Top U.S. renewable energy investors defend DOE loan guarantee program as being rigorous in its review process, should not be foiled due to Solyndra's fall; agency has until Sept. 30 to decide on US$8.9B in loan guarantees
September 22, 2011
– The U.S. Dept. of Energy’s (DOE) loan guarantee program for renewable energy was defended recently by some top private equity firms that have participated and found the review process “robust” and even more complex than the private sector’s, reported Reuters on Sept. 21.
DOE’s due diligence was “probably the toughest” ever experienced by those who participated, said Neil Auerbach, a managing partner at Hudson Clean Energy Partners, at the Retech renewable energy conference in Washington on Wednesday.
The program has come under increased scrutiny in an investigation by Republicans following the fall of California-based solar panel maker Solyndra LLC, which was awarded a US$535 million loan guarantee in 2009, Reuters reported.
In a letter to Energy Secretary Steven Chu on Tuesday, Republicans on the House Energy and Commerce Committee indicated their concern about DOE rushing to meet deadlines for approving further loan guarantees “before they are ready.”
By Sept. 30, the DOE has to decide on $8.9 billion in loan guarantees for 14 pending renewable energy projects, reported Reuters.
The DOE might have become stricter as officials applied lessons learned during the early projects, said Auerbach, whose fund backed California-based SoloPower Inc., which received a $197 million loan guarantee this year to construct a solar manufacturing plant in Wilsonville, Oregon.
So tough were the agency’s conditions that one of the fund’s portfolio companies, California-based Calisolar, decided to seek other financing, Auerbach said.
Solyndra was the first to receive a loan guarantee in the DOE program, Reuters reported.
The agency’s oversight was called “rigorous” by Ed Feo, a managing partner at USRG Renewable Finance, which has a borrower who considered the level of due diligence “maybe a little too extraordinary in terms of the amount of digging.”
In early September, USRG and SolarCity Corp. received a conditional loan guarantee for the California-based company to install solar panels on military housing throughout the U.S.
Solyndra’s collapse should not be clamed on DOE’s loan guarantee program, but rather on all of the investments, Feo told the conference, reported Reuters.
The primary source of this article is Reuters, London, England, on Sept. 21, 2011.