Energy secretary: Loan programs can be improved upon

Energy Secretary Steven Chu warned Thursday that a retreat from federal green-energy investments would be a grave economic mistake, but acknowledged that the design of loan guarantee programs could be improved.

Chu and the White House are under GOP fire following the bankruptcy of Solyndra, the solar panel manufacturing company that collapsed weeks ago after receiving a $535 million Energy Department (DOE) loan guarantee in 2009.

“I think what one could do differently is you start with the idea that Congress and the administration can design a better loan program,” said Chu, speaking at an energy conference hosted by The Washington Post.

The department emphasized that Chu was referring to the design of future programs.

Chu told reporters that the loan program could be more “flexible,” and suggested different financing terms depending on the level of risk.

“In higher risk things, there could be other avenues where you actually share more in the upside,” he said.

The current loan guarantee program was authorized in a sweeping 2005 energy bill signed by then-President George W. Bush, and modified and expanded with funding in President Obama’s 2009 stimulus law.

The stimulus-backed program — a major piece of the overall portfolio — came to an end in late September as DOE announced more than $4.7 billion in loan guarantees for four solar projects on the program’s final day.

Chu’s remarks note that the U.S. is at a “crossroads” with the expiration of the stimulus loan guarantee program and looming expiration of many clean-energy tax credits.

Chu is slated to testify before the House Energy and Commerce Committee’s investigations panel Nov. 17.

In what’s likely a preview of his testimony, Chu defended the program aimed at helping commercialize solar power and other renewable energy technologies.

He noted that lawmakers, when creating the program, contemplated that some federally backed companies could fail, and defended the decision to approve the Solyndra loan guarantee.

“As we look at what happened in Solyndra, hindsight is often said to be 20/20. In this case I think some of the hindsight was 20/10 or even better, clairvoyant,” Chu said. “There were things with the market, it took an unexpected turn. Modules dropped tremendously in a very short period of time. Knowing what we knew at the time, I think one has to take risks in order to promote innovative projects.”

Chu said his message on Nov. 17 will be that the U.S. can’t “walk away” from backing green energy.

Republicans probing the Solyndra financing say the department botched the vetting of Solyndra’s application and claim the White House rushed the decision, among other accusations.

The controversy over Solyndra and the loan guarantee program intensified in recent days with the bankruptcy of a second DOE-backed company, and Thursday’s decision by Energy and Commerce Committee Republicans to subpoena the White House for internal communications on Solyndra.

Solyndra’s collapse has also prompted some Republicans to attack all federal loan support for green-energy projects, alleging that the federal government should not be “picking winners and losers.”

But Chu said it’s vital for the U.S. government to be competitive in the green-energy sector, warning against pulling back.

"Once again, there's a huge opportunity before us — a global community market that is already worth an estimated $240 billion a year and is growing rapidly,” Chu said.


"While some people in Washington are debating whether the clean-energy economy is real, or whether we should compete, other countries are seizing the opportunity. No where is this more apparent than in China,” Chu said.

"Not every company, not every project will succeed. But there is no reason to sit on the sidelines,” he said.