Thomas Pyle is the president of the Institute for Energy Research.
Despite the ongoing Solyndra scandal, the Department of Energy pushed nearly $6 billion in new loan guarantees out the door Friday—the last day the Section 1705 loan program was available. The move has people wondering, does the administration just not care about the will of the American people anymore? After all, how can the president have no regrets amidst the widespread public outrage over its $500 million loan to the politically-connected, but now-defunct Solyndra?
President Obama is apparently so committed to bailing out wind and solar investors that he isn't willing to face the facts. The financial health of Solyndra was in question well before the loan application was approved—so much so that advisers in the White House and officials at the Office of Management and Budget had expressed concerns about the president's promotional activities in support of the company. And yet all the warning signs were ignored. Now here we are, $535 billion in wasted taxpayer dollars later, and it seems that the administration is intent on going full speed ahead. In fact, the president recently said in an interview that the Solyndra deal was "a good bet." Talk about a disconnect.
Of the seven projects that received $5.9 billion last week, six are solar projects: one applicant received a loan to place solar panels on rooftops in 28 states, three loans will support projects at solar plants in California, and two loans will support solar plants in Arizona and Nevada, respectively.
The only non-solar loan approved last week will support an ethanol plant in Kansas owned by Spanish firm Abengoa. Sound familiar? Abengoa's solar company has received $2.65 billion in loan guarantees as well, even as the company has posted losses for three consecutive years.
As difficult as it is to understand why the government rewards continual failures with taxpayer dollars, there really isn't a method to this madness. Solar is, and has always been, an unreliable and inefficient way to generate electricity. The Energy Information Administration estimates that the levelized cost—the net cost of installation divided by anticipated lifetime energy output—is 21.1 cents per kilowatt hour for a photovoltaic solar (solar PV) plant and 31.2 cents for a thermal solar plant. That is far more expensive than the 6.6 cents per kilowatt hour for conventional combined cycle natural gas.
Furthermore, because solar is inefficient and unreliable, solar only provided 0.03 percent of our electricity in 2010. Proponents will argue that this is because solar power is a nascent technology that the market hasn't had time to embrace. The truth is, the first solar cells were developed in the 1800's, and the technology has matured since then. Investors simply aren't interested in it.
Solar producers receive subsidies of $24.34 per megawatt hour of electricity produced; contrast this with $1.59 for nuclear, $0.67 for hydroelectric power, $0.44 for conventional coal, and $0.25 for natural gas and petroleum liquids. A further incentive comes in the form of mandates. In the 28 states that have a renewable electricity mandate in place, utilities have been eager to jump on board because it allows them to pass their costs on to their ratepayers and charge more for their more expensive energy.
In the same fashion, the government has removed the risk from a select cadre of favored businesses and transferred it to the taxpayer who, when things go wrong, is left standing with the bill. One of the most shocking developments of the Solyndra debacle was the revelation that the loan was structured in such a way that should the business fold, the private investors—including, Obama campaign bundler George Kaiser—would get paid before the American taxpayer got a dime of taxpayer money back. If this seems appallingly unfair, that's because it is.