The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

DOE's Untold Impact on Solar

The Obama Administration's $60 billion Loan Guarantee Program (LGP) for renewable energy is considered a failure because of Solyndra, Beacon Power, and potential 2012 bankruptcies. What is not well known is that 75 percent of the program's deployed funds went to relatively low risk power plants that will catapult the U.S. to a leadership role in the utility-scale solar sector. This is hardly the hallmark of a "failed program." The program is akin to Shakespeare's King Henry V, who said as a delinquent Prince: "I'll so offend as to make offense a skill, redeeming time when men think least I will."

The LGP’s offenses are extensive and justify the current Congressional investigations. Its greatest blunder is failing to stimulate the economy in 2009 by not deploying capital. In the American Recovery and Reinvestment Act, Congress allocated $60 billion of implied lending authority (estimates vary) to section 1705 of the LGP, which could have had a tremendous and critical impact on the energy industry and the broader economy if investments were made in 2009 and 2010. Some had high expectations because the DOE had already been soliciting applications for this program since 2006. Unfortunately, in the first 18 months after the stimulus bill, only 1 percent of the funds were deployed and more than 80 percent of that went to two companies that are now bankrupt.

Congress had good reason to rescind approximately $35 billion from the LGP and launch an investigation. The program’s original concept was timely and brilliant: the government would use $6 billion to derisk approximately $60 billion of loans for innovative energy technologies that were unfinanceable due to the credit crisis of 2009. These figures imply a 10 percent estimated default rate, which takes most venture capital deals off the table. VCs make high-risk investments like Solyndra, but they place multiple bets and hope a single success story can more than offset losses from the failures. For the U.S. government to invest in Solyndra with a low risk tolerance and no other sizable bets was simply irresponsible.

While Wall Street was rejecting the DOE’s gamble on domestic solar manufacturing in 2010, a cluster of power generation applications were emerging as a second act for the LGP. Utility-scale solar has substantially lagged rooftop growth to date due to economic, environmental and financial barriers. The economics of selling solar electricity to utilities at wholesale prices is now making sense though, thanks to a 75 percent drop in panel prices in the last 3 years. On the environmental side, these power plants require large tracts of land with high sunhours that do not exist in traditional European solar markets.

The southwest U.S. is the most logical place on the planet for utility-scale solar. It is a vast public desert in close proximity to a large population that generally wants to increase its use of renewables and is used to paying above-average electricity prices. Unfortunately, securing permits for federal land can require stringent multi-year environmental reviews including an Environmental Impact Study mandated by the National Environmental Policy Act. A handful of developers survived those studies though and in 2011 the only remaining hurdle was financing; it was “redeeming time” for the LGP.

In the last year, the LGP closed on 12 solar generation projects totaling $12 billion, or 75 percent of the program’s deployment since 2009. These systems, which are now under construction, will be game-changing for solar and carry relatively little risk for the taxpayers. They utilize multiple proven technologies and their average size is 283 megawatts, equal to three times the world’s largest solar plant currently in operation. And if something goes wrong and a default occurs, there will be an electricity and cashflow generating power plant to cover losses instead of a customized manufacturing facility that is worth pennies on the dollar.

Two months after the LGP’s lending authority expired, a Berkshire Hathaway subsidiary stepped up and purchased a gargantuan $2 billion solar project in California that has no government loan guarantees attached.  Utility-scale solar is cost competitive in the U.S. and private investors are now eager to participate; too bad the DOE won’t get the credit.

Robert Lahey is the Senior Legislative Analyst at Ardour Capital Investments, LLC a boutique investment bank specialized in energy and environmental technologies.

At Solar Power-Gen in Long Beach, California next month, Robert Lahey will be moderating a session entitled “Solar Power on Public Lands: Aligning Conservation and Development Interests. 

Untitled Document

RELATED ARTICLES

Sunrise in Pakistan as the Country Delves into Solar PV

Robert Harker Pakistan has joined the list of countries that are exploring solar power as a means to bridge critical energy generat...

Global Renewable Energy Roundup: China, Kenya, Turkey, India Seeking More Renewables

Bloomberg News Editors China is being encouraged by three industry groups to double the nation’s solar-power goal for 2020 to make up for sh...

Why Smarter Grids Demand Smarter Communications Networks

Mark Madden

Historically, utility networks and communications networks have had little in common.

The Importance of “Switching Costs” to the US Residential Solar Industry

Paula Mints The DoE and numerous organizations and governments globally are focused on driving down the cost of solar convinced t...

PRESS RELEASES

Array Technologies’ DuraTrack HZ v3 Continues to (R)evolutionize at SPI

Array Technologies, Inc. (ATI) prepares to showcase its recently launched tracking syst...

Appalachian's Energy Center assists counties with landfill gas to energy projects

The Appalachian Energy Center at Appalachian State University recently completed a proj...

Redesigned HydroWorld.com Video Gallery

Hydropower news and information, and interesting promotional announcements are now avai...

30 days to GRC Annual Meeting & GEA Geothermal Energy Expo

The Geothermal Resources Council (GRC) has announced that it is only 30 days to go to t...

FEATURED BLOGS

The Coming Multi-trillion Dollar Energy Investment Drive

In coming years, a multi-trillion dollar low-emission energy investment drive will get underway. Three catalysts wil...

Appalachian's Energy Center assists counties with landfill gas to energy projects

Activity supported with Z. Smith Reynolds Foundation funding BOONE—The Appalachian Energy Center at Appalachia...

Discounted Room Rates for Geothermal Event end Friday

Discounted room rates for GRC Annual Meeting & GEA Geothermal Energy Expo end Friday Room rates for this prestigi...

3 Reasons To Follow-Up

It’s very important to begin nurturing your relationship with a customer immediately after the project you sold...

FINANCIAL NEWS

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

Intersolar South America 2015

Exhibition and Conference: September 1-3, 2015 Intersolar South America ...

Intersolar Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 Intersolar Eu...

COMPANY BLOGS

Less Is More

When you’re giving a presentation, one of the easiest things to do...

Captivology

One of the biggest challenges we face as efficiency sales professionals ...

How To Optimize Your Meeting Schedule

Do you spend more time in meetings than you do actually working? While m...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS