Congressional commission investigating clean-energy loan promises
For the last two years, the Department of Energy has been offering a financial helping hand to clean-energy companies. Through the American Recovery and Reinvestment Act, the DOE billions of dollars in loans. Some of those companies did not grow as expected, and Congress is now questioning the decisions of the DOE.
Clean energy loans
The Department of Energy has been selecting various clean-energy projects to support through loan guarantees. Rather than directly giving the projects loans, the DOE has been providing federal guarantees for bad credit loans to these companies. These agreements basically say that if the company goes under or cannot repay their loan obligations, the government will make sure the lender receives payment. These clean energy loans went to a variety of projects, including solar power in Reno, Nevada, and Solyndra Inc. in California.
Solyndra Inc investigated by Congress
One of these clean-energy bad credit loan guarantees did not go as the DOE planned. The DOE promised about $500 million in guarantee money to help Solyndra Inc. secure financing for expansion into a second plant and hiring of about 1,000 additional workers. Solyndra also planned on making an initial public offering within a few months of the loan going through to help raise capital to pay back the loan. After an auditor warned that company did not have the revenue necessary to support the IPO and revenue did not outpace costs, however, Solyndra had to roll back its plans for expansion. The company has not closed, and the government has not yet been asked to pay back any of the $500 million loan guarantee. However, House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) has opened an investigation into the guarantee.
Wider investigation into stimulus money
The investigation into Solyndra Inc. is just the first in what the House Energy and Commerce committee expects to be a larger investigation into clean energy loans. Proponents of green-energy support from the government are pointing out that not every company that gets a loan guarantee can do well, just as every company that gets a traditional loan may not succeed. Opponents say that even though the government hasn’t yet had to put out any money, it should not be in the business of guaranteeing loans for green energy projects.