When Eric Schneiderman is not busy trying to shake down the Trumps for contributions while investigating them, he is harassing another high-profile target at the urging of liberal activists who make up his political base – ExxonMobil.
In just the last year, Schneiderman has used New York’s Martin Act, a 1921 law that gives New York attorneys general nearly limitless powers to go after fraud, to claim ExxonMobil misled investors by reporting inaccurate forecasts of the company’s reserves and that it underrepresented the danger posed by climate change to keep its stock prices high.
Schneiderman has subpoenaed more than 3 million documents from ExxonMobil but has not come close to making a case. But there is an energy company in New York state that appears to have dramatically misled its investors – the largest, by far, of which is the state of New York itself. And it appears to have done so in just the way Schneiderman has accused ExxonMobil of doing – by misleading on its financial prospects and hiding the problems with the underpinning science.
In June 2014, SolarCity, which makes residential solar panels, bought Silevo, a panel manufacturing start-up, for $200 million, saying at the time this technology would enable SolarCity to build “the world’s most efficient rooftop solar panel.”
The State of New York, looking to rebuild the struggling western end of the state, leaped into action, awarding SolarCity $750 million in subsidies -- $350 million to build a plant and $400 million for equipment SolarCity could use for free. Rent for the plant was set at $1 per year on the promise Solar City would deliver 5,000 jobs – 3,000 of which would remain permanently in Buffalo.
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The plan and public investment grew as quickly as the enthusiasm. The plant that had been slated for 250,000 square feet suddenly was set for 1.2 million.
“When people think of Buffalo now, they’re not just going to think of chicken wings, the Bills and snow,” said Erie County Executive Mark Poloncarz at the time. “They’re going to think of the largest production site for solar panels in the Western Hemisphere.”
Gov. Chris Cuomo called it the largest advancement for Buffalo’s economy in a generation,” and said the project would change the city’s mentality.
It has not worked out that way. Tesla, which is owned by Elon Musk, who also owns SolarCity, predicted in a letter to shareholders in 2014 that solar panels from the Buffalo plant would “ultimately reach 1 million customers by mid-2018.” It reported at the end of last year it had reached just 325,000.
Moreover, it doesn’t seem the technology that so wowed New York economic development officials is all that effective. In mid-October, Tesla and Panasonic announced they were going to begin collaborating on the manufacture of solar cells and modules in the Buffalo plant, pushing Silevo aside.
“Notably absent from the announcement were comments from Solar City, any executives at SolarCity, or any mention of Silevo,” noted Travis Hoium in a piece for the Motley Fool investing site. “And that should be shocking for everyone who has watched SolarCity’s potential move into solar panel manufacturing.”
The extremely sweet deal that brought SolarCity to Buffalo did not provide for this deal to be extended to Panasonic. What will New York do? Double-down on its investment and gamble again on the promises of solar promoters? Or will it seek fair market value for taxpayer-funded equipment and production facilities?
And what about the questions Schneiderman has been all too eager to ask ExxonMobil? SolarCity and Silevo promised 3,000 permanent jobs – it looks like the number will settle somewhere in the 500 range. It projected 1 million customers; it has maybe a third of that.
It promised technology that would upend the industry. Instead, it appears that technology cannot be made into a cost-effective, high-energy solar module even with the state providing the equipment for free and the facility for $1 per year.
Did the $5 billion SolarCity promised to invest in the plant ever materialize? Will it now that Tesla is acquiring SolarCity? And if SolarCity can’t move 1 million units, what does that mean for New York’s 50 by ’30 target – the governor’s drive to have half of New York’s energy generated by renewable sources by 2030?
And how much did SolarCity overstate the prowess of its technology or the potential of its sales? What did it know about the precarious situation the company was in, and when did it know it? In time to forestall this huge, and now apparently wasted, state investment?
If Schneiderman truly cares about eliminating fraud and protecting taxpayers and investors, he will start asking some of these questions and letting New Yorkers know where and how their money was spent. But don’t count on it. It doesn’t fit his ideology. And for guys like him, ideology is the law.
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