Chu: DOE remains committed to loan guarantee program
Despite being caught up “in the most disappointing kind of politics,” Energy Sec. Steven Chu said recently that the U.S. DOE and the Obama administration remain firmly committed to the department’s loan guarantee program.
“We want to make very clear to everyone, in the building and across the country that we will not back down from our commitment to this program and the crucial work it does,” Chu wrote in an email to loan program staff on Sept. 30.
The DOE’s Loan Program has come under intense scrutiny from Congress following solar panel manufacturer Solyndra LLC’s Sept. bankruptcy filing. The company received a $535 million loan guarantee from the DOE in 2009. Some members of Congress are now claiming that the agency did not fully vet the company and rushed its application. The DOE has staunchly disputed those claims and has released an infographic detailing Solyndra’s application process, which dates back to 2007.
The DOE Loan Program was established in 2005 but did not issue a single loan guarantee until 2009. Jonathan Silver served as executive director of the program from November 2009 until Sept. 30, when he left the agency to join clean energy think tank Third Way as a Visiting Distinguished Senior Fellow. Chu said in a statement that Silver’s decision to leave the DOE was made in July, after the 2011 fiscal year budget made clear that Congress would not fund the 1705 loan program beyond Sept. 30. “Since he joined the department in 2009, Jonathan assembled and managed a truly outstanding team that has transformed the program into the world leader in financing innovative clean energy projects,” Chu stated. “Under his leadership, the loan program has demonstrated considerable success, with a broad portfolio of investments that will help American companies compete in the global clean energy market. Because of my absolute confidence in Jonathan and the outstanding work he has done, I would welcome his continued service at the department, but I completely understand the decision he has made.”
David Frantz will serve as interim director of the program and will be assisted by Deputy Secretary of Energy Daniel Poneman while the agency continues to seek a permanent replacement for Silver. Frantz has more than 25 years of worldwide experience in project finance and worked most recently at Overseas Private Investment Corp., where he led a team responsible for closing financial transactions focused on overseas investments and promoting economic development in new and emerging markets.
The Loan Program office oversees three separate programs— the 1703 program, the 1705 program and the Advanced Vehicle Technology Manufacturing loan program. In a Q&A published in the September issue of EPM, Silver highlighted the differences between the 1705 and 1703 programs and noted that while 1705 would expire on Sept. 30, the DOE retained $1.5 billion of authority under 1703 to provide loan guarantees.
No ethanol projects have received assistance through the 1703 program to date, but the agency was able to complete two cellulosic ethanol loan guarantees under the 1705 program before it expired. On Sept. 23, the agency finalized a $105 million guarantee for Poet’s Project Liberty, a 25 MMgy corn cob-to-ethanol project in Emmetsberg, Iowa. On Sept. 29, the agency cleared a $132.4 million guarantee for Abengoa Bioenergy Biomass of Kansas LLC, which will be used to support the company’s 23 MMgy multi-feedstock facility near Hugoton, Kan.
The 1705 program is supporting 28 projects, almost all of which are power generation projects, with total loan amounts of $16 billion. As of Sept. 30, the DOE had issued an overall total of more than $35 billion in loans, loan guarantees and conditional commitments.