Proposal Aims to Gut DOE Loan Program

By NAUREEN S. MALIK AND CASSANDRA SWEET  |  Wall Street Journal  |  Link to article

About $41 billion in loan guarantees for renewable-energy projects are caught up in the bipartisan wrangling over the federal budget, which could derail dozens of projects and eliminate tens of thousands of jobs. Even established companies are concerned, underscoring the nascent industry’s reliance on government help.

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A Republican proposal to slash the loan-guarantee program was included in a U.S. House of Representatives’ budget bill passed last month. Such a move would be a setback for the Obama Administration’s push to develop alternate sources of energy, slash greenhouse gas emissions and create jobs.

Renewable-energy companies, particularly solar power product makers and developers, say the loan-guarantee program administered by the Department of Energy is crucial to allow projects currently under development to proceed. Loan guarantees for nuclear plants would not be affected.

“The DOE loan program provides an important financing ‘bridge’ at a time when the U.S. private debt markets have little to no experience financing first of their kind utility-scale solar projects,” First Solar Chief Executive Rob Gillette said in an email. He said the program supports large solar projects that create jobs, state and local tax revenue and investment opportunities.

The loan guarantee acts as lenders’ insurance in case of default or unforeseen delay for technologies trying to go commercial for the first time. It is meant to push companies out of the so-called valley of death where private equity or debt investors are reluctant to cover huge construction costs on unproven technology given the sluggish growth outlook for power demand. (read entire article)