won't get those improvements if people don't buy some from each generation. Meanwhile, people are happy to buy an iPhone every 5 months when all they do is change the color of the case and move the camera.

You're right. People are too dumb to buy the things that are really useful to their lives, so we should just have the government pick the things that the people really need and buy it for them. I agree 100%.

[mcsluggo]

well, no. But purposely snotty/pithy statement aside.

by definition people will not buy the "socially optimal" amount of a product that has spillover costs or benefits that don't accrue to the direct purchaser.