Despite the high-profile bankruptcy of solar panel maker Solyndra, the Department of Energy’s renewable energy loan program is officially in the black as of September and now expects to earn as much as $5 to $6 billion.
According to a report released last week by the Energy Department’s Loan Program Office, some $810 million in interest has already been collected on the $21.71 billion the program has loaned out so far. Solyndra and three other companies that failed after receiving funds from the program, meanwhile, accounted for $780 million in losses.
The $5-6B in projected earnings is calculated based on average rates and expected returns over the next 20 to 25 years. Michael Morosi, an analyst with Jetstream Capital, told Bloomberg Businessweek that that return is better than many venture capital and private equity investors, many of whom got burned by Solyndra along with the federal government, will see from their investments in renewable energy. “A positive return over 20 years in cleantech?” Morosi says. “That’s not a bad outcome.”
According to the LPO report, 20 projects that received funds from the program are already in operation, generating revenue, and have begun paying back their loans (some $3.5 billion in loan principle has been recouped so far). Tesla Motors is perhaps the biggest success of the program so far, and it paid back its loan of $465 million last year—9 years early.
The report does not shy away from its losses, however. Noting that “losses are also inherent in any lending portfolio,” it explains that “because the mission of LPO is to finance innovative technologies that have never been deployed at commercial scale in the U.S., the program was intentionally designed to carry some level of risk — and Congress specifically set aside funds to cover those losses when the program was established.”
While these numbers were initially reported by the LPO as constituting profits accruing to American taxpayers, however, the truth is more complex than that. Donald Marron, former acting director of the Congressional Budget Office, argues in a blog post that for the Energy Department to portray the repaid interest on its loans as profit is misleading, because it did not report the interest the Treasury Department has to pay on the money it borrowed from global investors in order to make the loans in the first place. Overall, the federal government is unlikely to make any profits on the loans. But then, that was never the intention of the program, anyway.
As Marron writes:
DOE’s lending programs should not be evaluated solely or even primarily based on their profitability or lack thereof. What matters is their overall social impact. How much are they advancing new technologies? How much are they reducing future pollution? Have they created jobs and economic growth? And are any gains worth the taxpayer subsidies? Those are the questions we should be trying to answer.
By that measure, the LPO is rightly touting its successes in helping launch the utility-scale photovoltaic solar industry, deploying next-generation concentrating solar power technology, and spurring growth of the electric vehicle industry. But it’s worth noting that the program also claims to have revitalized the U.S. nuclear industry and to have helped commercialize cellulosic biofuels, both technologies that have been criticized as not being true solutions to the problems of pollution and climate change that the program was ostensibly designed to address.
Still, the more than $5B in earnings mean the renewable energy loan program is nowhere near the boondoggle its detractors have made it out to be. Americans will remember Solyndra as the bogeyman of the 2012 presidental campaign, when Republican candidate Mitt Romney tried to use the company’s failure as a political cudgel with which to attack his opponent, President Barack Obama—or at least to distract attention away from his own record of outsourcing American jobs to overseas markets and downsizing companies to maximize shareholder profits in his days at Bain Capital.
Even today, in responding to news of the program’s solvency, Rep. Marsha Blackburn, a Republican from Tennessee, responded by echoing the same line of attack Romney attempted in 2012: “what we have seen is incredible mismanagement, and it’s become the poster child for crony capitalism.”
But as Katrina vanden Heuvel wrote in The Nation at the height of Republicans’ Solyndra frenzy:
Republican outrage rides on the insistence that Solyndra got the loan as political payback. But after a year of hearings, twenty-six witnesses and 187,000 documents from the White House, all Republicans have to show for it are some context-less quotes and a lot of baseless assertions.
By March, Congressman and Solyndra Grand Inquisitor Darrell Issa, was reduced to telling [Politico], “Was there criminal activity? Perhaps not. Is there policial influence and connections? Perhaps not. Did they bend the rules for an agenda not covered within the statute? Absolutely.”
As a Bloomberg Government analysis found, “The focus on Solyndra is not proportional to its impact.” Meanwhile, truly disturbing stories—from the rampant corruption at the Bush Minerals Management Service to Keystone XL’s coziness with the Obama State Department—drew comparatively paltry attention. Chalk up another win for the Republican outrage machine.
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