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  • Is Harry Reid-Backed Nevada Geothermal the Next Solyndra?

    “This project is exactly the type of initiative we need to ensure Nevada creates good-paying jobs,” Senate Majority Leader Harry Reid (D-NV) said of a geothermal plant to be built in his home state. A year and a half and $145 million in taxpayer financing later, and the company that built the plant is in dire financial straits.

    A recent audit by Deloitte & Touche expressed “significant doubt” about Nevada Geothermal Power’s “ability to continue as a going concern.” The company’s vital signs are not looking good: it “has incurred net losses over the past several years, has an accumulated deficit of $44.0 million and an anticipated inability to retire its long-term liabilities,” the audit concluded.

    Nevada Geothermal enjoyed significant backing from the federal government. It received a $79 million loan guarantee from the same Energy Department program that helped finance the failed solar company Solyndra. It also got $66 million in federal grants from the Treasury Department.

    Reid was instrumental in securing that financing for Nevada Geothermal, the New York Times reported on Monday.  “Mr. Reid has taken the nascent geothermal industry under his wing,” the Times noted, “pressuring the Department of Interior to move more quickly on applications to build clean energy projects on federally owned land and urging other member of Congress to expand federal tax incentives to help build geothermal plants, benefits that Nevada Geothermal has taken advantage of.”

    The Times noted some similarities to Solyndra, which also received financing thorough the Treasury and DOE, but missed the essential political takeaway: the Nevada Geothermal case speaks less to cronyism or corruption in the federal government, and more to the inadvisability of government intervention in the market.

    “The parallels between [Nevada Geothermal and Solyndra] illustrate the risk inherent in building the clean energy marketplace in the United States, government officials and industry experts say,” the Times wrote. “Indeed, the loan guarantee program exists precisely because none of these ventures are a sure bet.”

    That is correct, but the fact underscores a point Heritage’s Nick Loris has made: “This is precisely why the Department of Energy should not be engaged in loan guarantees or any other sort of private capital allocation. It is not a financial institution. Its leadership is political, by design, and it has no experience in assessing financial risk as it relates to commercial projects.”

    As the Times notes, government financing mechanisms are set up because the ventures they fund are too risky for private investors. As fewer projects are weeded out by the natural risk-reward calculations, the inevitable result is more Solyndras and more Nevada Geothermals.

    A Reid spokesman quoted by the Times made a similar point: “If projects like this did not contain a certain level of risk, alongside their enormous potential for creating jobs and generating clean energy, there would be no need for the bipartisan loan guarantee program,” the spokesman said.

    Of course if anticipated returns were high enough to outweigh that risk, there would also be no need for the program. Government intervention in the market, by its nature, distorts the risk-reward calculations that guide private investors. When taxpayers assume some of the risk for these green energy projects, investors are easier to come by – but the risk itself is not diminished, it’s just shifted onto taxpayers.

    As for green energy’s “enormous potential for creating jobs,” DOE’s latest batch of loan guarantees will create 283 jobs in the renewable energy sector – at $23 million apiece.

    Hence, it is telling how the administration has chosen to define success for the Nevada Geothermal plant: “The Blue Mountain power plant is up and running, generating clean, renewable power and has been consistently making its loan payments on time and in full,” a DOE spokesperson said. There’s nothing in there about employment. Success is defined by green energy generation, not job creation.

    Posted in Featured, Scribe [slideshow_deploy]

    13 Responses to Is Harry Reid-Backed Nevada Geothermal the Next Solyndra?

    1. @USAGeorge says:

      Just what we need,a government so corupt,it really doesn't give a damn about the results of their collective actions. If we were cannibals we could roast these fat pigs and at least have the pleasure of crapping them away.

    2. ertdfg says:

      From the NY times article… "the company has only 22 employees in the state"

      So that's worth 66 million in grants plus 79 million in loans? Ok…

      Can I get a grant for 3 million dollars? I promise to employ myself for the rest of my life to blow a lot of hot air… good enough; or is it something more impressive that results in paying 3 million dollars per employee in this case?

      Heck, I'll even pass on the 3.59 million dollar loan for myself, I think I can manage on just the grant money alone.

    3. joe says:

      the list is long enough to include any project sinse 2007

    4. John Hamilton says:

      This goes right along with what I've said about Mr. Reid: http://hamsy2000.wordpress.com/2011/09/02/critiqu

    5. marge says:

      there is no mention as to why reed is so interested in this co.is there a reed family member ,an upper tier ,employee?I read that a week or so back .but can't remember where ,or how to go back & make sure .but if this is the truth ,why is it not being brought to the tax payers attention?

    6. freetre says:

      The central theme in these scandals is that corruption and cronyism runs throughout all branches of our government. If we don't do something about it now, it is going to lead to the demise of our nation.

      I mentioned the case in Texas a few days ago, but its worth mentioning again. A Dallas business owner, who was involved in a civil dispute and paid millions of dollars to lawyers, and when he objected to their fees, they had a “friendly” judge seize all of his property, without any notice or hearing, and essentially ordered him to be an involuntary servant to the lawyers. The business owner has been under this "servant" order for 10 months and is prohibited from owning any possessions, prohibited from working, etc…
      http://www.lawinjustice.com has an explanation of this really disturbing case..

    7. Chuck says:

      Thank you Mr. Leader…how little we learn. And how little we take responsibility on the "bets" that fail. Oh, if only I had other people's money to place "bets" with!!

    8. Lee Burns says:

      While it is enlightening that someone is monitoring the actions taken by the Energy Dep't there appears to be no indication that punitive action is being or will be taken against the persons directly responsible for these huge losses of taxpayer funds. When private capital benefactors make these kinds of mistakes they pay by losing their jobs or their capital. Either way the incentive to continue incompetent action is taken away. When are we going to see appropriate punishment against the administrative heads to ensure that things like this don't continue to happen?

    9. walter says:

      This is just another fail program in the making. congress need to investigate this program also. I am not a very smart man but I think I can do a better job then those in office now. I would not spend any tax dollars on fail programs. Government need to stay out on the privit sector.

    10. zis says:

      Harry Reid and Shelley Berkley give our taxes to personal friends and family investments all the time. They get promised votes and great kickback donations.

      Harry Reid and Shelley Berkley built a new Chabad Of Southern Nevada out of hard working tax payers threw Appropriations taxes for several years now written under a suspicious claims. We who have lost jobs and homes.

      The corruption never ends as Sin. Reid and Radical Berkley invested in WAR-ARMS that were used against our soldiers on land war. But what do they care they became worth many many millions more for there families to live like kings and Queens and our soldiers come home with blown up legs and arms.

      Happy Harry and Happy Shelley doing the devils greedy work every day.

    11. George says:

      This is the same Harry Reid who was behind "Cowboy Poetry" as a national need a few months ago. Makes you wonder how serious he is about anything.

    12. noreen says:

      Perhaps someone can explain the need for a Geothermal plant when most people do their own geothermal system on their own property for their own use………..when did it come provided like gas or electric?

    13. matt says:

      Why dont you do some fact checking, the plant is working and producing energy to 35K homes in the state and will do so for twenty plus years.. The loan is not in jeopardy, as the loan is tied to the plant not the company. For f sake do some DD of your own….

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