Last month marked the 10-year anniversary of the Solyndra bankruptcy. Despite the many successes of the U.S. Department of Energy’s Loan Programs Office (LPO), this particular loan divided our politics and was used as a talking point to try to undermine the nascent clean energy industry in the United States.
Today, the world has come to understand the importance of responding to the climate crisis but the drama around the Solyndra loan still holds lessons for Congress as it considers critical new investments in clean energy as part of the bipartisan infrastructure bill and the Build Back Better Act.
We heard a lot about that loan. That’s because we ran the agency that made the investment in Solyndra — and in many other clean energy companies. Although the investment in Solyndra was made before we arrived, it was made for the same reason all of them were: to commercialize innovative technology, create new jobs and reduce global warming.
Looking back 10 years later, it’s clear that the vast majority of the loans were winners. One was to a start-up automaker called Tesla. We also issued loans to 10 of the first utility-scale solar projects in the United States, catalyzing the industry. We underwrote the largest wind farm in the U.S. and financed the first nuclear power plant to be built in this country in the last 30 years. The portfolio also included energy storage projects, innovative transmission lines, geothermal projects and biofuels. In total, $32 billion was invested across a wide range of technologies, and 10 years later, the portfolio has made money for taxpayers, while cumulatively avoiding more than 35 million tons of carbon emissions and displacing nearly 3 billion gallons of gasoline.
In addition to being good investments, these loans helped launch a clean energy transition that is now undeniable. According to the International Renewable Energy Agency, solar and wind accounted for 91 percent of all new power generation installed globally last year. Government programs like ours helped launch the renewables market by demonstrating feasibility and lowering cost. Since 2010, the cost of solar and onshore wind has fallen 82 percent and 39 percent respectively. Utilities, corporations and consumers are now turning to clean energy simply because it is the lowest cost option.
The clean energy transition has also created the kind of good-paying jobs we believed it would 10 years ago. Today, more than 230,000 people work in the U.S. solar industry. It is a growing industry that employs skilled electricians, computer programmers, construction workers, financial analysts and everything in between. And these loans had a significant impact on the environment. Today, the loan program portfolio saves about 1,473 tons CO2 per $1 million in financing provided.
While this is all good news, the recent wildfires in the West, record heatwaves and destruction of Hurricane Ida underscore the fact that the climate crisis has not been solved. This is a sobering challenge, but thanks in part to the loans made 10 years ago, the industries and technologies exist to start tackling this crisis at scale. It’s time once again to take bold steps to confront the climate crisis, create more clean energy jobs, and invest in the next wave of successful clean energy companies.
Congress can take immediate action by enacting the bipartisan infrastructure plan, which would accelerate electric vehicle deployment and build the transmission capacity necessary to expand renewable energy production. It must also go further by enacting stronger clean energy and climate policies, such as a national Clean Energy Standard, electric vehicle mandates and financial incentives to lower the cost of key technologies.
Private capital also has a critical role to play: $50 trillion of investment is required over the next three decades to avoid the worst effects of climate change and achieve the goals of the Paris Agreement. This isn’t a sunk cost. It’s an opportunity to invest in the companies and infrastructure that provide energy, mobility and other essential services. Institutional investors are already increasing their allocations to the sector. Now they need to adopt binding environmental, social and governance (ESG) policies and direct asset managers to do the same.
In addition, more than 400 of the world’s largest companies have already committed to net-zero greenhouse gas emissions. The world needs other companies to follow suit, drive these changes through their supply chains and create larger markets for clean energy and other climate solutions. Individual consumers can also flex their power by choosing clean energy, electric vehicles and low-carbon lifestyles.
Ten years ago, we were privileged to help launch the clean energy industry by directing billions of dollars of investment into a young industry. Not every investment succeeded, but most did — and they changed the world.
As in baseball, you don’t get on base every time you’re up to bat, but you cannot hit unless you swing. And it’s important that the government continue to take swings at bat because the climate crisis is both an existential issue and one of the biggest investment opportunities in generations.
So, let’s play to win.
Peter W. Davidson is the CEO of Aligned Climate Capital, an asset manager focused exclusively on clean energy and climate-linked investments. He served as executive director of the U.S. Department of Energy’s Loan Programs Office from 2013 to 2015.
Jonathan Silver is a senior adviser to Guggenheim Securities. He served as executive director of the U.S. Department of Energy’s Loan Programs Office from 2009 to 2011.
Opinions expressed are solely those of the author and do not reflect the views of Guggenheim Securities.