Renewables groups oppose Loan Guarantee Program cuts

By Lisa Gibson
Posted August 31, 2010, at 2:33 p.m. CST

A recent dip into the U.S. DOE's Loan Guarantee Program funding has renewable energy groups feeling a bit neglected as it is the second time funding has been "borrowed" for other purposes, the first amount still not repaid.

President Barack Obama signed legislation that would allow a trimming of $1.5 billion for funding of emergency assistance to various states. A package containing the measure has passed in the House, but is waiting on Senate action. A letter to Speaker of the House Nancy Pelosi, D-Calif., outlining the detriments of such a measure was signed by representatives from the American Wind Energy Association, the Geothermal Energy Association, the National Hydropower Association, the Solar Energy Industries Association and the Biomass Power Association.

"This reduction in funding severely limits the DOE's ability to support the suite of renewable resources through the loan guarantee program," the letter reads. "Further, a solicitation for manufacturers of commercial renewable energy technologies has not even been released yet by DOE. The proposed cut makes it likely that manufacturers of commercial renewable technologies will not be able to take advantage of the DOE Loan Guarantee Program."

The first time funding was cut from the program was in 2009 for the Cash for Clunkers program. A total of $2 billion was trimmed from the $6 billion allocated in the American Recovery and Reinvestment Act to provide loan guarantees for an estimate $60 billion worth of renewable energy projects. With the latest rescission, $3.5 billion will have been cut from the program and many projects will go unfunded, the letter states.

"I think it puts a lot of the projects that either had applied or possibly could apply in additional solicitations at risk unless we get some of that money back," said Dick Munson, senior vice president of Recycled Energy Development and member of the BPA. In addition, the Loan Guarantee Program has four active solicitations for proposals of up to $47 billion, but with only about $25 billion left after both the cuts, he added. "There's a huge gap between what they're anticipating of $47 billion and the $25 billion that's currently available after you take away these funds for both Cash for Clunkers and the state aid package," Munson said.

The letter says the cuts will significantly undermine the Loan Guarantee Program and urges Pelosi to work with the Administration and Senate to reverse them and restore funding to the program.

"I think this is one of the potentially great renewable energy programs because biomass companies and others in this recessionary period are looking for financing and this program is the big one that's out there," Munson said. "By it consistently being raided and not having funds restored to it, as well as not having the Administration flag this as a program that they really need to accelerate and get projects through the due diligence process, I think we're really missing an opportunity to spur the renewable energy industry through this financing program."