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Clean Power DOE letter to senate committee outlines new energy loans

Published on April 6th, 2012 | by Tina Casey

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Energy Official Pens a Love Letter to Renewable Energy



DOE letter to senate committee outlines new energy loansWhen it comes to explaining the Department of Energy’s loan program for clean energy companies, David G. Frantz, acting director of the agency’s Loan Programs Office ain’t no Shakespeare but he sure has a way with words. In a letter yesterday addressed to Senators Jeff Bingaman and Lisa Murkowski, Frantz made a passionate case for the use of public funds to keep America competitive in the “fierce global race”  for new alternative energy technologies.

The global race for clean energy

Frantz’s letter was a response to a request for an update on DOE’s loan program from the Senate Committee on Energy and Natural Resources, of which Bingaman (D-NM) and Murkowski (R-AK) are Chairman and Ranking Member, respectively.

The money quote comes about midway through the letter when Frantz writes:

“From solar energy to wind to biofuels and more, the global market for clean energy technologies reached $260 billion last year and is growing rapidly.  Recognizing the enormous economic opportunities ahead, countries like China, Germany, and others around the world have established programs to provide government-backed financing for innovative technologies and companies.  Such support is crucial because private lenders are often unwilling or unable to absorb the risks associated with financing truly innovative or advanced technology projects at scale until such projects have been proven in the marketplace.”

A bipartisan clean energy investment program

Not so long ago, the need to invest public funds in high-risk new energy technologies was a concept that easily crossed party lines. Frantz is careful to note that the DOE loan program was a component of the Energy Policy Act of 2005 under President Bush, while his administration still enjoyed a considerable measure of support in Congress. Under the heading Section 1703, the loan program was specifically tailored to address new high-risk technologies for which private sector funding was unavailable.

Frantz also notes that the bipartisanship continued under the Obama Administration, when Speaker of the House John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) agreed on an additional $170 million in reserve funding to supplement Recovery Act funds that were set to expire, and a separate $1.5 billion loan guarantee authority.

Full speed ahead for DOE clean energy loans

The agreement has enabled DOE to forge ahead with the process under which more than three dozen project sponsors are seeking approval. On the very day that Frantz sent his letter to the Energy and Natural Resources Committtee, the Department of Energy notified the sponsors that they are still eligible for consideration. The total amount of loan guarantees for this group will not be determined until the assignment of a risk level for each of the projects, but Frantz states that the recent Independent Consultants Review of DOE’s loan program has found that overall its loan portfolio is strong.

Clean energy feathers in America’s cap

Frantz winds up his letter with a rousing defense of DOE’s role in establishing a globally competitive profile for U.S. clean energy technologies:

“Over the past three years, the loan programs have invested in some of the world’s biggest, most innovative, and most ambitious clean energy projects to date, supporting a balanced portfolio of American clean energy projects that are creating tens of thousands of jobs nationwide and are expected to provide power to nearly three million U.S. households.”

Clean energy for red, blue and you

In selecting a small number of DOE-backed projects to highlight, Frantz also makes the point that from a consumer and labor perspective, the benefits of clean energy cut across party lines. He cites the massive Agua Caliente project in Arizona, a state that is hardly known as a bastion of Democratic party power and the equally grand-scaled Caithness Shepherds Flat wind farm in Republican leaning eastern Oregon (Portlandia, for those of you keeping score, is set in western Oregon).

Frantz also describes a DOE-backed wind project in Hawaii that used components manufactured in Iowa and Texas before tossing in a couple of solar projects in California almost as an afterthought, then moving quickly along to list several states that have benefited from a boom in solar construction including Florida, Georgia, Mississippi and Tennessee among others.

Also of interest to those of you keeping score at home, Frantz’s background includes a long career in private sector project finance beginning with ten-year sting for Gulf Oil, as well as postgraduate work at the alma mater of both President Barack Obama and candidate-for-president Mitt Romney, Harvard University.

Image: Some rights reserved by charlottel.

Follow Tina Casey on Twitter: @TinaMCasey.

 

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About the Author

Tina Casey specializes in military and corporate sustainability, advanced technology, emerging materials, biofuels, and water and wastewater issues. Tina’s articles are reposted frequently on Reuters, Scientific American, and many other sites. You can also follow her on Twitter @TinaMCasey and Google+.



  • 1barbaradurkin

    Tracking investments in which I’m forced to participate as investor, 60%, I think the DOE has mismanaged my money they invested in Solyndra, Evergreen Solar, Beacon Power, Sun Power, Fisker, A123, EnerNOC, First Wind “Kahuku” wind project, etc., that has a $117 million loan backed by the public. This loan is for wind turbines under Trade Secret- they fail to function in Hawaii. UPC First Wind “Junk” rating wasn’t a red flag?

    Green bubble companies concentrated in Massachusetts, the self annointed US “incubator” for renewable companies, have entered the bust cycle, much like the Dot-Com bust of 2000-2001.

    Hawaii Free Press
    ‘Confidential Memo: Wind Turbine Model Installed at Kahuku has Structural Problems’
    http://www.hawaiifreepress.com/ArticlesMain/tabid/56/articleType/ArticleView/articleId/5604/Confidential-Memo-Wind-Turbine-Model-Installed-at-Kahuku-has-Structural-Problems.aspx

    Massachusetts Green Bubble Alert: First Wind-
    http://bjdurk.newsvine.com/_news/2012/04/01/10888055-massachusetts-green-bubble-alert-first-wind

    Massachusetts Green Bubble Alert: A123 Systems-
    http://bjdurk.newsvine.com/_news/2012/03/27/10887207-massachusetts-green-bubble-alert-a123-systems-aone

    Massachusetts Green Bubble Alert: Mass Tank partners with Goldwind of Xinjiang, China-
    http://bjdurk.newsvine.com/_news/2012/03/27/10888647-massachusetts-green-bubble-alert-mass-tank-partners-with-goldwind-of-xinjiang-china

    Massachusetts Green Bubble Alert: Flodesign-http://bjdurk.newsvine.com/_news/2012/03/27/10889807-massachusetts-green-bubble-alert-flodesign

    STAFF REPORT
    U.S. HOUSE OF REPRESENTATIVES
    112TH CONGRESS
    March 20, 2012

    ‘The Department of Energy’s Disastrous Management of Loan Guarantee Program’. The Congressional Report offers blistering criticism of crony capitalism behind Massachusetts’ companies Beacon Power and First Wind, “Kahuku”, loan guarantees that can be reviewed in the Report:
    http://oversight.house.gov/wp-content/uploads/2012/03/FINAL-DOE-Loan-Guarantees-Report.pdf

    According to US House of Representatives Budget Committee Chairman Paul Ryan ‘ Empty Promise of Green Jobs’ study, “The Costly Consequences of Crony Capitalism” 11/21/11:

    First Wind Holdings, received a $117 million loan guarantee in March of 2010. First Wind withdrew its initial public offering in October of 2010, due to a lack of investor demand. [11] According to the Boston Globe, investors shied away from the company because “First Wind owes more than $500 million, loses money on a steady basis, and reports a negative cash flow.”[12]

    “Empty Promise of Green Jobs”:
    http://budget.house.gov/News/DocumentSingle.aspx?DocumentID=261226

    Thank You,

    Barbara Durkin

    • http://cleantechnica.com/ Zachary Shahan

      Barbara,

      I imagine you have good intentions, but you’re off target.

      Try:

      Independent Review Finds DOE Loan Program Working
      http://cleantechnica.com/2012/02/10/independent-report-doe-loan-program-working-could-be-improved/

      Solar Fastest Growing Industry in US
      http://thinkprogress.org/romm/2011/09/16/321131/solar-fastest-growing-industry-in-america-and-made-record-cost-reductions/

      Wind Power Making Electricity Cheaper
      http://cleantechnica.com/2011/05/02/wind-power-is-making-electricity-cheaper-exxon-wind-to-be-cheapest-source-of-electricity/

      6 Things You Really Need to Know about Solar Power

      http://cleantechnica.com/2012/03/30/renewable-energy-facts/

      3.1 Million Green Jobs Across US

      http://cleantechnica.com/2012/03/23/3-1-million-green-jobs-across-america/

      Over 1 Million Jobs on West Coast from Clean Economy Transition

      http://cleantechnica.com/2012/03/16/over-1-million-jobs-on-west-coast-from-clean-economy-transition/

      2011 U.S. Solar Market Report — Top 7 Findings & Charts
      http://cleantechnica.com/2012/03/15/us-solar-facts-charts/

      We Lose the Clean Energy Race without Government Investments

      http://cleantechnica.com/2012/01/11/we-lose-clean-energy-race-without-government-investments/

      Clean energy, without a doubt, will become more and more central to the
      global economy in the years and decades to come. You want the US to fall
      behind in that race and in the global market?

      • 1barbaradurkin

        Zachary,

        Thanks for your response.

        If you were to elect to invest your money in renewables, I would wish you well. My independent investigation of Massachusetts renewable companies results indicate that Evergreen Solar and Beacon Power are the first green bubble business ventures to burst. The multiple companies I’m forced to invest in are not sustainable even with public subsidies in excess of 60% and more.

        I’m a fan of the free market. Especially in the context of wind energy that got its commercial start in the US as Enron Wind, Zond, purchased by GE’s Jeffrey Immelt, Obama’s advisor.

        GE petitioned the court for their money back as the value of the “Enron” “asset” wasn’t worth the price GE paid.
        http://articles.latimes.com/2002/nov/15/business/fi-wind15

        There’s a lesson here.

        One of the nation’s largest wind companies, UPC (First Wind), set up in China in 2006 in response to government support to companies like Goldwind of Xinjiang, China. Goldwind Xinjiang will continue to export wind turbine components to the US thru Goldwind USA, an office employing former First Wind staffers in Chicago, for the Goldwind of Xinjiang China company, who announced just profit losses of 78%.

        The renewables industry is acutely aware of favorable conditions in China where an engineer’s wage is $500 per month. China also controls 98% of the world’s supply of rare earth minerals used in the manufacturing of wind turbines.

        http://bjdurk.newsvine.com/_news/2011/07/04/7011643-hypocrisy-of-wind-energy-exposed-by-greenpeace

        Why is it that wind is not held to the standard of biomass as in MA that requires a life cycle analysis only for biomass? The wind lobby would prefer the public remains in the dark about the full life cycle of wind energy? There’s not one step in the rare earth mineral mining process that is not toxic to the environment according to Greenpeace toxic’s expert Jaime Choi, above link.

        There are more than 14,000 steel, concrete, and fiberglass wind turbines abandoned in the US. The fiberglass blades cannot be recycled. Concrete and steel processing are environmentally harmful as are the trucks’ emission and vessel trips from China to the US and UK to deliver components. It took 30 vessel trips from China to the UK to deliver 1/2 of the foundations for the 140 total offshore Gabbard project, now “sinking”, “shifting” and “corroding” as is the case with all offshore UK projects.

        The wind industry destroys more jobs that it creates and its benefits are perennially elusive. But its adverse impacts are measurable, actual and unacceptable.

        Why should we expect the product of the parent Enron will deliver public or environmental benefits, reliable or commercially reasonable energy?

        Thank You,

        Barbara

        • Bob_Wallace

          “The wind industry destroys more jobs that it creates and its benefits are perennially elusive. But its adverse impacts are measurable, actual and unacceptable.”

          Right here, I’m calling BS.

          Bring facts if you want that kite to fly….

          All your investment stuff – a valid role of government is to provide help to emerging technology. It’s how it’s worked in the past and it’s been a very major reason for our success as a country.

          Early stage, it’s really hard to pick the winners. If picking the companies which turn out to be successful was easy, even possible, then private money would be all over the task and there would be no need for public money.

          Some ideas seem good but until they are given a fair test, one doesn’t know. And some ideas are good but an ‘unexpected’ can emerge that makes them not-so-good ideas.

          Take a few minutes and do a time-limited search on Solyndra. Read what the financial media was writing back at start-up time. The consensus in the private sector that giving Solyndra loan guarantees was a good idea.

          No one foresaw the rapid price drop of PV panels. That’s what killed Solyndra – an unforeseeable and unexpected.

          How you feel about your ‘forced investments’ in computer? In satellite technology? In railroads and the electric grid? In the highway system?

          • 1barbaradurkin

            Instead of asking a citizen to defend a position on renewables as a generator of jobs, why not ask the renewable sector to defend jobs they claim their industry creates? for proof of emissions benefits the industry claims they lower? to demonstrate benefits the they claim to provide, like cost savings? And ask them to cite conventional energy plants the wind industry has taken offline? Until the evidence of the above is available and not industry furnished, wind energy is a faith-based initiative requiring 60% public investment to increase electric rates.

            I understand why this would be a very tough sell to the private sector.

            Why is the renewables sector not even sustainable with 60% public investment?

            And what’s “early stage” about wind energy that has been around since the days of Egypt? It still requires us to predict the weather with accuracy, and take the day off when the wind’s not blowing and the gas pump isn’t flowing.

            Wind energy is regression in socioeconomic, jobs and environmental terms. It works well when the objective is to shift public wealth to multinationals from the perspective of multinationals.

            ‘Green jobs, Santa Claus and Unicorn Land’

            http://bjdurk.newsvine.com/_news/2010/02/26/3954003-green-jobs-santa-claus-and-unicorn-land

          • Bob_Wallace

            Barbara – go play in your coal pile.

          • http://cleantechnica.com/ Zachary Shahan

            Barbarba,

            I already supplied information on green jobs in the first reply to you — did you ignore that?

            I just added emissions info in another comment. Please have a look. The study discussed in that link was conducted by a climate scientist and another scientist complately unrelated to the wind industry.

            Coal has been declining and renewables have been filling the gap more than anything else: http://cleantechnica.com/2012/04/02/natural-gas-vs-renewable-energy-growth/
            It’s clear you don’t spend a lot of time on our site. So, if you come here trolling our site, you might want to look around for the facts you claim you want to see before claiming the opposite is true.

            The evidence has been furnished. Are you going to change your mind? Probably not — you clearly have an agenda with wind energy that is not based in facts but in some sort of emotional reaction to them.

            As for your remaining questions and claims, they get even more out of touch with reality. Again, take a look at the subsidies link and other links above.

          • TomSparc

            The fact that you refuse to provide evidence for your claim re. “wind power destroys jobs!!!”, suggests you have none and know that your claim is false.

            Your claim that wind power is all some giant con trick is made to look like the ranting of a crazy person when we look at the growth of global wind power:

            http://en.wikipedia.org/wiki/File:GlobalWindPowerCumulativeCapacity.png

            China, in particular, is making massive investments in wind. How do you explain that other than with some crazy conspiracy theory?

            P.S. When you start off pretending to be a serious commentator and then offer an article that cites James Inhofe, amongst other crazy sources, then your credibility vanishes. You’ll need to produce something more convincing than Fox News talking points to fool people on this site.

        • http://cleantechnica.com/ Zachary Shahan

          Barbara,

          fossil fuels and nuclear have gotten subsidies for much longer than wind power, and continue to. historical subsidies don’t compare — wind has a ton more on the grid than anything else did at the subsidy level it is at: http://cleantechnica.com/2011/09/27/early-fossil-fuel-nuclear-energy-subsidies-crush-early-renewable-energy-subsidies/
          also note that wind is cutting back the $500 billion a year the US pays in health costs from coal.

          your thoughts on wind’s environmental downsides are misplaced, it’s like focusing on the fact that food is lost (goes rotten) in the fields, transportation, and stores. yes, this happens, but the net effect is positive. the net effect of wind is strongly positive. when it comes to greenhouse gas emissions, only solar PV, solar thermal, and nuclear compare: http://cleantechnica.com/2012/03/02/clean-energy-is-needed-now-climate-scientists-climate-economists-say/
          again, this misplaced focus is like complaining that the floor is filthy because of a single speck of dirt, meanwhile your (fossil fuel) floor is covered in mud. it’s not logical if you take one step of perspective.

          again, see the link above.

          as for jobs, you’ve got to be kidding me. in my several years of reading
          and writing about this topic, i have never seen that claim backed up with
          any facts at all. there are now about 70,000 jobs in the wind industry.

          • Bjdurk

            Zachary,

            I don’t see the value in wind energy from a financial standpoint, or an environmental standpoint.

            Senator Cornyn of Texas asked Congressional Research Service to evaluate subsidies for energy.

            Their findings-

            Federal subsidies for renewables are almost 50 times as great per unit of energy as federal subsidies for fossil fuels.

            Fossil fuels that gets about 13% of the federal tax support contributed about 78 percent of our energy production in 2009.

            Renewable energy gets about 77% percent of federal energy tax subsidies and contributes about t10.6 percent of our energy production.

            http://www.masterresource.org/2011/05/big-wind-sen-alexander/

            Nearly $2 billion in money from the American Recovery and Reinvestment Act has been spent on wind and 80% of that money went overseas.

            Americans fund renewables jobs in China and jobs in the US that cost up to $38 million-each.

            Investigative reporter Ira Stoll writes in Future of Capitalism of Boston-based First Wind and job cost::

            “First Wind Holdings LLC will get a $117 million loan guarantee from federal “stimulus” funds to finance the construction and start-up of a wind energy project in Kahuku, Hawaii, the federal Department of Energy announced Friday. Once complete, the project will create “six to ten” jobs, according to the Department of Energy.

            At $117 million, works out to a federally guaranteed loan of between $19.5 million and $11.7 million for each job created….”

            http://www.futureofcapitalism.com/2010/03/another-117-million-for-first-wind

            Wind farm costs Ore. taxpayers heavily
            PORTLAND, Ore. (The Associated Press) – Mar 14 – By TED SICKINGER

            “…Yet by any standard, the cost per job is enormous: $34 million per permanent position when all federal and state subsidies are tallied…”

            continue reading:

            http://washingtonexaminer.com/news/2011/03/wind-farm-costs-ore-taxpayers-heavily

            Oregon @ $34 million beats Massachusetts @ $19.5 million each green job cost

            http://bjdurk.newsvine.com/_news/2011/03/27/6354820-oregon-34-million-beats-massachusetts-195-million-each-green-job-cost

          • http://cleantechnica.com/ Zachary Shahan

            Again, that stats and info you have here is cherry picked.

            Look at historical subsidies — fossil fuels and nukes have been getting significant subsidies for generations. Compared to other sources, wind has more power on the grid compared to historical subsidies.

            Picking one year out of the hat doesn’t show the full picture.

            And yet again, the studies mentioned don’t account for health and environmental subsidies in the form of added social costs.

            As for jobs, there are over 100,000 solar energy jobs in the use, and approximately 75,000 wind energy jobs. Again, you’re cherry-picking numbers from one construction project. You need to look at the big picture.

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