Despite Solyndra, Energy Loan Program Now Making A Profit
Before Republicans became obsessed with Benghazi, and now putting far more significance on Jonathan Gruber’s comments on the Affordable Care Act than, as I explained earlier in the week, there actually is, they loved to scream about Solyndra. Solyndra was granted loan guarantees under a program which was started under George Bush and expanded in Obama’s stimulus program. Never mind that the entire stimulus package was highly successful. All they cared about was that Solyndra went under. The decision to invest in risky energy companies which could advance clean energy in the United States is now paying off. NPR’s Morning Edition reports that the energy loan program is now making a profit.
In 2011, solar panel company Solyndra defaulted on a $535 million loan guaranteed by the Department of Energy. The agency had a few other high-profile bankruptcies, too — electric car company Fisker and solar company Abound among them. But now that loan program has started turning a profit.
Overall, the agency has loaned $34.2 billion to a variety of businesses, under a program designed to speed up development of clean-energy technology. Companies have defaulted on $780 million of that — a loss rate of 2.28 percent. The agency also has collected $810 million in interest payments, putting the program $30 million in the black.
When Congress created the loan program under the Energy Policy Act of 2005, it was never designed to be a moneymaker. In fact, Congress imagined there would be losses and set aside $10 billion to cover them…
Conservatives who saw a scandal in the Solyndra loan guarantees appear not to understand how the economy works. Some companies are going to succeed and some are going to fail. The loan program did not stay away from risky investments, and this has sometimes paid off:
The Energy Department actively monitors all the companies in its portfolio for potential default risks, “and when there are warning flags, then the disbursements are suspended — possibly ended,” Moniz says.
But he says the Energy Department doesn’t want to go too far in the direction of only lending to safe investments. “We have to be careful that we don’t walk away from risk, because otherwise we’re not really going to advance the marketplace,” he says.
Moniz points to a small company called Beacon Power as an example. It got an Energy Department loan, went bankrupt and defaulted on about $14 million in debt. Today the company is back in business, providing a valuable service to electricity grids and repaying the rest of its loan.
The United States has now accepted new challenges in light of the major breakthrough on climate change reached this week with China:
The deal jointly announced in Beijing by President Obama and China’s president, Xi Jinping, to limit greenhouse gases well beyond their earlier pledges is both a major diplomatic breakthrough and — assuming both sides can carry out their promises — an enormously positive step in the uncertain battle against climate change.
It will be interesting to see if any of the companies which received loan guarantees through the Department of Energy are instrumental in enabling the United States to carry out these promises.
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