A California-based solar company backed by several Obama supporters has been receiving millions in federal tax credits while losing $322 million since 2008, raising concerns about the company “becoming the next Solyndra.”
Among SolarCity Corp.’s biggest investors is Elon Musk -- the high-profile donor and fundraiser who co-founded PayPal and whose companies SpaceX and electric-car company Tesla Motors have received at least $846 million in loans and startup money from the Obama administration.
Alabama Sen. Jeff Sessions, the top Republican on the Senate Budget Committee, warned about SolarCity’s financial standing in a letter Monday to the Treasury Department.
“There is concern that SolarCity might become the next Solyndra -- a company propped on the back of the taxpayers,” Sessions wrote.
The company fired back Tuesday, specifically against the Solyndra comparison.
“The forces which drove Solyndra into bankruptcy -- steeply declining solar panel price -- are precisely what has driven the success of our business, as those declining prices allow more Americans to go solar, and wrest control of their energy supply away from government-regulated monopoly utilities,” company spokesman Will Craven told FoxNews.com.
Craven also said the company will soon set the record straight on the Sessions allegations now that a Securities and Exchange Commission’s “quiet period” has ended.
Beyond SolarCity reportedly getting millions in tax credits and cash grants through the 2009 stimulus law, Sessions charges SolarCity might have overestimated the “fair market value” of its products to get higher credits -- or in his words “reap financial benefits at the expense of the American taxpayers.”
The Treasury Department’s Office of Inspector General confirmed Tuesday an investigation into the matter, roughly 14 months after SolarCity acknowledged in its initial public offering that the inspector general’s office had issued subpoenas “to a number of significant participants in the rooftop solar energy installation industry, including us.”
In addition to the inspector general investigation, SolarCity subsidiaries Sequoia Pacific Solar and Eiger Lease Co are challenging the federal government in court for imposing tougher guidelines in calculating the market value of solar-energy systems.
SolarCity officials, including fellow Obama donor and Musk’s cousin Lyndon Rive, acknowledged in the IPO document the continuing need for government support, as alternative-energy companies strive to become competitive with coal, oil and other conventional-energy sources.
“Our business currently depends on the availability of rebates, tax credits and other financial incentives,” they wrote. “The expiration, elimination or reduction of these rebates, credits and incentives would adversely impact our business.”
Solyndra, a solar-panel maker touted by Obama, received an estimated $535 million in Energy Department loan guarantees, then went bankrupt in 2011 after repaying only a projected $143 million of the money.
Though the cash-grant program for SolarCity and others has concluded, the tax-credit program purportedly could continue through 2016.
“The financial pressures related to a private company’s survival should not cause the federal government to modify its polices or place additional taxpayer money at risk,” Sessions wrote in his letter to Treasury Secretary Lew in which he also asked when the tax-credit program would end and exactly how much SolarCity has received.
SolarCity last month reported a third-quarter profit after years of losses, including $91.6 million last year.
Musk, the company chairman, has benefited immensely from government credits and funding through his various ventures.
In addition to the $465 million loan Tesla received in 2010 from the Obama administration, which was recently paid off, the company has also received thousands in federal tax credits. Tesla has struggled with profitability and is now under investigation related to vehicle fires.
SpaceX received $381 million from NASA last year to compete in the race to replace the government space missions with commercial flights. And the company has the opportunity to take part in billions of dollars worth of NASA contracts.
He brought star power to a $35,800-a-plate dinner for the president at the Los Angles restaurant Tavern in April 2011. And he donated $750 toward Obama’s first election effort, while Rive gave $1,500.
The other SolarCity investors who have given to Obama campaigns include Nancy Pfund and Bennet Van De Bunt, who each gave $2,300 toward his 2008 election, according to the Federal Election Commission.