DOE Program Propels Thriving Clean Energy Economy Industries
There is no doubt that the clean energy economy made massive gains in 2016. Wind surpassed hydro as the top renewable energy source, highly efficient LED lightbulb installations have more than doubled, and 1 in every 50 new jobs created in the United States was in the solar industry. The progress is clear and undeniable, but what might be less clear is how the federal government supported America’s economic and environmental success.
Tomorrow the House Committee on Science, Space, and Technology’s Subcommittee on Energy is scheduled to hold a hearing entitled “Risky Business: The DOE Loan Guarantee Program.” But this U.S. Department of Energy (DOE) program is anything but risky.
In fact, it has a strong track record of delivering critical industry support—providing the federal government with billions in new revenue, creating tens of thousands of direct jobs across a diverse portfolio of projects, and offering the essential support to lower the risks on projects that can make cleaner and cheaper energy a reality.
The DOE Loan Program Office has a clear mission that contributes to our national clean energy objectives through guaranteeing loans to innovative energy and technology projects. The significant clean energy progress we’ve made has been supported through this program in a number of ways.
Supporting a diverse portfolio of projects
The first commercial (“at-scale”) projects for new technologies often face substantial barriers to obtaining loans and financing—potentially preventing new, innovative, and improved technologies from becoming widespread. This is also known as the “valley of death” between research and development (R&D) and commercial operation and success. The hurdles new technologies face can prevent innovative and improved technologies from even making it out of the labs. The Loan Guarantee Program, through Title XVII, helps these projects get off the ground by providing loans and technical help across a diverse set of eligible energy resources, including advanced fossil energy, new and advanced nuclear, and renewable energy & energy efficiency projects.
In the last decade, the DOE’s Loan Program Office has provided around $22.5 billion in loans to 25 projects through Title XVII. Another $8 billion has been provided to 5 additional projects through the office’s Advanced Technology Vehicles Manufacturing (ATVM) program. The law that established the program requires approved projects to obtain at least 20 percent private funding. In addition to the $30 billion provided in loans and conditional guarantees across the entire loan program office, $20 billion has been invested privately in projects spanning from everything from transmission infrastructure to batteries and energy storage; utility-scale solar PV (photovoltaics) to advanced nuclear; and new technologies to improve the fuel efficiency of vehicles.
An economic and environmental success
Twenty of the 25 projects receiving loans through the Title XVII Loan Guarantee Program are already operating and paying off their loans (with interest!), creating employment and cutting carbon pollution. They:
- Have created 12,900 construction jobs and are expected to create an additional 1,500 permanent jobs;
- Will produce almost 29 million megawatt-hours of clean electricity annually—or enough to power 2.65 million homes a year and;
- Helped avoid almost 16.7 million tons of carbon dioxide (CO2) annually, which is close to the combined 2015 CO2emissions from the electric sectors in Alaska, New Hampshire, Maine, Rhode Island, South Dakota, Idaho, and Vermont.
While most generate clean electricity, three of the projects provide energy storage and transmission services, helping to integrate renewable energy into the electricity system and maintain grid reliability. Of the five non-operating projects, three are still under construction. The two discontinued projects, Solyndra and Abound Solar, garnered considerable press, but they are by no means representative of the program’s success or failure.
As of December 2016, revenue from interest payments from DOE’s full loan guarantee program have already hit almost $1.8 billion, with expectations to grow to $5 billion by the end of current loans.
This far exceeds the combined losses of $810 million from discontinued Title XVII and ATVM projects. Losses only represent around 2.23 percent of loan guarantee amounts and are substantially less than the $10 billion that Congress authorized for losses. Further, almost all of the other projects have long-term contracts with private buyers—helping ensure that these projects will succeed and pay off the outstanding loans.
Thanks to the Loan Guarantee Program, America’s clean energy economy is booming
One of the program’s biggest success stories is the rise of solar power. At the start of 2009, the nation only had 22 megawatts (MW) of installed utility-scale PV solar. The Loan Guarantee Program provided loans to the country’s first five utility-scale solar projects larger than 100 MW (100 MW of solar can power about 18,000 homes annually). All five of these initial “at-scale” plants are operating—helping prove the viability of large-scale solar in the U.S. and eliminating barriers to commercial lending for future projects. Thanks to the success of these first projects, another 45 large-scale projects, all privately financed, came online by September 2016 and three more have come online between September 2016 and January 2017. Another 83 privately funded solar farms greater than 100 MW are planned, representing over 20 gigawatts of new utility-scale solar (or enough to power over 3.6 million homes). These large projects have cropped up across the country, from California and Utah to Michigan, Wisconsin, and Iowa to Mississippi, North Carolina, and Georgia. These represent billions in new investments and tens of thousands of new jobs all over the United States.
For some additional context, the government forecasted in 2009 that solar would only grow to reach 140 MW by the end of 2015. Instead, the solar industry added around 14,000 MW of new solar energy in 2016, alone—a tenfold increase over the government projection. Federal and state policies supporting clean energy and the extension of the investment tax credit (ITC) that Congress passed at the end of 2015 are expected to drive even more builds in each of the next five years.
Loan guarantees supported by DOE have helped America become a clean energy powerhouse—both domestically and globally. Without the loan guarantees, this might never have happened at such scale. The extremely successful program supports projects that have created tens of thousands of jobs, generated enough clean power to support millions of U.S. households, and will bring in billions in new revenue for American taxpayers. Let’s not risk that kind of success by closing down a thriving program.