Three solar companies are under investigation for potentially inflating costs in order to draw down more money from a stimulus-funded loan program. All three boast investors with significant ties to the Obama White House.
The Treasury Department has subpoenaed Solar City, SunRun, and Sungevity, The Washington Post reports, seeking to determine “whether the companies accurately reported the market value of their costs when applying for federal reimbursement, which was calculated at one-third of the costs.”
The three companies received stimulus grants through Treasury’s 1603 stimulus grant program, which “offers renewable energy project developers cash payments in lieu of the investment tax credits (ITC),” according to the text of the statute.
The companies have received hundreds of millions of dollars in federal funds to install residential solar panels.
“But the prices some of these industry leaders charged for their work were sometimes far higher than the broader industry’s market rate, according to solar experts and details of the Treasury investigation released in company reports,” according to the Post. “While firms can install solar panels for roughly $5 per watt of energy and make a comfortable profit, some firms were charging as much as $7 and $8 per watt.”
Federal officials and others involved in the solar industry had voiced concerns over the companies’ apparently inflated costs. According to the Post, some of that scrutiny has been reserved for the companies’ “financial partners.”
Some of those partners have notable connections to the Obama White House. SolarCity, which was recently audited by the Internal Revenue Service and went public last week, is run by billionaire Elon Musk, a prominent Obama supporter.
SolarCity’s investors also have significant ties to the White House. Venture capital firm Silver Lake Kraftwerk backed SolarCity with $81 million in capital. Kraftwerk, which is owned by billionaire liberal financier George Soros, employs former Assistant Secretary for Energy Efficiency Kathy Zoi, who oversaw the disbursement of more than $30 billion in green energy stimulus funds in her Department of Energy post. Zoi is reportedly on the shortlist for Energy Secretary should Steven Chu step down during Obama’s second term.
Citigroup is also a major SolarCity investor. Michael Froman, a close college friend of Obama’s, managed Citi’s alternative investment portfolio until he left for a top White House post in 2009. Froman was key to the President’s 2008 election effort, connecting him with major donors in New York’s financial industry. Froman also served on Obama’s 2008 transition team.
Sungevity also has major ties to the Obama Administration. Tom Steyer, the “main financial backer” of Sungevity investor Greener Capital and a major Obama donor, is an aggressive activist for more federal environmental regulation and taxpayer backing for green energy companies. Steyer “said he had spent time consulting with the Obama administration after last November’s election,” according to The New York Times.
“President Obama knows that advanced energy is America’s future,” Steyer said in a speech at this year’s Democratic National Convention. “And my bet, as a businessman, is that he’s exactly right.” That “bet” has paid off for Steyer in taxpayer support for a major Greener investment.
SunRun, for its part, has ties to the White House through one of its investors, Foundation Capital. General partner Paul Holland was invited to introduce the President at a White House event on green energy in 2009. Asked how he got the gig, Holland told The Wall Street Journal that Foundation partner Steve Vassallo “has a friend in the White House who asked him for help on this event.”
Image credit: Karen T. Borchers/San Jose Mercury News/MCT