Politics is full of surprises, but this week gave a very nasty one in the form of sections 1425 and 3001 of the House Continuing Resolution (CR) now under consideration. These sections would abruptly eliminate the Department of Energy’s loan guarantee program for clean energy. Just like that. After the long hard fight we had for those same loan guarantees in the last two years, after we finally got loan guarantees for several large scale solar plants in the Southwest that would allow the solar industry to get its foot in the proverbial energy market door. This is not just a step back, this is ten steps back. If we cannot break ground this year on several of these large scale solar projects, it would deal a devastating blow to the US solar industry.
In the words of Arthur Haubenstock of BrightSource (about to break ground on the Ivanpah project): “It is a terrible threat to a fledgling industry”. Arthur thinks that Ivanpah itself may not be affected, depending on when Ivanpah can close financing, but it would certainly jeopardize other projects, such as Blythe, and send exactly the wrong signal.
An alarmed Senator Feinstein sent a letter to congress on Tuesday expressing her concern and strong opposition to these CR sections. She writes that “Five conditional loans already issues to renewable energy projects would have to be withdrawn, while 26 loan agreements with final term sheets in hand could never be completed”. These projects affect 35,000 US workers and $9billion in equity investment from the private sector.
Congress created the loan guarantee program in 2005 to assist large innovative energy projects that face great challenges in obtaining affordable long-term financing in the financial market. The total allocation since then has been $23 billion. This may sound like a lot, but for every dollar appropriated, the loans drive thirteen dollars of private sector investment. Other countries are supporting the renewable industry with similar guarantee programs. China, for example, provided nearly $37 billion in project financing last year through the China Development Bank.
What gets me also is that at the same time as these cuts, large loan guarantee programs are proposed to support nuclear development.
All in all, this is a shortsighted CR, which could hurt the US renewable energy industry, a lot. I’m following the debate anxiously.