August 3, 2012

US House of Representatives committee passes bill

A key US House of Representatives committee adopted a bill to ban future loan guarantees after a string of bankruptcies among government-supported renewable energy projects.

By a vote of 29-19, the House energy and commerce committee approved the No More Solyndras Act, which would prohibit the Department of Energy (DOE) from issuing any loan guarantees for applications submitted after 31 December 2011. Projects submitted prior to that deadline would remain eligible, but would be subject to strict conditions, including increased due diligence, new transparency requirements and a ban on subordination of US taxpayer dollars to any other financing.

Congressional Republicans have accused the DOE of breaking the law by restructuring a loan guarantee to Solyndra to allow private investors to move ahead of the government to recover funds in the event of a default, so that the company could receive $75 million in emergency financing. But the Fremont, California-based solar panel manufacturer ultimately filed for bankruptcy anyway, costing US taxpayers $527 million. Abound Solar and Beacon Power have since followed Solyndra into bankruptcy.

“Both Congress and the administration identified ways to improve the Department of Energy Loan Guarantee Program to ensure that taxpayer dollars are protected and used wisely,” said Rhone Resch, president and CEO of the Washington, DC-based Solar Energy Industries Association. “Unfortunately, the bill passed by the committee disregards the significant economic and energy policy benefits associated with the programme.”

The DOE loan guarantee programme is providing crucial financing to support the construction of 11 utility-scale solar power plants in the Southwest that will add 2,700MW of capacity, he added. “These are financially sound projects with guaranteed revenue streams,” Resch said.

But opponents of the loan guarantee programme say the bill does not go far enough in protecting taxpayers because it grandfathers in several risky projects already in the pipeline.

“These grandfathered loan guarantees went through the same failed review process and are just as likely, if not more so, to end in default, just like Solyndra,” according to a letter by the Taxpayers for Common Sense Action, the Competitive Enterprise Institute, Freedom Action and The Nonproliferation Policy Education Center.

The measure has been reported to the full House of Representatives for further consideration, but Congress is scheduled to recess for the rest of the summer after this week.

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