When 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.
Follow Tina Casey on Twitter: @TinaMCasey.
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