(Reuters) - The controversial government program that funded failed solar company Solyndra, and became a lighting rod in the 2012 presidential election, is officially in the black.
According to a report by the Department of Energy, interest payments to the government from projects funded by the Loan Programs Office were $810 million as of September - higher than the $780 million in losses from loans it sustained from startups including Fisker Automotive, Abound Solar and Solyndra, which went bankrupt after receiving large government loans intended to help them bring their advanced green technologies to market.
The report’s findings are more of a political victory than a financial one. It took the program three years to break even after Solyndra’s failure, while during that same time the Standard & Poor’s 500 index increased 67 percent.
Still, the federal loans program is a success for taxpayers, judging by the numbers in the new report, the DOE said. After Solyndra’s 2011 collapse, the program was sharply criticized by Republican lawmakers as a waste of public money and a fountain of cronyism. The outcries mounted as others in the program failed, and the DOE issued no new loans between late 2011 and this year.
“Taxpayers are not only benefiting from some of the world’s most innovative energy projects... but these projects are making good on their loan repayments,” Peter Davidson, executive director of the Loan Programs Office, said in an interview on Wednesday. Davidson took over the loan program in May of 2013.
Under the program, the DOE issues a loan guarantee for about 50 to 70 percent of a project’s cost. The borrower then secures a loan from either the U.S. Treasury or a private lender. Most of the program’s loans have come from the Treasury, Davidson said.
The losses are not expected to rise significantly, while “every month money continues to roll in” from interest payments, Davidson said.
“We feel very confident that going forward our portfolio is much less risky than it has been,” Davidson said.
That is because most of the projects that received government loans are large power plants that are now feeding electricity into the grid, Davidson said. They include massive photovoltaic solar and solar thermal power plants in California and Arizona, wind farms and geothermal energy facilities.
Since DOE approved loans for the five utility-scale photovoltaic projects, 17 more have been funded by private investors who would not have taken on that risk five years ago, Davidson said.
“The loan guarantee program has been successful in bringing to market good projects with good credit support that absolutely would not have been built,” said a spokesman for NRG Energy Inc, an energy company that owns three solar power plants that received DOE loan guarantees.
The DOE’s loan program was created in 2005 under the Bush Administration, but its program for renewable energy projects was funded in 2009 as part of the Obama Administration’s economic stimulus, the American Recovery and Reinvestment Act.
The DOE also approved loans for next-generation vehicles that funded both the defunct Fisker as well as Tesla Motors Inc, which last year repaid its $465 million government loan 9 years early.
Of the $30.3 billion in loans and loan guarantees issued by the Loan Programs Office, $21.71 billion has been disbursed. At least one company has yet to draw down its DOE loan.
Solar wafer maker 1366 Technologies Inc was required under the terms of its loan to fund a small factory itself before it could tap its government money to finance a larger facility. It expects to break ground on that factory early next year.
In the meantime, the promise of the DOE loan guarantee gave private investors the confidence to put up nearly $90 million for the smaller facility.
“Those funds would not have been there if the DOE had not been there as a partner,” Chief Executive Frank van Mierlo said in an interview.
Losses make up 2.28 percent of the loan program’s total commitments, or 3.6 percent of the amount disbursed.
The government has not recovered any funds from Solyndra. It’s $528 million loan makes up most of the program’s losses.
The government recovered $53 million from Fisker, which received $192 million of its $529 million loan commitment. Fisker’s assets were acquired by Chinese auto parts producer Wanxiang in February for $149.2 million.
This year, DOE began lending money again. They have programs in the works that will support both renewable energy and fossil fuel projects. In February it approved $6.5 billion in loan guarantees to build two nuclear reactors in Georgia, and it issued a conditional $150 million commitment to help build a wind project off the coast of Cape Cod, Massachusetts.
Reporting By Nichola Groom; Edited by Ronald Grover and Ken Wills