DOE’s Green Loan Programs Waste More Green than They Create

A decade after the creation of the Department of Energy’s (DOE) first program to stimulate green energy projects, the concept is projected to lose more money than it receives, leaving taxpayers holding the reusable cloth bag.

DOE’s loan programs were authorized by the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.  They were then dramatically expanded under President Obama’s “stimulus” bill in February 2009.  The department’s loan portfolio is split into two programs: Manufacturing of “Advanced Technology Vehicles,” and another for various technologies such as solar and wind.  DOE’s current portfolio entails 34 loans and loan guarantees supporting 30 projects. 

An April 27, 2015 Government Accountability Office (GAO) report revealed the full extent of DOE’s green fiscal fiascos.  Five companies defaulted on DOE loans, including infamous boondoggles like Solyndra and Fisker, along with Abound Solar, Beacon Power, and Vehicle Production Group, costing taxpayers a total of $807 million.

Putting aside the defaults, the general profitability of companies who have DOE loans has been lackluster, at best.  GAO estimates that taxpayers will eventually be on the hook for $2.21 billion. 

In November 2014, DOE boasted of its “strong financial performance” based on its offsetting of the impending costs with interest payments from the companies.  But DOE failed to calculate the interest it was required to pay back to the Treasury for borrowing the money in the first place.  GAO directly challenged that rosy assertion of profitability, saying the DOE’s incomplete projection was “misinterpreted in several press accounts as projecting $5 billion in profits for the DOE loan programs.” 

Administrative costs were also not factored into the equation.  From fiscal years 2008 to 2014, both loan programs spent $312 million on administrative support, which have yet to be offset.  GAO stated that “it is too early to tell” if DOE’s green loan programs will ever be able to fully cover the cost of even administering themselves. 

GAO’s focus on these loan programs is not new.  There have been numerous reports going back to the program’s inception warning DOE about the lack of cost controls and metrics for evaluating progress. The collapse of Solyndra helped lead to the designation of then-Energy Secretary Steven Chu as CAGW’s 2011 Porker of the Year.   

All of this fiscal misfortune underscores a more fundamental truth:  The mere fact that a company requires federal support to survive is an admission of that company’s lack of a market-worthy product.  It’s no wonder taxpayers lose millions of dollars propping up companies that produce products few Americans will actually use.

These loan programs were unwise in theory, unworkable in practice, and should be ended before taxpayers are placed in further fiscal peril.