Government supported energy suffered one of its periodic eclipses this week when SolarWorld announced it was filing for insolvency (read bankruptcy) in a European court.
Despite receiving millions in tax credits and direct subsidies from all levels of government, the German-owned, Oregon-based solar power company was "over-indebted" and lacking a "positive going concern prognosis," to quote just a couple of business euphemisms from a brief statement issued Wednesday.
SolarWorld's ignoble end stands in sharp contrast to the optimism surrounding the company's first big entry into the US market with the opening of its $600 million solar panel factory in Hillsboro, Ore.
The company had been attracted to Oregon by the promise of millions in tax breaks through that state's Business Energy Tax Credit (BETC) program.
At a ribbon-cutting ceremony for the facility attended by Sen. Ron Wyden (D–Ore.) and then Rep. David Wu (D–Ore.), Oregon Gov. Ted Kulongoski proclaimed SolarWorld an economic development beacon in "the Silicon forest."
The BETC program lavished $22 million in tax credits on SolarWorld in during its first two years in Oregon, a complete five-year property tax abatement from the city of Hillsboro for its first 480,000 square foot facility.
By 2012, the company had received a total of 6 BETC tax credit deals for its Hillsboro facilities, which ended up costing the state at least $57 million. Later, the state determined the credits had been improperly awarded.
According to a 2016 audit, SolarWorld was able to inflate its eligibility for tax credits by applying for five projects, later merging into two for what should have been a single project. SolarWind also reportedly received tax credits for an invoice submitted in Japanese to the Oregon Department of Energy.
SolarWorld was far from the only company to abuse the BETC program. As Reason has reported, that program was shuttered in 2014 after giving out $347 million in tax credits to projects which were later deemed to be "non-operational," "illogical," or beset by a "direct conflict of interest."
Even inflated and ill-gotten tax credits did not prove enough to keep SolarWind aloft. By 2012, the company's revenue and share price had dropped dramatically, as the efficiency and cost of the panels it manufactured was continually undercut by Chinese competition, according to an investigation by The Oregonian.
Rather than cut costs and improve the quality of its products, a company that had by then gotten $100 million in tax breaks at the state and local level alone—went to the US Department of Commerce and demanded import tariffs on Chinese solar panels it claimed were unfairly subsidized.
The Obama administration—eager itself to promote the U.S. solar industry—complied, slapping tariffs as high as 250 percent on the Chinese competition. The government added tariffs again in 2014, the same year the Department of Energy gave SolarWorld a $4 million grant.
Nothing the government did could help the company compete. SolarWorld CEO Frank Asbeck knew who to blame. "Chinese companies are undermining anti-dumping measures by relocating production to neighboring countries in Asia or by other forms of circumvention" Asbeck said in a statement issued to employees following the bankruptcy announcement.
Essentially, Asbeck was complaining the Chinese were better at subsidizing the solar industry than his own country. It never ocurred to him or to anyone else what might become of their industry should governments stop subsidizing altogether.
In spite of the growing number of failures, it's taxpayers who continue to get sunburned.