World's Largest Solar Plant, With Second Largest Ever Department of Energy Loan Guarantee, Files For Bankruptcy

Tyler Durden's picture




 

Solyndra was just the appetizer. Earlier today, in what will come as a surprise only to members of the administration, the company which proudly held the rights to the world's largest solar power project, the hilariously named Solar Trust of America ("STA"), filed for bankruptcy. And while one could say that the company's epic collapse is more a function of alternative energy politics in Germany, where its 70% parent Solar Millennium AG filed for bankruptcy last December, what is relevant is that last April STA was the proud recipient of a $2.1 billion conditional loan from the Department of Energy, incidentally the second largest loan ever handed out by the DOE's Stephen Chu. That amount was supposed to fund the expansion of the company's 1000 MW Blythe Solar Power Project in Riverside, California. From the funding press release, "This project construction is expected to create over 1,000 direct jobs in Southern California, 7,500 indirect jobs in related industries throughout the United States, and more than 200 long-term operational jobs at the facility itself. It will play a key role in stimulating the American economy,” said Uwe T. Schmidt, Chairman and CEO of Solar Trust of America and Executive Chairman of project development subsidiary Solar Millennium, LLC." Instead, what Solar Trust will do is create lots of billable hours for bankruptcy attorneys (at $1,000/hour), and a good old equity extraction for the $22 million DIP lender, which just happens to be NextEra Energy Resources, LLC, another "alternative energy" company which last year received a $935 million loan courtesy of the very same (and now $2.1 billion poorer) Department of Energy, which is also a subsidiary of public NextEra Energy (NEE), in the process ultimately resulting in yet another transfer of taxpayer cash to NEE's private shareholders.

As Bloomberg notes: "The company joins Energy Conversion Devices Inc., a U.S. solar manufacturer that suspended production last year; LSP Energy LP, the owner of a natural-gas-fired power plant in Mississippi; Ener1 Inc., maker of lithium-ion batteries for plug-in electric cars; solar-panel maker Solyndra LLC; and energy storage company Beacon Power Corp. (BCONQ) in bankruptcy."

And so central planning fails again, and again, and again, and again. But it sure will be better with the centrally planned monetary (and in the absence of a working Congress - also fiscal) policy. Because this time it really will be different.

From Reuters:

Solar Trust of America and several affiliates filed for protection from creditors with the U.S. bankruptcy court in Delaware. It estimated to have as much as $10 million of assets, and between $50 million and $100 million of liabilities.

 

Blythe is about 220 miles (354 km) southeast of Los Angeles.

 

"We have been working with Solar Trust of America for a couple of years in getting this project going," David Lane, Blythe's city manager, said in an interview. "Although the project is not in the city limits, we are the only city within 100 miles. My sense is that with the large investment in what was to have been the world's largest solar power plant, someone somewhere will buy it and build it."

At least someone's reputation will be tarnished as a result of this latest epic failure of the Obama administration to misallocate capital :

Solar Millennium said it has been sued by former Chief Executive Utz Claassen over public statements by company representatives that he claims have damaged his reputation and left him unable to find a job. Solar Millennium said the lawsuit would not directly affect its insolvency proceedings.

Two people, however, who won't be humiliated at all are California Governor Jerry Brown, and Secretary of the Interior Ken Salazar, who reprise the role of Joe Biden, last seen praising not only MF Global's Jon Corzine, but that other epic administration failure: Solyndra. Watch them praise the groundbreaking for the Blythe facility.

Epic embarrassment. And not even a full year ago.

But before that, of course, we had the funding of the plant with a $2.1 billion loan guarantee from the US Department of Energy, the second largest ever, smaller only than Georgia Power's $8.33 billion loan guarantee.

From the DOE:

U.S. Energy Secretary Steven Chu today announced the offer of a conditional commitment for a $2.1 billion loan guarantee to support Units 1 and 2 of the Blythe Solar Power Project, sponsored by Solar Trust of America, LLC. The concentrating solar thermal power plant includes two units comprising a combined 484 megawatt (MW) generating capacity, an eight-mile transmission line and associated infrastructure. The project will be built adjacent to the City of Blythe in Riverside County, California and is expected to create over 1,000 construction jobs and approximately 80 operations jobs. The plant is estimated to avoid over 710,000 tons of carbon dioxide emissions annually, equivalent to the annual greenhouse gas emissions from over 123,000 vehicles.

 

“Loan guarantees play an important role in facilitating the development and deployment of innovative technologies at massive scope and scale,” said Secretary Chu. “Continued investments like this project make solar power more efficient and cost competitive while creating thousands of jobs and strengthening the economy.”

 

“California is the national leader in clean energy, and our great state is poised to become the world leader in renewable energy generation,” said Governor Jerry Brown. “I commend President Obama and Secretary Chu for making another major investment in California.”

 

“This clean energy project will create more than 1,000 jobs and strengthen the economy of Riverside County. Investments like this one are critical to reducing America’s dangerous dependence on foreign oil, protecting our children from pollution and creating clean energy jobs here in California,” said Senator Barbara Boxer.

And while we do not know just how much the government will have to pay out of pocket, we do know that STA had at least $50 million in debt at filing.

What we do know for sure is that at least the firm's financial advisors made money on the deal. From the company's Investors page:

World-Class Financial Advisors

In October 2009 Solar Trust engaged Citigroup Global Markets Inc. and  Deutsche Bank Securities, Inc. as advisors to assist in securing more than $6 billion in financing for construction of the company’s solar  power plants in California and Nevada. Citigroup and Deutsche  Bank are also providing advisory services for Solar Trust’s efforts to  develop models for debt and equity project financing for  its solar power plant projects.

Great job there Citi and Deutsche: can you please advise us how much in taxpayer cash you received as part of your incalculable "advice" please?

Also, as noted earlier on, as part of its first day filings, the company was prompt announce the procurement of DIP funding (link), which will come in the form of a $22.3 million secured loan (against what assets?) at Libor + 800bps, courtesy of NextEra Energy Resource, LLC. The same NextEra featured in the following press release:

NextEra Energy Resources' subsidiary closes on $935 million financing and secures a DOE loan guarantee for its Genesis solar project

 

JUNO BEACH, Fla. – NextEra Energy Resources, LLC, announced that its subsidiary, Genesis Solar, LLC, has closed on construction and term financing consisting of $702 million in project bonds, a $150 million project term loan facility and an $83 million project letter of credit facility. The U.S. Department of Energy has provided a loan guarantee of 80 percent of the principal and interest on the project bonds and project term loan under its Financial Institution Partnership Program. Proceeds from the financing will be used primarily for the construction of the Genesis project, a 250-megawatt utility-scale concentrating solar thermal generating facility featuring proven parabolic trough solar thermal technology, located in Riverside County, Calif.

 

“This financing marks a significant milestone in the development of the Genesis project,” said Armando Pimentel, executive vice president and chief financial officer of NextEra Energy, Inc., the parent of NextEra Energy Resources. “We are very pleased with both the strong investor reception for this financing, which we view as a validation of our solar development efforts, and the receipt of a loan guarantee from the Department of Energy Loan Programs Office.”

That's right: one ward of the state, bailing out another ward of the state, all to reduce those evil carobn emissions. Although that is not all. NextEra is also a subsidiary of the publicly traded, albeit with very private investors, NextEra Energy (NEE). Which means that every dollar extracted out of Solar Trust via the DIP, and ultimately via a Credit Bid in which NextEra will acquire the STA assets at pennies on the dollar, will go straight to NEE's shareholders. Who are these shareholders you ask? Here they are: spot the odd one(s) out. 

And that is how in crony America taxpayer money goes from one insolvent pocket, to another, to Wall Street, all under the guise of idealistic pursuits and clean energy.

There is more to this story but we will stop here as we have had enough.

For those interest here is the first day affidavit, as well as the DIP term sheet. And the last time we saw an Org Chart this fun, the company's name started with En and ended in ron.

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Mon, 04/02/2012 - 20:22 | 2311347 bob_dabolina
bob_dabolina's picture

Obama fucking SUCKS

Mon, 04/02/2012 - 20:23 | 2311348 Zola
Zola's picture

Hmm if i am right there are now also serious allegations of fraud and forgery regarding the birth certificate by Sheriff Arpaio. Anyone care to comment on that ? 

Mon, 04/02/2012 - 21:19 | 2311495 Van Halen
Van Halen's picture

Palin's fault.

Mon, 04/02/2012 - 21:43 | 2311570 Raynja
Raynja's picture

mexican border incident?

Mon, 04/02/2012 - 20:22 | 2311350 Atomizer
Atomizer's picture

It's all the sun's fault.

/sarc

Mon, 04/02/2012 - 20:25 | 2311355 palmereldritch
palmereldritch's picture

Blame it on the weather

Mon, 04/02/2012 - 20:28 | 2311370 bob_dabolina
bob_dabolina's picture

Bush's fault

Mon, 04/02/2012 - 20:35 | 2311386 nmewn
nmewn's picture

;-)

Sherriff Joe's fault.

Mon, 04/02/2012 - 20:42 | 2311398 noses
noses's picture

Sun? Shouldn't that be Oracle's fault now?

Mon, 04/02/2012 - 21:14 | 2311471 GeezerGeek
GeezerGeek's picture

I suggest you reconsider while sipping a cup of Java.

Mon, 04/02/2012 - 20:25 | 2311357 Lady Heather...UNCLE
Lady Heather...UNCLE's picture

These solar stocks need to change their modus operandi. Might i suggest they begin by changing their names to i-solar...there, all fixed. Seriously though, what another  disgrace. Wealth transfer of americans money to the insiders. You guys need to start assassinating people (its what the illuminati do after all)

Mon, 04/02/2012 - 23:48 | 2311922 NumberNone
NumberNone's picture

Just goes to show you can't just shove money up a unicorn's ass and realistically expect something useful to come of it.  

Mon, 04/02/2012 - 20:25 | 2311358 Normalcy Bias
Normalcy Bias's picture

Another billion dollar bust out, Chicago-style...

Mon, 04/02/2012 - 20:25 | 2311360 swissaustrian
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Hmmm, if prices for panels plummet even further due to the massive oversupply, I might consider buying a few.

Mon, 04/02/2012 - 21:21 | 2311505 thatthingcanfly
thatthingcanfly's picture

I was thinking the same thing.

Mon, 04/02/2012 - 20:27 | 2311362 kill switch
kill switch's picture

It's all BULL SHIT!!!!!!!

 

Fuck this state!!!!

http://www.youtube.com/watch?v=UNdQxgB3Vkg

 

 

Mon, 04/02/2012 - 20:27 | 2311363 Beam Me Up Scotty
Beam Me Up Scotty's picture

What a bunch of fucking idiots.  Every last one.

Mon, 04/02/2012 - 21:30 | 2311535 Lord Blankcheck
Lord Blankcheck's picture

Give them a  Million Dollar Bonu$

Mon, 04/02/2012 - 20:27 | 2311365 ebworthen
ebworthen's picture

"It will play a key role in further bankrupting the Amerikan Kleptoligarcchy and by extension of course - the American people."

How apropos that it was in Riverside, California.

Late Great Golden State.

http://www.youtube.com/watch?v=Ow9FV3xjkew

Mon, 04/02/2012 - 20:27 | 2311366 Lady Heather...UNCLE
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...and speaking of Sheriff Arpaio, did his bc allegations gain traction or were they laughed out of town

Mon, 04/02/2012 - 21:25 | 2311522 Manthong
Manthong's picture

I think he is still plugging away and now working on getting the AZ legislature to take a stand in light of the inablility to produce valid documents.

The first person to get a warrant for arrest though, should be Pelosi for passing a poser subject to the British Crown off as legit for POTUS.

Mon, 04/02/2012 - 20:28 | 2311369 SgtSchultz
SgtSchultz's picture

I guess it just needed more money (42% of which is borrowed but who cares).

Mon, 04/02/2012 - 20:28 | 2311371 CharliePrince
CharliePrince's picture

wheres goldman sachs

Mon, 04/02/2012 - 21:40 | 2311550 peekcrackers
peekcrackers's picture

 goldman lick sacs  is stealing the wind and water green powers money that they have lent out at a high intrest rate.

Mon, 04/02/2012 - 23:24 | 2311858 Esculent 69
Esculent 69's picture

golmans sach is teabagging the american people

Mon, 04/02/2012 - 20:29 | 2311374 swissaustrian
swissaustrian's picture

Somebody save the video before they block it.

Mon, 04/02/2012 - 20:51 | 2311413 Diet Coke and F...
Diet Coke and Floozies's picture

Done. :)

Mon, 04/02/2012 - 20:30 | 2311375 bob_dabolina
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Where's my fucking algae Mr. Prez?

Mon, 04/02/2012 - 20:38 | 2311389 noses
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Used for Soylent Green.

Mon, 04/02/2012 - 22:02 | 2311618 Melin
Melin's picture

My first thought as well. 

Zero won't let these little setbacks in solar get him down tho.  There are all kinds of green places to spend the products of other people's labor. 

You'll see.  He's undaunted. 

Mon, 04/02/2012 - 20:30 | 2311377 navy62802
navy62802's picture

NatGas bitch! That's where the future is.

Mon, 04/02/2012 - 20:57 | 2311421 Bunga Bunga
Bunga Bunga's picture

20 years of supply is the future?

Mon, 04/02/2012 - 23:04 | 2311804 Hangfire
Hangfire's picture

You bet your fracking ass it is! 

Mon, 04/02/2012 - 20:38 | 2311378 noses
noses's picture

Great. German flagship Q-Cells just did the same. First analysis: High subventions lead to a loss of (sex-) drive and thus to a loss of evolutionary edge and now China got so far in front you could just as well close the entire German solar industry.

 

Lesson? Sell Solar World, too, before it's too late.

Mon, 04/02/2012 - 20:55 | 2311420 Bunga Bunga
Bunga Bunga's picture

It wasn't the subsidies, its the Chinese competition which can beat any price due to nonexistent environmental and labor standards.

Tue, 04/03/2012 - 03:31 | 2312197 noses
noses's picture

Sorry, it's only availlable in German. Nevertheless quite a good analysis: SpiegelOnline - Das Ende der deutschen Solarzelle

Mon, 04/02/2012 - 20:33 | 2311379 Gromit
Gromit's picture

If alternative

Energy makes me feel good

Who cares what it costs?

(Responses please in traditional 5-7-5 Haiku format)

Mon, 04/02/2012 - 21:01 | 2311434 Clay Hill
Clay Hill's picture

A thief of our light

cuts purse before taking flight

and gets away green.

Mon, 04/02/2012 - 21:06 | 2311450 Van Halen
Van Halen's picture

Wind! Solar! Brilliant!

Taxpayers on hook for more.

Green energy fail.

Mon, 04/02/2012 - 21:16 | 2311484 GeezerGeek
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I've never heard of solar power killing birds. Not sure if that's a plus or a minus.

Mon, 04/02/2012 - 21:25 | 2311520 Clay Hill
Clay Hill's picture

Spank you, try again.

Now you have broken the chain.

Haiku is an art.

Mon, 04/02/2012 - 21:23 | 2311503 palmereldritch
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dp

Mon, 04/02/2012 - 21:24 | 2311514 thatthingcanfly
thatthingcanfly's picture

Shut your goddamn mouth.

Or else i'm gonna kick you

Square in the balls... asshole.

Ahhh, goddammit!

Mon, 04/02/2012 - 21:23 | 2311510 palmereldritch
palmereldritch's picture

Green Money Dollar

Shine brightly for you solar

Pump Dump And we're gone

Mon, 04/02/2012 - 20:34 | 2311383 lead salad
lead salad's picture

Par for the course...Owebama's golf course.

Mon, 04/02/2012 - 20:41 | 2311390 Downtoolong
Downtoolong's picture

What we do know for sure is that at least the firm's financial advisors made money on the deal.

Exactly. If we're going to engage in this folly, let's at least save some money by cutting out the middle men. They're the real reason we end up doing all this stuff. It's all for them. 

If we must do it, let's just cut to the chase, print the money, and pay people to dig holes and fill them up again.  

 

Mon, 04/02/2012 - 20:38 | 2311391 Van Halen
Van Halen's picture

Let's have a look at the last oh, two days or so under the Obama Administration:

World's largest solar energy plant... second largest DOE loan - bankrupt.

The Obama campaign caught manipulating credit card machines on their end to accept small credit card donations without security code attached, opening door for massive fraud.

Obama administration leaks info that Israel will use bases in Azerbaijan to attack Iran.

Obama dares SCOTUS to overturn Obamacare.

US plans to arm drones with nuclear power to keep them in air for days to months at a time.

And we're not done with today yet.

 

Mon, 04/02/2012 - 21:04 | 2311447 nmewn
nmewn's picture

"Obama dares SCOTUS to overturn Obamacare."

I've been thinking about that...all the way back to when he tried to embarrass SCOTUS in a SOTU speech. It may come to pass that his own "audacity" and hubris begins to unravel everything "progressives" hold dear.

Starting with using the commerce clause as a sort of crutch, a lame excuse, for the statists who inhabit DC to infringe on individual liberty incrementally and "progressing" from there.

Interesting times, opportunities abound when precedents are made to be broken ;-)

Mon, 04/02/2012 - 21:08 | 2311457 Van Halen
Van Halen's picture

I'm more concerned about what we DIDN'T hear him say. He dared SCOTUS for all to hear. What message did they receive privately?

Mon, 04/02/2012 - 21:37 | 2311557 nmewn
nmewn's picture

I'm not that concerned...the justices are statists in a sense as well...Kagen & Sotomayor being new would not understand or need to be "conjoled".

The individual mandate is going down 5-4 for sure...Kennedy stayed for just this, he's more libertarian than all of them combined. He knows what his duty is and I think relishes it.

As a real judge should, instead of rubber stamping everything that comes over from Congress...there is real opportunity here for future courts to unwind some very bad precedent.

All the way back to forcing someone to not grow wheat ;-) 

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