Close to three dozen CEOs of clean power companies — from First Solar to SunPower to Nanosolar — are pleading with congressional leaders to save the funding for the Department of Energy’s loan guarantee program, which has come under fire during the Congressional budget negotiations In a letter Tuesday morning, the CEOs asked congressional leaders Harry Reid, Nancy Pelosi, Mitch McConnell, and John Boehner to support continued funding for the program. (DOE Loan Chief Jonathan Silver will be speaking at our Green:Net 2011 event on April 21 in San Francisco.)
A loan guarantee serves essentially as a promise by the government to make good on a loan if the company can’t, and typically enables better interest rates and lower costs than would otherwise be available to a company for project financing. In total, the DOE has chosen 21 clean energy projects for loan guarantees and offered conditional commitments for $21 billion in loan guarantees. The loan program office also has already issued term sheets for more projects than it actually has the budget to finance.
Eliminating, or dramatically reducing, funding for the loan guarantee program, would “literally pull out the rug from under,” the companies’ projects, “just when we are about to break ground,” wrote the group in the letter. The group represented in the letter have been awarded, or have pending, loan guarantees the companies are using to raise millions of dollars in financing to construct clean power projects, from solar farms to biofuel plants.
We are deeply concerned that eliminating funding for this critical program will not only destroy thousands of pending jobs and hinder the growth of critically-needed U.S. domestic energy production, but also defeat Americaʼs effort to compete with China, Germany and others in the clean technology marketplace.
A report out from Pew Research and Bloomberg New Energy Finance Tuesday morning found that because of an uncertain political climate, the U.S has dropped to third on the global list of investments in clean energy, behind China and Germany. The U.S. was the leader in clean energy investing back in 2008. With an uncertain political climate, investors tend to make their investments elsewhere.
The CEOs say the currently supported projects with the DOE loan program “represent an estimated 58,000 direct and indirect jobs across 19 states,” and the remaining not-yet-allocated loan guarantee commitments represent another 35,000 jobs.
Beyond urging Congress to continue financial support for the program, the CEOs asked the congressional leaders to support a logistical change that would allow companies with project applications in one section of the loan program (Sec. 1705) to be able to transfer those applications to another section (Sec. 1703). As Silver explained at the Cleantech Forum earlier this month, it could be easier to get loan guarantees out by consolidating the sections.
The DOE loan guarantee program has come under scrutiny over the past few months for its increasingly conservative terms, for its less-than-detailed electronic records, and for picking winners that haven’t seemed to be winning. Some question the government even having a program that picks winners and losers. But for the companies that have already built their businesses around it, it’s a crucial program.