Wind companies losing billions, prompting fears a federal bailout could be coming
Solyndra Redux? If the federal government’s history of throwing money at failing green companies is any indication, more taxpayer support to offshore developers is not implausible.
Mounting financial losses in the wind industry over the last few months are taking a toll on the Biden administration’s clean energy drive. Despite the billions in subsidies that came down the pipeline in 2022 before the Inflation Reduction gave away even more money, energy experts don’t expect that the need for more money will deter the nationwide momentum to build more wind and solar farms.
Writing in his “Energy Absurdity” Substack, David Blackmon, an energy analyst with over 40 years of experience in the oil and gas industry, said that the lobbying for more renewable energy dollars is likely near.
“Everyone should prepare themselves to see an effort in Washington, DC to allocate billions more dollars to bail out Big Offshore Wind developers soon,” Blackmon wrote.
Since the Obama administration, the federal government has been pouring billions into projects to meet environmental goals, only to have the companies go bankrupt.
In 2009, the Obama administration co-signed $535 million in loans to solar panel manufacturing startup Solyndra. Two years later, the company went bankrupt, laying off 1,100 workers.
Another solar manufacturing startup, Abound Solar, received $400 million in federal government-backed loans to expand its Colorado and Indiana facilities. The company received further support from the U.S. Export-Import Bank, as well as property tax rebates in Colorado and Indiana.
In June 2012, the company filed for bankruptcy and left 405 people unemployed. It also left Colorado to spend millions to clean up hazardous waste it left behind.
Fisker Automotive received a $529 million green-energy loan from the Department of Energy for its luxury hybrid vehicles. The company spent $192 million of the loan before it was suspended in 2011 after the company failed to meet several sales milestones. Fisker filed for bankruptcy in 2013.
Today, the Biden administration is sending taxpayer dollars to offshore wind projects, and despite all the support, the developers and manufacturers are struggling to stay afloat.
Bloomberg reported in August that, during a conference call with analysts, General Electric’s CEO said that the company’s offshore wind operations expects to post annual losses this year of about $1 billion. German turbine manufacturer Siemens Energy is expecting a $5 billion net loss this year, also according to Bloomberg. The company is now in talks with the German government for nearly $16 billion USD in guarantees.
Chinese wind turbine maker, Xinjiang Goldwind Science & Technology Co. reported a net income of $1.28 million in the third quarter, which was down 98% compared to the same period in 2022.
A September Wall Street Journal editorial argued that, while green energy developers blame Russia’s invasion of Ukraine for causing the inflation that plagues the industry by driving up demand for renewable energy, the government mandates and subsidies, which they lobbied for, is a big driver of the demand.
The companies also blame rising interest rates, but quoting a report from the New York State Energy Research and Development Authority, the Wall Street Journal notes, “it does not appear reasonable for developers to have assumed that a low interest rate environment would persist throughout the period in which their projects were to be financed, given that the levels of interest rates witnessed today” have precedent.
New York regulators earlier this month denied a request from offshore wind developer Orstead to alter its long term contracts and raise purchase prices to a level that would have let them collect an additional $38 billion from ratepayers.
Then last week, New York Gov. Kathy Hochul announced that the state awarded contracts to three offshore wind companies, which includes $300 million to develop wind turbine and blade manufacturing facilities. Hochul is among six Democratic governors who urged President Joe Biden to provide even more subsidies to troubled offshore wind projects.
Blackmon noted in his Substack article that congressional Republicans are not likely to support a large bailout for the wind industry in a standalone bill. He predicts that Democrats will try to sneak such funding into any debt-ceiling compromise legislation in November.
“A federal bailout effort is coming. You can almost smell it in the wind,” Blackmon said.
The Facts Inside Our Reporter's Notebook
- billions in subsidies
- Writing in his âEnergy Absurdityâ Substack
- Obama administration co-signed
- received $400 million
- company spent $192 million
- Biden administration is sending taxpayer dollars
- Bloomberg reported in August
- according to Bloomberg
- now in talks with the German government
- which was down 98%
- Wall Street Journal editorial
- denied a request from Orstead
- Kathy Hochul announced
- six Democratic governors