The U.S. government's $535 million bet on solar-energy darling Solyndra, Inc. was big. But LA Observed has learned that the feds have bet an even bigger pile of taxpayer chips on another green energy project in California - that would be BrightSource Energy, Inc.'s Ivanpah solar power farm in the Mojave Desert. That bet: $1.6 billion.
Yes, the US Department of Treasury's Federal Financing Bank - the same bank that's on the hook in the Solyndra meltdown - has agreed to loan $1.6 billion to Oakland-based Brightsource. In case you've forgotten, Solyndra is the manufacturer of cylindrical solar power devices that filed for bankruptcy on Sept. 6, endured a raid by FBI agents with search warrants, faced a hostile House committee and is now the whipping boy of Republicans because of its ties to the Obama administration.
The fallout from Solyndra definitely won't help President Obama's nomination of Californian John Bryson as commerce secretary, who is a BrightSource cheerleader. Senate Republicans in mid-July, before the Solyndra collapse, threatened to filibuster Bryson's nomination claiming his overly zealous (their characterization) support for green energy is anti-business. Now, there may be more reason for them to yank the reins because Bryson was chairman of the board of BrightSource, with a sizeable stock equity awards plan valued at $442,000 that sweetened his involvement in the company. On June 27, Bryson resigned from the BrightSource board, presumably to help clear the way for his appointment as commerce secretary.
Bryson has a talent for straddling two worlds. He has been both the head of the California Public Utilities Commission and the head of Edison International, the parent of Southern California Edison, a utility heavily regulated by the PUC. Bryson also helped co-found a prominent environmental group (Natural Resources Defense Council) and he sits on the board of Coda Automotive, the Santa Monica-based electric car company now partnering with Chinese financiers to build batteries for its Coda car.
Even before the Federal Financing Bank disbursed a dime to finance it, the Solyndra deal had critics who doubted the wisdom of sinking tax dollars into its giant, heavily automated Fremont plant. But the BrightSource deal is also not for the faint-hearted. BrightSource's SEC filing, dated April 22, read like a nightmare - at least to the unsophisticated. The company's S-1 (initial public offering) statement lists a number of risk factors - including ironically the possibility that its green-energy solar plant would threaten the habitat of the local desert tortoise and stir up an environmental kerfuffle - which it has. In its IPO filing the company notes negative public reaction to construction of its plant could create costly delays:
For example, Ivanpah has been, and continues to be, the subject of administrative and legal challenges from groups concerned with potential environmental impacts (e.g., impacts on the California desert tortoise and other wildlife species affected by Ivanpah as originally proposed), archaeological or cultural impacts or impacts on the natural beauty of public lands. We expect this type of opposition to continue as we develop and construct existing and future projects using our systems.
Other risk factors cited by BrightSource in its IPO filing:
We have generated substantial net losses and negative operating cash flows since our inception and expect to continue to do so for the foreseeable future as part of the development and construction of solar thermal energy projects using our systems...Our proprietary technology has a limited history....our future growth is dependent upon the successful implementation of Ivanpah, our first utility-scale solar thermal power project...We may not be able to finance the growth of our business, which we expect will require significant amounts of capital... We depend heavily on federal, state and local government support for renewable energy sources, which are subject to change...Whether it's another Solyndra, the BrightSource deal probably deserves more scrutiny. It is also entirely probable that BrightSource has not gotten all the money the feds agreed to lend it - at least not yet.
Monday the LA Times reported that Rep. Darrell Issa (R-Vista), chairman of the House Oversight Committee, plans to investigate government loan programs in light of the Solyndra debacle, and that the OC congressman claimed such programs might be "unfixable." Sounding like he's been drinking the GOP party-line on "crony capitalism," Issa told C-Span: "There's been this attitude that the government can step in and give money and pick winners and losers... we see that as a backdoor easy way to end up with government corruption."
The LA Times went on to put Issa's criticism in context.
A year ago, however, Issa seemed to support government loan guarantees, at least to the nuclear industry, which includes the San Onofre plant in his district. In an April 18, 2010, op-ed in the San Diego Union-Tribune, Issa called for government help, including loan guarantees, to a nuclear industry he contended had been hamstrung by the environmental movement. "That this kind of political obstruction could again end up destroying investments in nuclear power makes it necessary for federal loan guarantees to backstop potential private sector investments to restart nuclear energy development," he wrote.