By Kevin Smith
There’s a lively debate underway about the U.S. Department of Energy’s loan guarantees to American companies that are developing advanced renewable energy technologies. Unfortunately, many opponents are generating heat, but are not properly representing the facts around the DOE program’s strong success.
These critics keep citing Solyndra, a solar panel manufacturer that went bankrupt because of intense foreign competition. But the projects representing about 98 percent of the program’s funding have been successful, especially solar power plants that aren’t vulnerable to the volatile global economy. Overall, the program has spurred $40 billion of investments in energy projects over the past five years, while supporting more than 60,000 American jobs.
An independent program review headed by Herbert Allison, a former Wall Street financier, reported that the loan portfolio is performing well, with the great majority of the companies on track to repay their loans on schedule along with some $8 billion in interest.
Reaching similar conclusions, the news service Bloomberg Government, found that 87% of the program’s loans are low-risk. Meanwhile, the news site CleanTechnica observed that, with only 1.4% of its investments in “losers,” the program has a far better record than the private venture capital markets.
Begun under former President George W. Bush, the program resembles federal programs that helped American companies to commercialize cutting-edge technologies, including aerospace, medical treatments, nuclear power, global positioning systems, and the Internet. It’s designed to minimize taxpayer costs and maximize economic benefits, such as job creation.
The federal government manages a loan guarantee portfolio of approximately $1.1 trillion, consisting of more than 65 programs. As with the loan guarantee program for renewable energy, these are federal guarantees of loans from private sources, not grants, tax credits, or direct loans. Even if companies go bankrupt, the taxpayers don’t have to pick up the entire tab because the federal government seizes the borrowers’ assets, from buildings to bank accounts, and can sell them or manage them in order to generate revenue.
Meanwhile, the program helps American companies to commercialize technologies that enable them to export products and services overseas and create good jobs here in the US.
For instance, in the town of Tonopah, Nev., a solar power project will produce power 24/7. A field of thousands of billboard-sized mirrors will focus the sun’s energy at the top of a tall tower where a “receiver” filled with molten salt will be heated by the sun. Stored in an insulated storage tank, the high-temperature salt can be utilized, day or night, to produce steam to generate electricity in a steam turbine.
When operational at the end of 2013, the Crescent Dunes Solar Energy Plant will generate 110 megawatts of electrical power to serve 75,000 homes. Because 100 percent of the electricity generated by the plant is pre-sold under a 25-year energy contract with NV Energy, the project is a solid investment.
Over 30 months of construction, almost 600 jobs will be created onsite, as well as more than 4,300 direct and indirect jobs from equipment and service providers in more than twenty states. Over its first ten years of operation, the project will generate $37 million in local tax revenues, helping to pay for school systems and police and fire departments.
The Crescent Dunes power plant is designed, developed and will be operated by SolarReserve, a leading developer of large-scale solar projects. More than $250 million of project equity was provided by private investors. But, in order to get this US-developed advanced technology off the ground, it received a boost from the DOE Energy Loan Guarantee Program.
The loan program commercializes new technologies, supports American jobs, promotes American exports, and generates clean energy. With all but a few loans on track for repayment with interest, the program is a proven winner for our country’s companies, workers and taxpayers.
Make no mistake: Federal loan guarantees for advanced renewable energy technologies aren’t a scandal – they’re a solid success story.
Smith is CEO of SolarReserve, a leading developer of large-scale solar projects.