DOE Plans On Wasting Another $4 Billion On Renewable Project Loans

Providing loans for renewable/alternative energy programs would, in a sane world, be a good idea. Unfortunately, as we saw with the previous loans, they were politically motivated and were wasteful

(Reuters) The U.S. Energy Department on Wednesday unveiled a plan for up to $4 billion in loan aid for renewable energy companies to help rejuvenate a program that faced harsh political attacks over past failures of federally subsidized projects.

The Obama administration’s draft plan would provide loan guarantees for innovative projects that limit or avoid greenhouse gas emissions.

It will specifically focus on advanced electric grid technology and storage, biofuels for conventional vehicles, energy from waste products and energy efficiency.

Again, research and development into these types of programs should be a good thing, regardless of the reason behind it. The endpoint would help all Americans.

“We’re back in business,” Peter Davidson, executive director of the department’s loan programs office, told Reuters. “We really want to go back to … doing very valuable work for our economy going forward.”

How’d their business work last time? 33 companies backed by the DOE failed, and that list was just through 2012, accounting for at least $10 billion. Many, like Solyndra, left vast environmental messes. And there have been more failures since, such as Fisker. The jobs created and the power supplied have been low, and, in many cases, the lands have been despoiled.

And 80% of the loans went to Obama backers.

These programs might be worthwhile if previous efforts didn’t show that the loans were quite often worthless, wasteful, and politically motivated. And, if the programs are so darned great, the private sector would be investing their own money heavily, hoping to make some serious money. Kinda says something when the private sector wants little to nothing to do with these programs, at least using their own money.

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2 Responses to “DOE Plans On Wasting Another $4 Billion On Renewable Project Loans”

  1. John says:

    The CBO has estimated that well above 50% of the loan guarantees to nuclear are at high risk.Also, the Congressional Budget Office has calculated that the risk of default on the DOE’s nuclear loan guarantee program, for example, is well above 50 percent.[21] In 2011, the CBO updated its study and replaced the embarrassing default rate with a list of variables affecting the rate.[22] While it doesn’t provide a specific rate, the report asserts that higher equity financing of these projects would reduce the risk of default. However, this is rarely the case, as most loan guarantee programs cover 80 percent of their financing through debt rather than equity.
    http://mercatus.org/publication/assessing-department-energy-loan-guarantee-program
    this is from a right leaning publication
    Venture capital investment IS risky. Anything better than 30% success in VC is considered good.
    Teach you also always seem to accept everything that you read at face value. You should ALWAYS look and see if this is just cherry picked numbers, i.e. what is the actual significance of these numbers.
    The “vast amounts” environmental mess if you read that article are actual as stated by the owner of the property to be UNKNOWN. Solyndra also represented about 01.4% of the DOE loan guarantees for that year. Also many of the companies that went bankrupt were in fact bought by other companies which then became liable for their loans

  2. Jeffery says:

    “And, if the programs are so darned great, the private sector would be investing their own money heavily, hoping to make some serious money.”

    And they do invest. And sometimes they win, sometimes they lose. Venture investing is risky business. Not all government grants result in positive results either.

    On the other hand, the loan guarantees, venture and equity investments, and grants, all stimulate the economy at a time when we need it.

    Should government invest in developing new technology? If the answer is yes; what’s the best mechanism? Invest in start-ups? Tax breaks? Or should the government create a new bureaucracy and do the work themselves?

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