Solar Firm Lobbies for More Subsidies as Parent Company Admits Insolvency

Abengoa is in dire financial straits, but a U.S. subsidiary is pushing for more federal support

Abengoa 11MW solar power plant / Flickr Creative Commons
December 9, 2015

A green energy company backed by billions in taxpayer funds is pouring money into its lobbying operation even as its parent company teeters on the edge of bankruptcy, government documents show.

Abengoa Solar LLC has spent $70,000 since October lobbying Congress for renewable energy subsidies, disclosure filings reveal. On each of the issues on which it lobbied, the company reported that its foreign parent, Spanish firm Abengoa, would benefit financially.

That company recently filed for insolvency protection in Spain, a process that gives it four months to secure financing that would allow it to stave off bankruptcy.

According to figures released by the company in those proceedings, its largest creditor, at about $2.35 billion (2.2 billion euros), is the U.S. Treasury. It also owes more than $280 million (260 million euros) to a controversial U.S. export finance agency recently reauthorized by Congress.

Abengoa is the company behind two U.S. solar facilities that together received $2.85 billion in stimulus-funded loan guarantees from the Department of Energy. Its extensive U.S. government backing led the group Good Jobs First to label Abengoa one of "Uncle Sam’s favorite corporations."

Its federal financing came by way of the same loan guarantee program that backed the now-defunct solar company Solyndra, which could revive criticism of Obama administration subsidies for green energy companies that surfaced in the wake of its 2011 bankruptcy.

Its financial troubles could also fuel ongoing debate over the U.S. Export-Import Bank. According to its list of creditors, Abengoa owes Ex-Im more than $280 million.

The bank’s support for the company was a source of controversy after it was revealed that a member of its international advisory board, former New Mexico Gov. Bill Richardson (D.), had also advised the bank on its investment strategies.

Congress recently approved a measure to reauthorize the bank after its critics managed to temporarily halt financing to the agency.

Allegations that Abengoa benefitted from its extensive political connections dovetail with criticism of both the the bank, which President Obama previously derided as "corporate welfare," and Energy Department loan guarantee programs that critics say reward those with ties to the administration.

Despite its extensive taxpayer support, Abengoa is now in dire financial straits. It filed for creditor protection last month after a deal to secure additional financing fell through. Its stock has plummeted since then.

At the same time, the company is facing investigations by two U.S. federal agencies.

Former employees at both Energy Department-backed solar plants have said that they witnessed extensive violations of U.S. immigration laws, environmental regulations, and workplace safety codes.

Even after the federal investigations and allegations from former employees were revealed, the department committed additional federal support for Abengoa green energy facilities in Kansas.

The company is apparently seeking additional federal backing. According to its lobbying disclosure form, it has pushed Congress since October to renew federal tax credits for renewable energy investment and incentives for renewable energy development on federal land.

As Abengoa Solar pushes for those subsidies, parent and sister companies are also facing lawsuits from shareholders who say the Spanish parent’s former CEO, who recently resigned after six months on the job, misled investors earlier this year about the company’s financial health, and from contractors who claim they were stiffed on orders.

The Energy Department is confident that taxpayers will not lose money on their Abengoa support due to the structure of its federally backed projects.

"Both Solana and Mojave are currently operating and repaying their loans with principal and interest," said Joshunda Sanders, a department spokesman, in an emailed statement, referring to the two plants.

"[The Department of Energy] DOE financed both projects with project finance structures, which insulates the individual project’s ability to repay if the parent company faces financial difficulty," Sanders explained. "In other words, DOE’s loans were not issued to Abengoa, they were issued to project companies created to own the Solana and Mojave facilities."

Until recently, the department’s website listed Abengoa Solar LLC as an owner of both the Mojave and Solana solar plants. It now says they are owned by Abengoa Yield Plc.

Abengoa Solar was owned by Spanish parent Abengoa S.A. until last year, when it was sold to Abengoa Yield, a publicly traded company that is majority-owned by Abengoa S.A. and exists to own and manage Abengoa S.A.’s energy properties.

According to documents filed in Spain and reported by the Madrid-based business publication Expansión, Abengoa S.A. itself owes $2.35 billion to the Federal Financing Bank, a division of the Treasury Department that disburses federally backed loans.

"DOE considers remaining balances to be business sensitive information so we do not share them publically," Sanders said of that listed debt. He referred additional questions to the Federal Financing Bank, which did not respond to numerous emails and phone calls.

Abengoa Solar also did not respond to a comment request.

Published under: Green Energy