Clean energy loan guarantees under fire
House committee considers No More Solyndras Act
A U.S. House committee put the Obama administration clean energy policy on trial as it considered legislation that would essentially end the federal loan guarantee program for clean energy technologies.
Dubbed the “No More Solyndras Act,” the law would sunset the program with the applications that were filed by last Sept. 30. The bill is named after the showcase solar manufacturing company that received the first loan guarantee and later declared bankruptcy. Taxpayers are on the hook for $527m.
“There’s more than enough evidence to show that this program is a failure,” said Rep. Ed Whitfield (R-Ky).
Democrats characterized the hearing as grandstanding before the election for a bill that has no chance of Senate passage or an eventual signature by the president.
“They are using inflammatory press releases,” to disparage successes of the program, said Rep. John Dingell (D-Mich.).
The Energy Policy Act of 2005 set up the program and it was launched in 2007 under former President Bush. David G. Frantz, Acting Executive Director of the Loan Programs Office U.S. Department of Energy, was grilled by the committee. He said 87% of the loans have been made to successful projects, while Congress anticipated some failures when it passed the legislation.
Frantz has been involved with the program under Bush and Obama and defended its record of review and approval of projects.
Committee chair Rep. Cliff Stearns (R-Texas) noted that three of the first five loan guarantee recipients are bankrupt.
Solyndra and energy storage company Beacon Power declared bankruptcy in 2011. Frantz said the government has recovered 70% of the $43m Beacon got under its loan guarantee. Abound Solar declared bankruptcy last week. It received a $400m loan guarantee but had only drawn down $70m as it failed to reach performance benchmarks and funds were shut off late last year.
Frantz said the loan office has committed or closed $35 billion in direct loans and loan guarantees, which finance nearly three dozen projects, with total project costs greater than $55bn.
He added the draft legislation would hamstring DOE’S ability to continue the program. The major part of the hearing considered the ability of the government to subordinate its interest behind private investors when a company is failing.
Solyndra’s loan was restructured in such a way that the government moved further downs the lie in the bankruptcy and is not going to be repaid.
Frantz said there was no other way to attract private capital to the failing company. “this is a tool of last resort,” he said.
Republicans framed it as a program run amok filled with shortcuts to expedite loans that benefitted politically connected donors
The Solar Energy Industries Association (SEIA), as expected didn’t like the tone of the hearing and immediately released a statement to that effect.
“Unfortunately, the discussion draft – as was noted on multiple occasions in the legislative hearing – would ‘throw the baby out with the bathwater.’ The loan program has been utilized on a bipartisan basis to leverage private capital to promote transportation, health care, education, housing and energy infrastructure policies. The provision in the discussion draft that sunsets DOE’s loan program would hinder our nation’s ability to develop innovative energy infrastructure projects. In solar alone, this program has achieved a number of notable successes. Chief among these are 11 utility‐scale solar power plants in the Southwest, totaling 2,700 megawatts – enough to power 500,000 homes,” SEIA President and CEO Rhone Resch said.