Loans to Clean Energy Dwindling, New Ideas May get Started
Location: New York
Author: Bill
Opalka
Date: Tuesday, September 27, 2011
The two biggest clean energy programs to come out of the Recovery Act
have been the
cash grants in lieu of tax credits, and the federal loan guarantees
for projects and innovative technologies. The loan programs’ time is
winding down.
I spoke to Jonathan Silver, the executive director of the U.S.
Department of Energy’s Loan
Programs Office. He leads the Obama Administration’s $70
billion dollar investment program in alternative energy, financing a
wide range of solar, wind, geothermal, biofuels, fossil and nuclear
energy projects.
“This is without question the largest and most successful clean energy
financing effort in U.S. history and the scale in which we’ve been able
to operate is really remarkable,” Silver said.
He cites the statistics. Since March of 2009, the office has issued 42
conditional commitments for loans and loan guarantees totaling over $40
billion with total project costs of $63 billion. It claims to have
created or saved over 68,000 direct jobs plus tens of thousands more
across the supply chain.
Technically, the loan program wasn’t created in 2009, but that was the
first time it received significant funding.
Most of the program will end on September 30.There are some project
closings and some funds for additional elements to continue through the
winter. A $200 million proposal to continue some project financing in
fiscal year 2012 is in the next budget.
When the stimulus program started, renewable energy developers were
impatient with its slow start.
“They were correct. As recently as January of 2009 there were 14 people
in the office,” Silver said. Now up to 175 to from career civil servants
and outside consultants “deeply steeped in energy project finance.”
In fact, the large, high-profile wind and solar projects, many too large
for the private capital markets to finance, were in the program. So,
too, were innovative technology companies in clean energy manufacturing.
And that’s where the program generated
heat on Capitol Hill, with Republicans charging favoritism for solar
photovoltaic manufacturer Solyndra.
“The Solyndra story has been significantly misunderstood,” Silver said,
referencing the $535 million guarantee to expand manufacturing
facilities. The project employed 3,000 construction workers and has more
than 1,000 permanent employees. “I’ve never seen a company grow straight
up without some bumps in the road.”
But the company is not profitable and last year canceled its initial
public offering (IPO).
“The notion that filing an IPO and then putting it on the shelf
during a period of time in which almost no IPOs were coming out doesn’t
strike a private equity guy as terribly surprising,” said Silver, who
was co-founder and a managing director of Core Capital Partners, an
early-stage investor in alternative energy technology, advanced
manufacturing, telecommunications and software.
But he said the company met the criteria for the program and the office
did its due diligence.
Even as the program winds down, interest remains high. “We have far more
demand that we have resources to support,” he says. But a
successor must be found.
A clean energy development administration, discussed by renewable energy
advocates in and out of Congress, has been floated, but has not been
enacted.
“It’s clear that if the United States intends to remain a leader in the
clean energy space we have to figure out exactly what role we’re going
to play in support of that,” he concluded.
Still, debate ensues as which energy forms should get federal
assistances, with the staunchest free market advocates saying that none
of them should. That’s not likely to happen, although this is a period
of high deficits that are getting cut.
With shrinking government support, the riddle becomes more difficult to
solve.
Copyright © 1996-2011 by
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Inc.
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