Green Economy

Government-Backed Green Energy Goes Bust

What the Xunlight solar energy firm bankruptcy reveals about crony capitalism.

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The recent Chapter 7 bankruptcy and liquidation filing of the Toledo, Ohio-based solar-panel manufacturer Xunlight Corp. has attracted barely any national attention.

Maybe it's gotten to the point—after Solyndra, Evergreen, Abound, and Satcon—that the failure of another government-backed alternative energy company is a dog-bites man story. It'd be newsworthy if any of them actually ever succeeded.

But it's worth pausing for an autopsy and retrospective on Xunlight, because it's a great (or terrible, depending on how you look at it) example of how government at all levels—state and federal—and in both parties—Republican and Democrat —wastes taxpayer money by subsidizing politically connected businesses.

The stereotype is of the Washington, D.C. Democrats shoveling stimulus money into solar energy firms. And indeed there were plenty of Democrats involved with Xunlight.

According to the Toledo Blade, one of the few press outlets following the story, "In 2010, the company received $34.5 million in tax credits as part of the stimulus bill. U.S. Rep. Marcy Kaptur (D., Toledo) helped secure nearly $3 million in federal earmarks for the company. The company received a $3 million grant from the National Institute of Standards and Technology, a more than $4 million loan from the state, and more than $2 million in state and local tax credits."

But it wasn't only Democrats who wanted to use the power and dollars of government to give Xunlight a boost. Senator Portman of Ohio, the perennial vice-presidential hopeful who was director of the Office of Management and Budget in George W. Bush's administration, issued a press release touting legislation that he said would "would boost Toledo's growing leadership in green industries and initiatives. The opportunities that could emerge would complement the efforts of existing companies in the region's rapidly maturing solar industry. These include Xunlight Corp., whose innovative solar panel technologies are powering the first totally solar-powered billboard in New York's Times Square." 

And in the closing days of the 2008 presidential race, the McCain campaign sent its vice presidential candidate, Governor Palin of Alaska, to speak in Toledo at Xunlight headquarters. "I appreciate the hospitality of Xunlight Energy, and all the people of Toledo. The folks at Xunlight are doing great work for this community and our country," Palin said on October 29, 2008. "Every day, when there are no cameras around to draw attention to it, this company and others like it are engaged in the great enterprise of energy independence. And what we see here is just a glimpse of much bigger things to come. Solar power is one of many alternative energy sources that are changing our economy for the better. And one day they will change our economy forever."

The Economist magazine wrote a dispatch about Xunlight and its 100 employees under the headline "Greening the Rustbelt:" "Green investment presents new hope," the magazine declared.

Federal Election Commission records show the company's founder, Xunming Deng, donated $3,000 to the campaigns of Marcy Kaptur, a Democratic congresswoman from Ohio. In 2010, he gave $4,500 to the campaign of Ohio's governor, Ted Strickland, a Democrat, Ohio state campaign finance records show.

U.S. Senate lobbying records show Xunlight spent $100,000 total in 2008 and 2009 to hire lobbyists at the PMA Group, which closed in 2009 after being raided by federal prosecutors.

Maybe someone, someday will yet figure out how to make a successful business out of Xunlight's solar technology, or out of some other solar technology. If they do, though, I hope it will be on the basis of having good technology, not on having pull in Washington or in some state capital.

The Xunlights of the world raise issues of both justice and efficiency.

Justice, because how is it just for individuals laboring in unsubsidized industries, or in heavily taxed ones, to have their earnings taxed and transferred to the Xunlights of the world?

And efficiency, because what evidence is there that government or politicians are better than venture capitalists or other market-based investors in selecting companies to invest in? The incentives are all off: by the time the subsidized businesses go belly-up, many of the politicians are out of office, and the press has moved on to other things, so few voters even notice.

The whole process could benefit from some sunlight. Not Xunlight, but sunlight of the old-fashioned, standard-spelling variety.

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  1. No one wants to hear about the GreenGrift?

    1. You mean “The Grinch who Stole the Budget?

    2. what Patrick said I’m shocked that a mom able to get paid $5552 in four weeks on the internet. did you read this site link http://www.usapayjobs.com

  2. “….it’s a great (or terrible, depending on how you look at it) example of how government at all levels?state and federal?and in both parties?Republican and Democrat ?wastes taxpayer money by subsidizing politically connected businesses.”

    I wish someone would call it what it is. It is theft. Stealing, plain and simple. They are looting the treasury and handing it out to their friends. It is not more complicated than that.

    1. Ok, now, come down off of that ledge. It’ll be ok.

      “They” aren’t “stealing” that money. Politicians of both parties are throwing money at “Alternative Energy” because they are convinced that it is the right thing to do, or that it is popular with their constituents, or both. Are they sending that money to people with whom they have cordial relations, probably involving campaign donations? Sure. What? They should give that money to people they despise?

      The companies are not failing because they are shady, per se. They are failing because there is a fundamental flaw in the whole idea of “Alternative Energy”, which means that for the most part it cannot make a profit. To some degree this make sang company enervating that business shady, but it is also reasonable to suppose that they people building wind farms, and flogging solar panels are doing so because they Really Believe.

      This has ALWAYS happened, it just used to be that the True Believers had to convince the King, the Church, or the Nobles. Now they have to convince the populace at large, and to a degree they have done so.

      1. Did they do so completely aboveboard? Probably not. But a lot of the enthusiasm for “Alternative Energy” comes from people who are not thinking, but emoting.

        So. This is not THEFT. It is rampant stupidity, anti-science (and anti-math) rubbish, and a waste. But it is not theft.

        1. “But it is not theft”

          It does, however, line the promoters’ pockets very nicely.

          The working stiffs who got jobs in these places are back on the streets now that their “green” jobs have gone in the red.

          The guys who ran this scam have taken some nice bonuses home and are now figuring out their next “business.”

        2. It is theft.

          Did you see the Solyndra workers destroying solar panel components? They all knew goddamn well upfront that none of those companies would survive. They were just fronts used to launder tax payer money and put it in the pockets of their cronies.

          You are wrong. They are stealing in a deliberate and calculated way.

      2. That’s a nice way to look at it. And it’s also mostly bullshit. It’s just pure cronyism at it’s core. Sure it’s meant to impress certain special interest groups, but there is little to no thinking about doing the right thing, only the thing that keeps crony bucks flowing and elections funded.

      3. The companies are not failing because they are shady, per se. They are failing because there is a fundamental flaw in the whole idea of “Alternative Energy”, which means that for the most part it cannot make a profit.

        They could be selling oil and cures for cancer and yes the companies would still be shady, because they’re relying on investors who were extorted for their investment. The fundamental incentives of enterprise have been warped beyond recognition.

        The fact that ‘alternative energy’ is a bust could be gleaned from the fact that investors actually required a gun be pointed at them before they’d invest in the company.

  3. “Green investment presents new hope,”

    Who knew The Economist was a humo(u)r magazine?

  4. Posted in AM Links. Lefty columnist is a bit behind the times and doesn’t seem to mind telling fibs anyhow:

    “And investment bank Lazard released a report that showed the price of clean energy sources like wind and solar power have fallen to levels on par with fossil fuels.”
    Well, no:
    “”Certain Alternative Energy generation technologies are cost competitive with conventional generation technologies under some scenarios,” the report said.”

    And Exxon should give up research for new oil fields since oil will run out some day! More stupidity here:
    http://www.sfgate.com/green/ar…..925239.php

    1. SFed the link.

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  6. A few thousand dollars in campaign contributions and 100k to some lobbyists for ~10MM in direct subsidies plus you make most of your money tax free? Talk about great alpha.

    1. Economic thinkers are supposed to consider both the seen and the unseen, right?

      You believe these men to be practical because they succeeded in getting government loot; but what happens when you make a deal with the devil? You forgot the part where the bureaucrats throw these guys under the bus five years from now, and they end up bankrupt and imprisoned, their lives destroyed.

      1. Oh come on, man! If rich dudes like the Koch brothers didn’t force our elected officials to allow themselves to be bought, then utopia would finally arrive and everyone would be equal! Those evil capitalists deserve to be ruined for abusing our honest and noble leaders the way they do!

      2. The TOP MEN never miss a meal.

        It’s the poor sod who worked on the line that has to tighten his belt.

        (Heinlein said this better, but I can’t find the quote.)

        Does anybody remember Linda Lay crying on TV because they were down to a meazly $7 million?

        1. Linda Lay is a terrific porn name.

  7. “And Obama said, Let there be light: and there was light.

    And Obama saw the light, that it was good: and Obama divided the light from the darkness.

    And Obama called the light Democrat, and the darkness he called Republican.”

    -Revised Team Blue Version.

    1. Well now that Obama the light bringer is the anointed king of the world and the oceans have been receding for 6 years, can’t we drop the phony green energy shit already?

  8. Yet another example of the fine minds of government making venture capitol investments. Why with these forward thinking folks on our side we should easily become insolvent ourselves one day! Wait, I think that might already be happening…

  9. So Ira… I should be concerned about a development-stage company that got a couple million dollars in grant money from the government and then went belly up? Do you think that speculative investments on ground breaking technology that will foster energy independence and help mitigate global warming are all going to be successful? You should come out to Silicon Valley and watch all the idiotic investments that vc companies make. I’d wager they ‘re no better at picking winners than the dreaded government.

    Should we talk now about the billions of dollars in money oil companies receive from the government, how much Koch industries got in grants last year, or the money that governments spend in patent enforcement? I’ve seen about 10 articles here on reason that deal with solar energy companies that went bankrupt, but none on the tax breaks and subsidies that megacorp receive. Is the Big Boss looking over your shoulder now? Maybe it’s time to look busy.

    1. Re: American Stolid,

      So Ira… I should be concerned about a development-stage company that got a couple million dollars in grant money from the government and then went belly up?

      Yes.

      Do you think that speculative investments on ground breaking technology that will foster energy independence and help mitigate global warming are all going to be successful?

      Your confusion is understandable. All little red Marxians are confused.

      There’s nothing groundbreaking about those technologies, and the money “invested” wasn’t from investors who would know better. Besides, those technologies would do nothing to stop a fantastic notion.

      You should come out to Silicon Valley and watch all the idiotic investments that vc companies make. I’d wager they ‘re no better at picking winners than the dreaded government.

      It’s their money, they can squander it 7 ways to Sunday. The government produces nothing, so the money the bureaucrats squanders is not theirs – it was taken from everybody under the threat of bodily harm.

      Should we talk now about the billions of dollars in money oil companies receive from the government?

      Why not? NO ONE should receive subsidies or grants.

    2. Why don’t you type “corporate welfare” in the search bar up there, and let me know if nothing comes up.

      After all, they’re not responsible if you skip every article except the ones that piss you off.

      1. I don’t presume all of corporate welfare is a bad thing. If General Electric comes to town and says we are going to put a plant here and hire 2,000 engineers then i don’t really have much of a problem with upgrading the water mains.

        If we are to explore the topic of corporate welfare maybe it’s time to explore areas where it is applied that cost billions and not millions. There’s plenty of government largesse going to corporate America. I just find it interesting that Reason starts off with what amounts to small ball corporate welfare. I know that any expenditure on green energy is a moral panic for right-wingers, but for the rest of us maybe not so much.

        1. I just find it interesting that Reason starts off with what amounts to small ball corporate welfare

          And this is the point we can safely ignore you. Feel free to peruse the reason archives. Interestingly, you don’t show up to make this argument on the threads about football stadium subsidies.

    3. american socialist|12.1.14 @ 7:50PM|#
      “Should we talk now about the billions of dollars in money oil companies receive from the government,”

      Hi DIPSHIT! Cite missing on your latest lie, but not surprising from lefty asshole!
      Pay your mortgage yet, or are you still letting everyone else support your sorry ass?
      Oh, and please die a slow and painful death!
      You’re welcome.

      1. Calm down, moron. Here’s a citation. The source doesn’t really care for Obama so your eyes shouldn’t bleed.

        http://priceofoil.org/content/…..Screen.pdf

        1. Why do you think the government subsidizes oil?

    4. Do you think that speculative investments on ground breaking technology that will foster energy independence and help mitigate global warming are all going to be successful?

      It’d be swell if one were successful. One.

      1.

      One.

      You should come out to Silicon Valley and watch all the idiotic investments that vc companies make. I’d wager they ‘re no better at picking winners than the dreaded government.

      One does it with their own money, the other does it with mine.

      I’ll let you figure out which.

      1. “One.”

        Easy. Qualcomm. Do you want some more?

  10. Should we talk now about the billions of dollars in money oil companies receive from the government?

    Why not? NO ONE should receive subsidies or grants.

    It’s like he didn’t even read the article and/or isn’t at all aware of his opponents beliefs.

    1. He’s either a bad troll intentionally ignoring his opponents beliefs or he is a True Believer(tm). In this particular rant he also confuses not taking with giving. Hilarious.

      1. He’s an ignorant, lying asshole who deserves to die of torture under one of the mass murderers whose asses he licks.

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  12. Actually, given the current prices of oil and gas, the Resource Extractors are all either gonna go broke or ask for MORE government help. As it stands, they already get all sorts of tax breaks.

    Add in the ethanol $$$ and everything else, and I think you will find conventional fuels are getting their fair share of gubment largess.

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