Green Energy Subside Funding Taxpayer Nightmare

There appears to be no end to the destructive activities from the Obama Administration. This administration believes the Constitution doesn't exist and that they can do anything they want regardless of the law.

Worse, millions of citizens turn a blind to this abuse of power. But, then again, it shouldn't come as a surprise to anyone that cares about our country, it was plain as day what Obama had in mind for us during the campaign, he said it many times, American needs to be "fundamentally changed". He is a man of his word! Hello socialist European nightmare.

A Gold Rush of Subsidies in Clean Energy Search
Source: Eric Lipton and Clifford Krauss, "A Gold Rush of Subsidies in Clean Energy Search," New York Times, November 11, 2011.

Government support for large, renewable energy projects has increased dramatically within recent years, with spending from the 2009 stimulus package taking the expenditure amount to unprecedented levels. The government support -- which includes loan guarantees, cash grants and contracts that require electric customers to pay higher rates -- attracted private-sector partners by largely eliminating their risk, thereby guaranteeing them large profits for years to come.

Yet these market interventions have warped the entire renewable energy sector, distorting motivations and transferring taxpayer-funded subsidies to bank-rolling investment firms, says the New York Times.

From 2007 to 2010, federal clean energy subsidies jumped from $5.1 billion to $14.7 billion.
Nearly 90 percent of the $16 billion in clean energy loans guaranteed by the federal government since 2009 went to subsidize lower-risk power plants.

In the 2010 fiscal year, the oil and gas producers got federal tax breaks of $2.7 billion.
Clean-energy advocates emphasize this last point in order to justify their subsidies, yet federal funds expended elsewhere cannot justify clearly wasteful spending on clean energy. These funds, while technically supporting the construction of clean power plants, line the pockets of big-dollar investors that recognize the government actions for what they are: riskless investment opportunities.

This can be seen in the case of NRG Energy's California Valley Solar Ranch project.
The plant is expected to cost $1.6 billion to build.

In late September, the Energy Department agreed to guarantee a $1.2 billion construction loan.
This loan was issued by the Treasury Department with the exceptionally low interest rate of 3.5 percent, compared with the 7 percent that executives said they would have paid otherwise.

The project benefits from a California state law that requires 33 percent of its power to come from clean energy sources by 2020; this allowed NRG to strike a lucrative contract setting its rate an estimated 50 percent above the market rate.

The total value of all those subsidies in today's dollars is about $1.4 billion, leading to an expected rate of return of 25 percent for the project's equity investors.

The large returns to be made on these projects are largely gathered by private investors such as Goldman Sachs and Google. And the government's generosity requires them to bear little risk at all.