Tax credits

Taxpayer Weaned SolarWorld Comes to an End

U.S. taxpayers lavished over $100 million in government aid on the now insolvent SolarWorld.


SolarWorld's Hillsboro Location
M. O. Stevens / Wikimedia Commons

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.

The company may now take its place with the growing number of unlucky old suns like Solyndra and Solar Trust that all together have cost taxpayers billions.

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.

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  1. Goddamn, who could have seen that coming?

    1. You should see my shocked face right now!

  2. “In spite of the growing number of failures, it’s taxpayers who continue to get sunburned”

    Get it? Sunburned? Solar? Har Har.
    Someone’s been hanging out with Amy Schumer.

  3. This is all just a pack of Russian lies! Solar and wind are CHEAPER and GOODER! They are competitive with real energy TODAY.

  4. Surely, fracking had a lot to do with this, too. What can compete with the abundance and price of natural gas? If coal is even being displaced by natural gas, why would solar be competitive?

    The most competitive green option is still geothermal heat pumps, and even their fundamentals are done in by natural gas. Geothermal heat pumps don’t actually generate power; they just lower the need for power.

    Almost all their costs for geothermal heat pumps are up front with installation–they cost almost nothing to run. Even still, natural gas is so cheap and abundant because of fracking, geothermal heat pumps can compete on an NPV basis with everything except natural gas.

    Natural gas is so cheap and abundant because of fracking, using it doesn’t generate enough cost for a geothermal heat pump to displace.

  5. I used to work just down the street from their factory – their parking lot was always empty, as though their real business was bilking taxpayers and not actually making solar panels…

    1. their parking lot was always empty, as though since their real business was bilking taxpayers and not actually making solar panels…

  6. Tax credits may be distorting, but they are not subsidies, insofar as they reduce taxes that would have actually been paid.

    1. That is true, but they received at least one actual grant from the local government and probably far more money in Federal subsidy/grants but from the article I only see the one obvious $4 million dollar grant which is probably chump change for the local budget.

      I’ll admit it’s amusing that they even lobbied for, and received, tariffs on foreign competition though. They couldn’t survive paying no taxes with no foreign competition. That’s…incredibly terrible business.

  7. But I have been assured that solar is economically very viable without vast government interference! Surely the Progressives and the Democrats wouldn’t have lied about that just to enrich cronies!

    I’m sure this is just a fluke caused by the 1% or something. Yeah. That’s gotta be it. *distributes talking points*

  8. Why is it the same people who bring up Solyndra all the time (not referring to Reason here) are all in for Trump’s America First protectionist nonsense?

    1. Because irony isn’t will understood?

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