Despite Solyndra failure, US energy loan program turns a profit

Remember Solyndra? When the solar panel manufacturing company, which received hundreds of millions of dollars in loans from the Obama Administration, went bankrupt in 2011, the company became a symbol of government dysfunction, cronyism and misguided spending priorities.

But now, the same office that was responsible for Solyndra — the U.S. Energy Department’s Loan Programs Office (LPO) — is attempting to prove that what happened with Solyndra was an aberration, not a sign of deeper dysfunction.

The department announced this week that for the first time since the program was created in 2005, to kick-start nuclear energy projects and other green energy technologies, it had begun turning a profit.

The announcement might provide positive political fodder for the Obama Administration, which had been put on the defensive after several companies that were part of the program, including solar technology company Abound and carmaker Fisker, also went under soon after receiving loans.

“We take our responsibility to protect taxpayer interests very seriously,” the program’s director, Peter Davidson, said in a statement. “The best perspective for assessing LPO’s financial performance is to look at the portfolio in its entirety. And, as a whole, the portfolio is performing very well.”

When Solyndra failed, conservatives like Tennessee Rep. Marsha Blackburn pounced on it as an example of government at its worst — taking public money and wasting it on pet liberal causes like solar technology.

“The time has come to end these subsidies and having the federal government trying to micromanage and pick winners and losers,” Blackburn said in 2011.

The LPO has lent about $34 billion to companies, from nuclear plants to solar panel manufacturers to energy efficiency startups. This is the first time the LPO has announced that it’s in the black. And if all its current loans are repaid, it could garner up to $5 billion for the federal government.

Since the announcement that the LPO program is profitable, critics have been mostly silent. Rep. Blackburn did not return Al Jazeera calls for comment. Nor did two of Solyndra’s biggest critics, Colorado Senator-elect Cory Gardner, and Illinois Congressman John Shimkus.

Supporters of green technology say the announcement shows that the federal government has a role to play in spurring the creation of new energy technologies.

“Overall, the DOE loan program has been an unquestioned success,” Ken Johnson, a spokesperson for the Solar Energy Industries Association said in a statement. “It provided important funding for a wide range of green energy projects and helped, in part, to make solar the fastest-growing source of renewable energy in America.”

Compared with venture capital firms and other lenders, the LPO looks financially sound, according to some analysts. It has lost only $780 million (thanks to Solyndra and a few other failures), putting its “loss rate” at 2.28 percent.

“People make a big deal about Solyndra and everything, but there’s a lot of VC [venture capital] that got torched right alongside the DOE capital,” Michael Morosi, an analyst with Jetstream Capital, a company that invests in renewable energy, told Bloomberg BusinessWeek. “A positive return over 20 years in clean tech? That’s not a bad outcome.”

But for some, one positive data point after almost 10 years in operation doesn’t scream success.

“If it continues to make money, great,” said Ryan Alexander, the president of the nonpartisan lobbying group Taxpayers for Common Sense.  “But given the scale of the commitments that get made, it’s too soon to say we have no concerns.”

Of particular concern for Alexander and others are loans several times the size of Solyndra’s, like an $8 billion loan made to a nuclear plant in Georgia at a time when the nuclear power industry is struggling.

For others, the problem with the program isn’t its dysfunction, but its very existence. While the program purports to support innovative technologies from small companies, over half its funding goes to nuclear plants and large companies like Ford, and NRG, one of the largest energy companies in the U.S., which has donated hundreds of thousands of dollars to politicians, including President Barack Obama.

“Why was a company that obviously doesn’t have a problem getting capital given access to capital through this program?” said Veronique de Rugy, a researcher at the libertarian Mercatus Center at George Mason University. “For years we subsidized oil and gas companies, and now we’re just subsidizing another kind of company. Why not just cut all subsidies to all energy companies?”