Wednesday, October 24, 2012

More Taxpayer Funded 'Green Energy' Firms File For Bankruptcy

Say what you will about the Obama Administration, at least they're the model of consistency when they try and pick renewable energy winners while playing venture capitalist with other people's money.

No less than two Massachusetts-based 'green energy' companies- one of them touted by President Obama as a Stimulus success story- have filed for bankruptcy last week.

Waltham, MA-based battery manufacturer A123 Systems [NASDAQ- AONE] had filed for Chapter 11 bankruptcy protection on October 16.

The company had gone through nearly $260 million in Federal grants and loans since 2010 as well as another $5 million from the Commonwealth of Massachusetts. The struggling battery manufacturer was supposedly close to a deal worth more than $400 million with China's Wanxian Group [SSE- 600371] but that deal fell through.

Instead, Wisconsin-based Johnson Controls [NYSE- JCI] is bidding to purchase A123's assets including two battery plants in Michigan.

The following day, Boston-based solar inverter company SatCon had filed for Chapter 11 bankruptcy protection. SatCon [NASDAQ- SATC], which primarily markets towards industrial and utility grade photvalic markets, had been awarded two seperate stimulus grants of $3 million each- far less than A123 or Solyndra- but has reportedly used an estimated total of $228,000 from those contracts.

On the other end of the country, officials in the Treasury Department are investigating the financial practices of a solar company run by a bundler for Obama's Presidential campaign.

Elon Musk was hoping to put his San Mateo, CA-based Solar City up for an initial public offering (IPO),but some of the disclosures required by the SEC has garnered the attention of the IRS and Treasury in two seperate probes.
The Internal Revenue Service is auditing SolarCity, the SEC filings reveal, and at the same time the Treasury Department's inspector general is investigating the company. The question at hand: Did President Obama's Treasury Department inappropriately give stimulus money to Musk's company.

Obama's stimulus transformed a long-standing tax credit for renewable energy investment into a direct grant from Treasury, worth 30 percent of a company's investment in a renewable project. Musk's company has applied for approximately $325 million in these stimulus grants, according to the SEC filing.

Treasury found that SolarCity repeatedly overstated the value of its investments, the SEC filings indicate. In those cases, Treasury awarded smaller grants than SolarCity had tried to claim. Now the department's IG and the IRS are doing a broader audit of the projects for which SolarCity and other large solar companies got stimulus cash. Investigators want to know if the companies regularly overstated the value of their investments and thus got overly generous taxpayer grants.
Musk is also the CEO of electric car manufacturer Tesla motors, which recieved grants and low-interest loans from the US government to the tune of $465 million in 2009. Musk has reportedly donated more than $100,000 to President Obama's campaign and alligned PACs as well.

Meanwhile, workers in a Holland, MI plant that made batteries for the Chevy Volt are now saying that there is literally nothing to do but tidy up around the place or play cards as there are no orders for them to work on. The facility, run by South Korea-based LG Chem, has had very little in the way of work since General Motors scaled back production of the hybrid Chevy volt. The new facility, which broke ground in 2010, recieved $151 million in stiumulus funds and reportedly has yet to make a single battery.

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