Energy Department prepares to approve more green loans

The Energy Department said Thursday it expects to begin tentatively approving new taxpayer-backed loans for renewable energy projects in the coming months.

The announcement comes about seven months after Solyndra, the California solar firm that received a $535 million loan guarantee from the administration in 2009, went bankrupt, setting off a firestorm in Washington.

ADVERTISEMENT
“The Department expects to begin issuing conditional commitments over the next several months after completing a rigorous internal and external review of each application,” Energy Department loan program chief David Frantz wrote to the top lawmakers on the Senate Energy and Natural Resources Committee.

Frantz – in the letter to committee Chairman Jeff Bingaman (D-N.M.) and ranking Republican Sen. Lisa Murkowski (Alaska) – stressed that projects receiving loan guarantees will be “subject to a robust monitoring effort to ensure that taxpayers’ investments are protected.”

He defended the loan program from GOP critics, who have alleged that the administration is wasting taxpayer money by supporting risky renewable energy projects.

“By any measure, the Energy Department’s loan programs have helped the United States keep pace in the fierce global race for clean energy technologies,” Frantz wrote.

“Over the past three years the loan programs have invested in some of the world’s biggest, most innovative, and most ambitious clean energy projects to date, supporting a balanced portfolio of American clean energy projects that are creating tens of thousands of jobs nationwide and are expected to provide power to nearly three million U.S. households,” he said.

The Energy Department sent separate letters Thursday to the developers of more than three-dozen projects in the loan guarantee pipeline. The letters outlined the department’s criteria for identifying which projects will ultimately receive the loan guarantees.

Projects that meet a set of initial criteria will then be prioritized based on their ability to create new jobs and support manufacturing supply chains, among other things. The top projects will then be subject to the department’s “rigorous due diligence and loan underwriting review,” according to the letter.

“Please be advised that regardless of your project’s characteristics with respect to the screening and/or prioritization criteria, there can, of course, be no assurance that we will be able to consider your project for a conditional commitment, that appropriated funds will be available for your project, or that it will ultimately receive a conditional commitment or loan guarantee,” the letter warns.

An Energy Department spokesman said it is “impossible to project” how many projects will receive loan guarantees under the program.

Many of the projects in the pipeline did not receive backing under an Energy Department loan program that expired last September. They are now eligible for loan guarantees under a separate program that backs innovative clean energy projects.

The 1703 program, as it is known, received $170 million under last April’s budget agreement to cover credit subsidy costs associated with each loan guarantee. The credit subsidy cost is based on the risk of a project defaulting on its loan. The budget agreement set aside an additional $1.5 billion for projects that pay their own credit subsidy costs.

The news that the Energy Department will again issue renewable energy loan guarantees is certain to draw the attention of House Republicans, who are investigating the loan program.

The House Energy and Commerce Committee has spent more than a year probing the Solyndra loan guarantee, using the bankruptcy to raise broader questions about the Obama administration's clean energy investments.

Committee Republicans have alleged that the department missed a series of red flags that hinted at Solyndra’s financial problems. And they’ve accused the administration of approving the loan to please Obama’s campaign donors, a claim the White House strongly denies.

The committee’s investigation has not uncovered evidence of political influence. But the probe has unearthed details that are likely embarrassing and potentially politically damaging for the White House, including that officials questioned the wisdom of approving the Solyndra loan guarantee.