Fiscal failure impact: 5-times that of Solyndra
When his second term comes to its inevitable conclusion, the final list of President Obama’s policy failures will be ponderous.
And few items on this list will place higher than his “Green Energy Initiatives.”
One of his gandest schemes involved backing Solyndra LLC, a solar-panel maker. Presidential aides pressured White House budget officials to complete a review of a $535 million U.S. loan guarantee to the firm, which subsequently filed for bankruptcy protection.
Now comes news of a failure 5-times larger. Late last year, another Obama-based green energy company was poised for bankruptcy:
Abengoa is a Spanish company that was another of President Obama’s personally picked green energy projects, and it’s now on the verge of bankruptcy too, potentially saddling taxpayers with a multibillion-dollar tab and fueling the notion that the administration repeatedly gambles on losers in the energy sector.
The renewable energy firm, which is constructing several large-scale solar power projects in the U.S. and has received at least $2.7 billion in federal loan guarantees since 2010, said Wednesday it will begin insolvency proceedings, a technical first step toward a possible bankruptcy.
…Abengoa’s looming demise is eerily reminiscent of the fall of solar power firm Solyndra in 2011, a colossal failure of government investment that left taxpayers on the hook for more than $530 million.
A potential Abengoa bankruptcy could be much worse for taxpayers, although it’s unclear how much of the guaranteed loans the company has paid back. Neither the White House nor the Energy Department responded to requests for comment Wednesday seeking information on how much the company still owes on the loans, for which the federal government might be left on the hook.
Now, a U.S. judge has given the Spanish firm bankruptcy protection under American law.
Judge Kevin Carey of the U.S. Bankruptcy Court in Wilmington, Del., on Thursday agreed to preliminarily shield Abengoa SA and a host of affiliates from any creditor actions in the U.S., extending a protection that Abengoa has already secured from a Spanish court.
Abengoa this week sought protection under chapter 15 of the U.S. bankruptcy code, which is available to foreign companies, after 75% of its financial creditors signed on to a standstill agreement that gives Abengoa until the end of October to reach a comprehensive restructuring agreement without the threat of its creditors interfering with those efforts.
“That leaves an unknown 25% out there that we’re not sure what they’re doing or what they’re thinking,” Abengoa lawyer Craig Martin said at Thursday’s hearing.
…Court papers show Abengoa’s debt load tops €14.6 billion ($16.6 billion). Abengoa, which operates around the world, is hoping in its restructuring to cut costs, shed noncore assets and emerge as a slimmer business valued at €5.395 billion with €4.9 billion in debt.
The loans primarily went to building the Solana solar plant in Arizona and the Mojave Solar Project in California. There is some question as to whether rate-paying energy users in these regions would be impacted by the developments.
“This (Abegona’s financial situation) has no impact on ratepayers,” Jenna Shaver said. “We have no investment in the plant itself.”
Officials at Pacific Gas and Electric Company in California were more guarded in their remarks.
In an email exchange with Watchdog.org, Denny Boyles, external Communications representative at PG&E, said the company has a 25-year power purchase agreement to pay for power supplied by the Mojave Solar Project, but he didn’t say whether ratepayers could face any financial exposure in case of an Abengoa bankruptcy.
Hopefully, the next President will pull the plug on future green energy schemes. Taxpayers are running out of the money to fuel them.
(Featured image from Bloomberg video).