We’ve all heard the expression,
”
If something sounds too good to be true, it probably is.
”
In the investment world the saying is,
”
If something sounds too good to be true, it definitely is.
”
and there isn’t a better example of this than the one presented
by Solargen Energy Inc.
By Kim Williams
We’ve all heard the expression, “If something sounds too good to be true, it probably is.” In the investment world the saying is, “If something sounds too good to be true, it definitely is.” and there isn’t a better example of this than the one presented by Solargen Energy Inc.
You’ve probably heard about Solargen’s proposal to cover 4,717 acres of Panoche Valley with solar panels. A “bright idea” according to the ad Solargen placed in the Free Lance last week inviting people to an open house at the chamber of commerce.
While some locals are ready to roll out the red carpet, many question the sense of putting stock in a startup company with no prior experience and dwindling finances. Skeptics are called antagonists and NIMBY’s (an acronym for “not in my backyard”) in an attempt to dismiss doubts raised by residents who are concerned San Benito will come out on the losing end of Solargen’s proposal.
It’s obvious Solargen is promising more than they can deliver. According to their recently released 2009 Annual Report, Solargen has enough capital to cover operating expenses through their second fiscal quarter. Beyond that they will need to rely on funds raised from debt and equity to provide general operating capital and pay the four officers receiving 6-figure salaries. These officers share beneficial ownership and have the most to gain if Solargen’s project is approved in 2010, qualifying them for $390 million in federal stimulus money.
Solargen representatives promise 600 jobs if the project is approved yet admit there are only about 140 jobs available during construction and 10 permanent jobs once construction is complete, (verifiable through Solargen’s permit application posted on the SBC Web page). The rest of the jobs are at the Chinese solar panel manufacturing plants Solargen executives are in negotiations to purchase panels from. And the question remains, who will pay for the upgrade of 30 miles of substandard road between Hollister and Panoche Valley if a Hollister workforce is to be hired?
Thanks to government incentives and mandates for new renewable energy sources, Solargen will pay no property tax, no capital gains tax and no sales tax. In lieu of this, Michael Peterson, chairman of the board, president and chief executive officer says Solargen will “donate” $1 million per year to the county for 10 years if the project is approved for permitting. Promises have already failed to come true though and there’s a good chance this one will fall by the wayside as well. Last year, in an early attempt to gain community support, Solargen executives offered to install a rooftop solar system on Panoche Elementary but failed to attend the scheduled school board meeting to present their plans. No call saying they wouldn’t attend, no follow up, nothing.
A 1,000-megawatt solar project planned for selenium-tainted land in the Westlands Water District, Fresno County is the best project in California’s pipeline. The land has been farmed, there are no endangered species, and freeing up water for other farmers in the drought-plagued San Joaquin Valley makes sense. Westlands has tens of thousands of acres of land too salty for farming. Everyone agrees it’s perfect for solar development and will likely turn Fresno County into a solar industry hub.
Solargen acknowledges shortcomings in their 2009 annual report:
“The Company (Solargen) has no experience in the solar projects we plan to develop in the future. Because our history is limited, any investment in us would be inherently risky. Our cash may not be sufficient to fund day-to-day operations even for the short-term. After operations begin, the operating expenses will be significant and the Company (Solargen) will have to generate substantial revenues to achieve profitability. As a result, we may never achieve or sustain profitability.”
Any way you look at it, Solargen’s proposal is too big a risk for taxpayers and San Benito.
Kim Williams is a Panoche Valley resident.
