In my last post, I took a look at how surprisingly credulous state executives were of Evergreen Solar’s business. Rarely, if ever, were concerns raised about whether Evergreen Solar was a good investment for the state to make, nor whether the solar industry in general was fundamentally sound. That green jobs had a bright future was, documents indicate, an article of faith.
It’s easy now, as much of the predicted “Green Boom” has gone bust, to second guess the decisions made. A question that should be answered, however, is why those decisions were made. The Patrick administration hasn’t been eager to answer that question. When quizzed about the bankruptcy, the governor insisted the company’s CEO was “out of the loop” while insisting the state would be able to clawback incentives paid out.
But while I once despaired of ever getting Evergreen Solar’s secrets, MassDevelopment has released almost a thousand pages that do shed light on why warning signs were ignored, and it looks like, Massachusetts fell victim of old-fashioned peer pressure.
The scene is all too familiar for anyone whose bought a car. Evergreen is a bargain, but you have to buy now because other suitors are calling and soon it will be going, going, gone. Or to quote directly from a Special Meeting of the Board of Directors of the Massachusetts Development Finance Agency:
Amid aggressive competition from Mexico and Oregon and other states, Evergreen has chosen to remain in Massachusetts and to build a new facility, which the Governor hopes will attract other renewable energy companies thereby forming a cluster in Massachusetts. One criterion Evergreen cited in its decision to remain in Massachusetts is the Commonwealth’s ability to “move quickly” with expedited permitting at Devens.
Download the full meeting minutes here.
The specter of other states winning the bid is outlined again in a memo detailing MassDevelopment’s eventual grant to Evergreen Solar:
Because Massachusetts had already been in competition with the States of New York, Oregon, and New Mexico for the siting of this facility, the Massachusetts Office of Business Development (“MOBD”) quickly turned to Devens as a location that could meet Evergreen’s needs in the timeframe that they required.
Evergreen Solar executives had no qualms about playing off Massachusetts’s fear of losing out to help drive up the asking price. An e-mail from Massachusetts Office of Business Development:
[After discussing pooling funding and financing sources:] This would bring our total loan package up to $20 million and make us very competitive with other states on the financing front. New York, which is being considered along with Oregon and New Mexico, is making a serious run at it with a large loan package that is forgiveable (i.e. converts to a grant) if certain job creation benchmarks are achieved. New York also has identified an old IBM semiconductor facility in East Fishkill, NY that has a building and infrastructure in place and would significantly reduce Evergreen’s startup costs and timetable. Rich emphasized that the Massachusetts proposal is now very competitive and that the policy discussions with Ian Bowles’ team have been positively received by the Board. He also re-iterated that they are committed to a two-way dialog with Massachusetts and will let us know in advance whether our proposal will be adequate or inadequate to close the deal and give an opportunity for Massachusetts to address any potential areas of the proposal which need to be bolstered to close the deal.
This is all the normal bartering of business, the natural give and take of negotiating. But why were the right questions not asked about Evergreen Solar’s viability? Why was the focus so squarely on catering to Evergreen’s specific needs and demands, and not on more general incentives? Documents indicate peer pressure played a part, with executives caught up in the chase of landing a big (doomed) catch.
But that competitive pressure was ignited by what e-mails indicate was an equally powerful draw: The promise of a new economic dynamo, all powered by socially responsible green energy. As I’ll explore in my next post, it was a combination too powerful for state decision makers to pass up.