Taxpayers Take Hit as Solar Industry Implodes

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In a year where Solyndra became the face of the solar industry’s chronic failures, even the holiday season could not prevent one last flurry of layoffs in 2011.

The Mountain Enterprise (based in Frazier Park, Calif.) reported over the weekend that First Solar, Inc. – which the media sometimes identifies as the largest solar company in the world – laid off half its employees on Friday at its Antelope Valley Solar Ranch One project. The facility has been the subject of controversy in the local community over the effects it will have on land use, wildlife, and water usage.

In a September 30 press release that announced the sale of the 230-megawatt photovoltaic “farm” to Exelon (First Solar will still build, manage and operate the project), up to 400 construction jobs and as many as 15 operations positions were supposed to result. The Department of Energy, which provided a $646 million loan guarantee for AVSR1, pegged the job creation at 350 construction and 20 permanent.

“We are pleased to be working with Exelon to realize the AV Solar Ranch One project, providing clean, affordable energy and hundreds of construction jobs to California,” said Frank De Rosa, a First Solar senior vice president.

The cutbacks follow the announcement earlier in December that First Solar would eliminate 100 positions, including 60 at a research and development center in Santa Clara, Calif. Among those departing were the company’s chief technologist, Markus Beck, who served in the same role for Solyndra before joining First Solar in 2008.

The company, like the entire solar industry, has survived on government grants and guarantees. Besides AVSR1, for example, the DOE partially guaranteed $1.46 billion in borrowing for its Desert Sunlight Solar Farm west of Blythe, Calif. And $967 million in DOE loans covered First Solar’s Agua Caliente Solar project in Yuma County, Ariz. Also, the U.S. Export-Import Bank backed $455.7 million in loans to First Solar for projects in Canada. Add millions of dollars more in manufacturing tax credits, state and local incentives, plus mandates to force utilities to buy renewable power, and you’ve got an industry that is wholly dependent on taxpayers, not on its own technology’s capabilities.

Worse, the Venture Capitalist-in-Chief (and his top bettor, Energy Secretary Steven Chu) seem to have placed several piles of chips on another business in freefall. 24/7 Wall Street identified First Solar (FSLR) as one of “the 13 worst big stock stories of 2011,” with prospects looking poor for this year as well. Shares peaked just above $175 in February, but now stand at around $33, despite being named one of Forbes’s 25 fastest growing tech companies in America nearly a year ago. 

“First Solar Inc. went from the U.S.’s solar sector poster boy to perhaps the worst performing S&P 500 stock,” the site’s analysts wrote.

The company’s stock collapse is alarming considering the massive infusion of government support, and the healthy boost it received when it was sold in 1999 to an investment firm that handled the Walton family’s money. The late John Walton, son of Walmart founder Sam Walton, reportedly infused First Solar with $150 million and took a seat on the company board. His estate unloaded much of its First Solar stock in mid-2009. Good timing.

The downturn in value led to the firing of company CEO Rob Gillette in October, which 24/7 Wall Street characterized as “strange and sudden.” Co-founder Michael Ahearn was brought back to replace him. This followed expenditures of $2.2 million on lobbying since 2007, according to Bloomberg News, which also reported “representatives met Obama administration officials before winning the aid, government records show.” First Solar outspent Solyndra by about $1 million on lobbying during the same period.

In addition the company spent heavily in that gravy train of states for renewable incentives, California. Bloomberg reported the company gave more than $150,000 to Golden State political campaigns last year – more than triple what BP gave – and has received $3.43 million in state sales tax credits.

“It’s a pretty substantial amount for an emerging-tech company,” said Phillip Ung of California Common Cause. “We can only assume they’re giving that much to legitimize themselves in the political system. Access got them some benefits.”

Similarly, First Solar extracted at least $51.5 million in incentives from state and local government in Arizona to build a manufacturing facility in Mesa. Ahearn and his wife Gayle – also listed as a co-owner – donated $65,000 to the Democratic Party of Arizona since the 2008 electoral cycle, according to the Center for Responsive Politics.

Federal candidates also reaped benefits of the Ahearns,’ and several other First Solar employees,’ largesse. Michael Ahearn donated $40,400 to the Democratic Senatorial Campaign Committee since 2008. Company executives and staffers also gave $37,158 to President Obama and various other Democrat candidates for Congress during that time.

Now though, despite its past dependence on pursuit of political favor, First Solar says it will move away from subsidized markets and “will bet its future on sales in countries in which solar companies that can provide low-priced equipment and engineering services will make money and stay in business,” according to a report on technology Web site Gigaom.com. Company officials said they will soon announce a three-year plan to stay in markets “that aren’t heavily dependent on government incentives and political whims that can dramatically shrink their appetite for solar electricity,” the Web site reported, after listening on a conference call led by Michael Ahearn. 

Good luck with that. Just where those unsubsidized markets are in the world, I’m not aware of them. And it’s not like I haven’t been asking.

First Solar will also quickly learn such markets for its energy technology do not exist. Its stock price has tanked even with those subsidies, so look for the job losses and taxpayer outrage to increase, just like with Solyndra.

Paul Chesser is an associate fellow for the National Legal and Policy Center.