If the mainstream media has reported on the U.S. Department of Energy's (DOE) loan guarantees for advanced technologies, it's been about the controversy. Solyndra! But here's the news you probably haven't heard: the federal government loan guarantees will cost the American public about 46 percent less than originally estimated because many of the green tech companies are paying back the loans quicker than expected, according to one report.

U.S. Department of Energy (DOE) loan guarantees will cost Americans about $2.7 billion, down from the $5 billion originally estimated, Think Progress is reporting, citing Herb Allison, ex-national finance chairman for Sen. John McCain. The DOE had already recently forecast the loans, which were committed to companies that produced everything from wind farms to cellulosic ethanol and solar power plants, to cost about $3 billion. For comparison, taxpayers subsidized Big Oil to the tune of $70 billion between 2002 and 2008, Think Progress notes.

DOE loans towards clean-energy projects have been a divisive issue as the government looks to narrow its budget deficit and analysts and politicos debate over the dynamics of weaning the country off of fossil fuels. The Obama Administration's decision to delay its decision on the Keystone oil pipeline has caused many to criticize the president over what they see is his unwillingness to try to stem rising fuel prices by approving the pipelines.

DOE loans have also been a point of contention among start-up automakers looking for funding for alt-fuel vehicles. Last month, extended-range plug-in utility vehicle maker Bright Automotive shut down after accusing the federal government of taking too long to process its $400 million in loan requests. The future of Fisker Automotive, maker of the extended-range luxury sedan Karma, has also been called into question because of that company's inability to secure most of the $520 million in loans it was slated to get from the DOE.


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  • 19 Comments
      electronx16
      • 2 Years Ago
      "The Advanced Technology Vehicle Manufacturing program was supposed to provide up to $25 billion in direct loans to help companies both large and small pay for the costs of opening or retooling U.S. factories to produce more fuel-efficient cars and components". The fact that only five loans totalling $8.4 billion have been made, despite more than 100 applications while promising start ups like Bright Automotive were left dangling, facing ever more stringent demands until they died no doubt helped to keep cost down. Fisker seems to be facing the same problems: it was forced to introduce half baked products to meet stringent DOE demands and could die too as a result. Seems that being to concerned about cost/ risk made the whole program something of a disaster. No risk no gain!
        Spec
        • 2 Years Ago
        @electronx16
        I disagree. I think the companies need to have some track record, a clever new business model, or some brand new promising technology that they have invented which can change things in order to get funding. Just saying you want to build green cars is not enough. Solyndra ultimately failed but at least it had new technology & idea . . . creating inexpensive thin-film cylinders which were (supposed to be) cheap to make, get light from different angles, don't get covered by snow, wind resistant, etc. Envia offers a new battery chemistry. Tesla is creating EVs from the ground up as opposed to just conversions and has various new technology in them. If we just give money to anyone that asks, we are just asking for failure. If you want funding, you need to bring something to the table.
          Letstakeawalk
          • 2 Years Ago
          @Spec
          "Just saying you want to build green cars is not enough." It worked for Ford. They used their loans to re-tool factories to build ICE cars, albeit slightly cleaner and more efficient ones.
          EZEE
          • 2 Years Ago
          @Spec
          Exactly - vet the company - make sure they can pay back, check to see if there is something potentially there - then make the loan.
          electronx16
          • 2 Years Ago
          @Spec
          @Spec: So Bright didn't bring anything new and innovative to the table? Oh yes, it would have to compete against all those other plug-in hybrid aluminum vans on the market already. Here is an idea: lend the money to Nissan and Ford. Very little risk there. Of course they would have invested the funds anyway, but you will sure get your money back.
      Spec
      • 2 Years Ago
      That is great news. Now lets do another round of projects. There have got to be some good companies out there worth funding for another round.
      grantisgr8
      • 2 Years Ago
      Are we going to hear how much less was lost on Solyndra since the assets have yet to be sold off?
        marcopolo
        • 2 Years Ago
        @grantisgr8
        @grantisgr8 Sadly, when companies like this fail, the 'assets' realise very little. Solyndra was a surprisingly obvious failure. When the large Solar maker in the world abandons a 30 year old business, with billions invested, because it simply can't compete with PRC state supported, cheap manufacture, it pays to take notice. Just believing "big oil conspiracy theories, and thinking you can succeed where BP failed, results in ......Solyndra!.
          brotherkenny4
          • 2 Years Ago
          @marcopolo
          Some assets realise much less than original costs, otherers do not, land does not depreciate. An additional point that has not been clarified in the case of Solyndra was how much was actually spent. They had not completed the plant, so the cost to the tax payer was something less than $535 million to begin with, and then minus whatever can be recovered as assets. The fact that the press fails to be able to get their minds around this is more disconcerting than the fact that most americans will never be able to understand it.
          marcopolo
          • 2 Years Ago
          @marcopolo
          Just because Solyndra was bad news that no one wanted to happen, doesn't mean it didn't occur! It did, and taxpayer took a hit. That's what Venture capitalists and Banks face all the time! Business is risky, that's it's nature. Especially, businesses created to meet a sudden demand. It's of little value to shoot the messenger.
      PR
      • 2 Years Ago
      It would be interesting to factor in how much in energy savings this loan program will bring to tax payers over the life of the projects these loans supported.
      • 2 Years Ago
      If you read the report, it states numerous times that this exact type of calculation is inappropriate. For example, on page 28, it states that, "Neither the FCRA Methodology nor the FMV Methodology can be used to predict the eventual realized loss associated with any loan or loan guarantee or the Portfolio as a whole." Another example is on page 33, which states that, "To be clear, while the results of the FCRA Methodology represent reasonable estimates of the expected credit cost of the loan guarantee at the current time, this valuation methodology, like the FMV Methodology discussed below, cannot be relied upon as a predictor of the eventual performance of the Portfolio." Similar language appears throughout the report. For what it's worth, the FMV (fair market value) methodology predicts larger losses as a result of loan devaluation -- to the tune of between $5 billion and $6.8 billion right now. But that will almost certainly change over time, so again, it's inappropriate to use.
        Jason Allen
        • 2 Years Ago
        Well, it sounds like you've brought up a salient issue AB ignored, again. But one thing seems reasonable to assume now, that the magnitude of the numbers have been off by at least one. Even if we get to 8 billion it's still 10x less than 80 billion, an entire order of magnitude off. Which helps explain why all the shrieking we hear from the 'conservatives' are also off by AT LEAST an order of magnitude. 'Too much gubmint money in defiance of the free market' they yell while justifying the $70 billion minimum just given, borrowed and given to big oil, in defiance of the free market. There is no sanity or consistency from the 'cons'. Just ANY justification they can come up with to further their selfish bias. They shoot themselves in the foot and then blame others when it hurts!?!?
      wardialer
      • 2 Years Ago
      http://www.youtube.com/watch?v=tsRz-Zoc1Ac&feature=youtu.be the government shouldn't be picking winners... period. conflicts of interest always seem to arise when that happens. fisker is a bust. i called it early. the car is heavy, inefficient, overpriced, and can't even be reviewed 'cause its DOA. moreover it has absolutely NO competitive advantage from what i can observe.
        EZEE
        • 2 Years Ago
        @wardialer
        There may be conflicts of interest, back scratching, palm greasing - however, this is a loan program - LOAN - if the companies are properly vetted, and can pay the loan back - I don't see a problem. A grant of money - well, then there can be an issue people can take philosophically - but a loan? Meh.
      marcopolo
      • 2 Years Ago
      This is very good news for the American taxpayer and vindication of the wisdom of the policy of prudent incentives to provide wind in a time of economic doldrums.
      EZEE
      • 2 Years Ago
      Does this mean less money was given out than planned?
        pmpjunkie
        • 2 Years Ago
        @EZEE
        quote from the posting: " because many of the green tech companies are paying back the loans quicker than expected"
          EZEE
          • 2 Years Ago
          @pmpjunkie
          Well thank you! :) I didn't spot that in there. Personally, some people out there are bitching about the program, the cost, etc. - but as the Radical Right Wing Extremist - a 'loan' really doesn't bother me, as long as the company is vetted and can pay it back. It's a loan...
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