Timeline Revealed for DOE Loan Program: Don't Get Your Hopes Up

Updated to include quote from DOE’s David Frantz: Energy Secretary Steven Chu wanted checks cut in four weeks. Today, the director of the Department of Energy’s much-delayed loan guarantee program for clean energy technology, David Frantz, revealed what he sees as a realistic timeline: In testimony today before the Senate Energy and Natural Resources Committee, he said that while the program will begin disbursing loans this year, guarantees for projects that require environmental impact statements will not go through until 2010. This means more waiting for the program’s first round of 16 finalists, including Solyndra, Beacon Power and Tesla Motors (which has also requested low-interest loans under a separate DOE program). Update: Frantz added that for the handful of projects that have been placed in the fast-tracked group (which includes all three of those companies), “[T]hose projects can go through the process in just a few months, from due diligence to funding or issuance of a guarantee.”

Frantz acknowledged that the program “faced challenges in its first few years,” referring to a lack of support from Bush administration officials. But that’s changed. With a new team in the White House, he said the program has “a new sense of energy to make these decisions.” Nonetheless, he added that more delays could ensue if new funding requests for the program are not approved by next month.

The last administration’s Assistant Secretary for Energy Efficiency and Renewable Energy, Andy Karsner, said the loan program — and the DOE at large — face bigger problems than money. Karsner advocated for the creation of a clean energy bank — a new government entity that could relieve the DOE of responsibilities it was never meant, and is not equipped to handle: namely, the actual rollout and financing of technology. “The guts of what we do at the DOE well is science and technology,” he told the Committee. Once things get out of the R&D phase, he said, the DOE is “handcuffed” by its position as a civil service agency.

Kevin Book, a senior analyst for Friedman Billings Ramsey & Co., agreed on the question of competence. You can’t expect scientists to be financiers, he said, and “you certainly can’t have the bankers become the scientists.”