Menu Close
Posted in Money Morning, Other Guys

The Cleantech Crash: Five Huge Taxpayer-Funded Failures – Money Morning

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

“The Cleantech Crash” – profiled on CBS’ “60 Minutes” Sunday night – has joined the list of the U.S. government’s biggest blunders, wasting approximately $150 billion dating back to the George W. Bush administration.

Ten years ago, cleantech was touted as the future of the energy industry. Silicon Valley entrepreneurs created buzz when they planned to revolutionize clean energy, sparking huge funding programs from private investors and the U.S. government.

Unfortunately, many of these cleantech startup companies folded, and quickly. And in many cases, they cost American taxpayers hundreds of millions of dollars.

There were a number of factors that led to the Cleantech Crash: the economic recession, increasing global competition, poor business models. One of the biggest was the boom in U.S. natural gas production.

The Cleantech Crash left a graveyard of energy startups in its wake. For every success story like Tesla Motors Inc. (Nasdaq: TSLA), there are countless others that filed for bankruptcy or are operating on life support.

Unfortunately for taxpayers, they were the ones that funded the crash.

Here’s a closer look at five companies that received huge loans from the Department of Energy – only to fail.

Cleantech Crash: The Biggest Culprits

Solyndra Inc.: The solar energy company Solyndra Inc. has become almost synonymous with the Cleantech Crash. In August 2009, Solyndra secured a $535 million taxpayer-funded government loan, after it had already received $1 billion from private capital funding. At the time of the loan, Solyndra was losing money, faced stiff competition, and had high manufacturing costs.

The government funded it anyway.

Solyndra’s innovative idea was to create tube-shaped solar panels to rival traditional flat panels. The panels were innovative in that they took up less space and could produce more electricity.

During their development, however, silicon prices dropped substantially, allowing Solyndra’s competition to offer cheaper products. That, combined with a down economy and an unsustainable business model, doomed Solyndra.

On Sept. 1, 2011, Solyndra laid off all of its employees and filed for Chapter 11 bankruptcy – a $535 million government loan, gone.

Fisker Automotive Inc.: Fisker only ever developed one line of vehicles, the Karma. Priced at $95,000, the Karma incorporated solar panels that allowed the vehicle to travel emissions-free for up to 50 miles a day, on an overnight charge.

Disappointingly, the Karma delivered just 20 miles per gallon, far lower than Fisker projected, or any hybrid owner would desire.

The Department of Energy granted a loan of $529 million to Fisker in 2009. The measly production is all the company has to show for it. Fisker had initially planned a second model, the Nina, but due to delays with the Karma, it was forced to shelve the project in early 2012.

A123 Systems LLC: A123 developed rechargeable lithium-ion batteries for electric vehicles and was granted a $249 million loan from the Department of Energy in 2010. Taxpayers looking for a silver lining will be thrilled to learn that A123 only received $132 million from the government before it declared bankruptcy in October 2012.

A123 was hyped as a company that would help revolutionize the electric vehicle market in the United States. The company has produced batteries for companies like Chevrolet, General Motors, BMW, and Fisker (see above). However, it continued to accrue debt faster than it could sell its batteries.

ECOtality Inc.: Yet another company involved in the electric vehicle market, ECOtality, received big funds from Uncle Sam in 2009. This time to the tune of $99.8 million.

ECOtality didn’t develop cars, but rather the charging stations where electric-vehicle owners could plug in. That said, the company had issues increasing its sales and commercializing new products. An overheating problem with its charging stations was another hindrance.

In August 2013, the U.S. government announced that it would be suspending its payments to ECOtality.

Range Fuels: Biofuel producer Range Fuels developed a single batch of ethanol before calling it quits. The cost to taxpayers? $76 million.

After it produced that batch in early 2011, the company’s technical advisor and original founder Bud Klepper announced that Range Fuels would be laying off most of its employees and shutting down its plant in Soperton, Ga.

The company cited “technical problems” as the reason for its failure.

If you follow these five easy steps, you can find huge small-cap “sparks” for your portfolio in under 90 seconds…

Related Articles:

The post The Cleantech Crash: Five Huge Taxpayer-Funded Failures appeared first on Money Morning – Only the News You Can Profit From.

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

Related Posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.