The U.S. Department of Energy may finally have something to brag about when it comes to its clean energy loan program. After years of criticism following some highly publicized defaults, the DOE has just announced that its loan program is actually generating profits for the American taxpayers.
The DOE's rocky road to turning profits
Over the years, the DOE has given roughly $30 billion in loans to clean energy companies to help them bring innovative cleantech ideas and innovations to market. And while many loan recipients have gone on to be key players in the cleantech sphere, some investments failed to pay off for the agency.
You may remember the Solyndra incident from a few years ago – in 2010, President Obama and Steven Chu publicly announced a $40 million investment in the solar company. Shortly after, the company declared bankruptcy. Opponents slammed Obama, Chu and the DOE, accusing them of wasting taxpayer money on pet projects. The loan program continued, despite the beating it took in the court of public opinion.
The DOE's fortunes appear to have changed. Greentech Media reported that over the last three years, the program has actually turned a profit for taxpayers even in the face of loud opposition. According to the news source, the government has received $30 million just in interest payments from loan recipients. Bloomberg Businessweek added that when all is said and done, analysts expect the program to net the taxpayers $5-6 billion as the loans are repaid.
"It's a portfolio that JPMorgan and others would be glad to hold," said John MacWilliams, a senior advisor to the energy secretary.
MacWilliams isn't exaggerating either. Businessweek found that the DOE's investment portfolio actually performed better than most venture capital funds in the clean technology space. While the DOE caught most of the flak for the Solyndra debacle, most other private investors also got burned by it and other failed cleantech ventures.
"A $5 billion return to taxpayers exceeds the returns from many venture capital and private equity investments in clean energy," said Michael Morosi, an analyst at Jetstream Capital LLC, a firm that invests in renewable energy.
The gains from the loan program have exceeded the losses thus far, keeping taxpayers in the black on their investments.
What the DOE's success means for the rest of us
Putting the political jostling aside, we can start to see what the success of the loan program actually means for home and business owners.
The stellar reductions in the cost of solar power and other clean technologies can be directly attributed to innovations in the technological, industrial and financial processes through which they are brought to market. Innovations that make solar panels easier and cheaper to make while making them more efficient means that we can make our homes and businesses cleaner and more efficient without breaking the bank.
Success begets more success. Now that the DOE's loan program is operating in positive territory, it should encourage more investments in the cleantech industry that put us one step closer to reducing our carbon emissions and our energy bills in one fell swoop.