Many Americans were upset when they learned First Solar, an Arizona-based solar panel manufacturer, received millions of dollars in loan guarantees from the U.S. government. Chances are, they’ll be even more unhappy when they find out the same company was given an additional $455.7 million loan guarantee to sell solar panels to itself.
Yep. First Solar, an already heavily subsidized “clean energy” company, was given further government assistance in order to sell solar panels to itself.
“The subsidy came from the Export-Import Bank, which President Obama and Harry Reid are currently fighting to extend and expand,” the Washington Examiner’s Tim Carney reports.
How did that work? How did First Solar manage to land this deal?
In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio — a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.
Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state’s Air Quality Development Authority gave the company an additional $10 million loan.
After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.
In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two wind farms in Canada. That means if the wind farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.
Guess who the buyer was? If you said First Solar, please move to the front of the class.
“A small corporation called St. Clair Solar owned the wind farm and was the Canadian company buying First Solar’s panels,” Carney explains. “But St. Clair Solar was a wholly owned subsidiary of First Solar. So, basically, First Solar was shipping its own solar panels from Ohio to a solar farm it owned in Canada, and the U.S. taxpayers were subsidizing this ‘export.’”
Amazingly enough, Alan Bernheimer, a First Solar spokesman, actually defends this move, claiming that – technically – it’s an “export” because they had to pay a sales tax on the transaction.
But even if one accepts Bernheimer’s exports explanation, it still doesn’t change the fact that the First Solar subsidy goes against the entire reason Ex-Im exists, as Carney notes. Ex-Im is supposed to help create jobs and enable companies to compete with foreign manufactures by having taxpayer dollars backstop the financing.
Sadly, this isn’t the first time Ex-Im has done this sort of thing (see Enron).
“It is critical that we encourage more American companies to compete in the global marketplace,” Ex-Im Chairman Fred Hochberg said about the First Solar deal. He went on to say that the subsidy would “boost Ohio’s economy, create hundreds of local jobs and move us closer to President Obama’s goal of doubling U.S. exports by the end of 2014.”
So, this would be done through competition in the markets, right? And by “competition,” First Solar mean “selling to ourselves.”
This may come as a surprise to some at First Solar but, generally speaking, “competition” usually involves a competitor.
So what’s the ultimate fallout from this First Solar deal?
“First Solar unloaded its St. Clair wind farm to NextEra Energy, and so First Solar’s financial troubles don’t threaten to put the taxpayer on the hook for this deal,” Carney writes.
Well, at least there’s that. But are there any greater implications to this story?
Carney end with these final thoughts:
…the Ex-Im subsidy itself was a great case in point as to how national industrial policy pitched in the name of helping the U.S. economy often does nothing to help the broader economy, instead helping only those companies lucky — or politically connected — enough to get the handouts.
Obama, Reid and most of the Republican leadership want to reauthorize Ex-Im this month and boost the amount of debt it can have outstanding. The lobbyists at Boeing, the Chamber of Commerce and the National Association of Manufacturers agree. They’ll claim Ex-Im is crucial to prosperity. And for a few companies, it is.