Profits Elude Geothermal Companies
October 10, 2011
Three taxpayer-backed clean energy companies that specialize in capturing heat from the earth and turning it into electricity are facing deep financial difficulties, according to an analysis of financial records. The companies have received millions in federal loan guarantees and grants aimed at promoting clean energy. However, because they have been unable to consistently produce profits, they face questions similar to those of Solyndra, the now-bankrupt solar manufacturer that received a $535 million federal loan in 2009, says USA Today.
- Raser Technologies, the recipient of a $33 million Treasury Department grant, filed for Chapter 11 bankruptcy this year.
- Nevada Geothermal Power obtained a $98.5 million loan guarantee under the same program as Solyndra in addition to $66 million in government grants, yet the company has never operated profitably and is at risk.
- U.S. Geothermal received a $97 million Energy Department loan in February, but it has not turned a profit in four years.
Defenders of the firms are quick to point out that the entire geothermal industry is suffering from poor performance this year, with stocks down from 60 to 80 percent. Furthermore, individual companies such as Raser Technologies cast blame on subpar equipment provided by subsidiary firms, explaining that this has limited production. Nevertheless, taxpayers' primary concern will most likely be attempts to recoup federal funding from defaulting companies -- a concern that a Department of Energy spokesman was quick to quell when he explained that geothermal facilities could continue to run and produce revenue even if the company were to collapse.
Regardless of how these three companies fare in the near future, it is probable that blame will circulate back to Washington.
Source: Aamer Madhani, "Profits Elude Geothermal Companies," USA Today, October 6, 2011.
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