• 10 hours U.S. Oil Production To Increase in November As Rig Count Falls
  • 12 hours Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 14 hours Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 16 hours EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 18 hours Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 19 hours Aramco Says No Plans To Shelve IPO
  • 3 days Trump Passes Iran Nuclear Deal Back to Congress
  • 3 days Texas Shutters More Coal-Fired Plants
  • 4 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 4 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 4 days Chevron Quits Australian Deepwater Oil Exploration
  • 4 days Europe Braces For End Of Iran Nuclear Deal
  • 4 days Renewable Energy Startup Powering Native American Protest Camp
  • 4 days Husky Energy Set To Restart Pipeline
  • 4 days Russia, Morocco Sign String Of Energy And Military Deals
  • 5 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 5 days China Set To Continue Crude Oil Buying Spree, IEA Says
  • 5 days India Needs Help To Boost Oil Production
  • 5 days Shell Buys One Of Europe’s Largest EV Charging Networks
  • 5 days Oil Throwback: BP Is Bringing Back The Amoco Brand
  • 5 days Libyan Oil Output Covers 25% Of 2017 Budget Needs
  • 5 days District Judge Rules Dakota Access Can Continue Operating
  • 6 days Surprise Oil Inventory Build Shocks Markets
  • 6 days France’s Biggest Listed Bank To Stop Funding Shale, Oil Sands Projects
  • 6 days Syria’s Kurds Aim To Control Oil-Rich Areas
  • 6 days Chinese Teapots Create $5B JV To Compete With State Firms
  • 6 days Oil M&A Deals Set To Rise
  • 6 days South Sudan Tightens Oil Industry Security
  • 6 days Over 1 Million Bpd Remain Offline In Gulf Of Mexico
  • 6 days Turkmenistan To Spend $93-Billion On Oil And Gas Sector
  • 7 days Indian Hydrocarbon Projects Get $300 Billion Boost Over 10 Years
  • 7 days Record U.S. Crude Exports Squeeze North Sea Oil
  • 7 days Iraq Aims To Reopen Kirkuk-Turkey Oil Pipeline Bypassing Kurdistan
  • 7 days Supply Crunch To Lead To Oil Price Spike By 2020s, Expert Says
  • 7 days Saudi Arabia Ups November Oil Exports To 7-Million Bpd
  • 7 days Niger Delta State Looks To Break Free From Oil
  • 7 days Brazilian Conglomerate To Expand Into Renewables
  • 7 days Kurdish Independence Could Spark Civil War
  • 7 days Chevron, Total Waiting In The Wings As Shell Mulls Majnoon Exit
  • 8 days The Capital Of Coal Is Looking For Other Options
Alt Text

Richard Branson To Invest In Elon Musk’s Hyperloop One

Britain’s Virgin Group boss has…

Alt Text

Chinese EV Boom Could Crash Oil Prices

Most oil majors acknowledge that…

Gloria Gonzalez

Gloria Gonzalez

Gloria is a writer for Environmental Finance.Environmental Finance is the leading global publication covering the ever-increasing impact of environmental issues on the lending, insurance, investment…

More Info

DOE’s Support for Clean Tech Sector Coming Under Fire Following Solyndra Failure

The collapse of solar panel manufacturer Solyndra has raised serious doubts about the legitimacy of the US Department of Energy’s (DOE) process for evaluating loan guarantees and its ability to successfully spend the remaining $10 billion earmarked to support clean technologies, observers said.

Fremont, California-based Solyndra, which designs and manufactures solar photovoltaic systems, filed for Chapter 11 bankruptcy on 6 September after failing to secure additional funds from the private sector to continue operations. Two days later, the Federal Bureau of Investigation raided the company’s headquarters and the homes of several Solyndra executives, for reasons as yet undisclosed.

In 2009, the DOE offered Solyndra the first loan guarantee for a renewable energy project, valued at $535 million, to cover debt financing for about 73% of the cost of building a solar panel fabrication facility in California.

In late 2010, Solyndra asked the department to increase its loan commitment because it was unsuccessful in its efforts to raise additional equity. The DOE refused and Solyndra sought a new $75 million emergency loan from its current equity investors. In order to avoid an imminent default by Solyndra, the department agreed in February to restructure its loan guarantee to give the investors repayment priority over the DOE.

Republicans slam Solyndra loan guarantee

In a contentious Congressional hearing on Wednesday, Republicans in the House of Representatives argued that the department erred in giving up the government’s primary recovery position, contrary to the plain language of the statute authorising the programme, which requires the DOE’s financial commitment not to be subordinate to any other funding sources.

Jonathan Silver, executive director of the Loan Programs Office, testified that DOE’s legal counsel signed off on the decision to restructure the loan guarantee.

“You didn’t have a very good lawyer and I think you got bad advice,” replied Stephen Scalise (R-Louisiana).

Several Republican members said the review process for the Solyndra loan was rushed due to White House pressure to promote its economic stimulus package. They also implied that the loan itself was made for political reasons, namely a financial contribution to President Barack Obama by George Kaiser, one of the company’s primary backers, which Silver denied.

US solar market flooded with Chinese imports, say Democrats

House Democrats and Silver blamed market conditions for Solyndra’s collapse, specifically the influx of Chinese-made solar products that has depressed cell prices by about 42% in the first eight months of 2011, Silver stated.

China has been the most aggressive country in supporting its clean-tech sector, providing more than $30 billion in credit to the country’s largest solar manufacturers through the government controlled China Development Bank, 20 times larger than the US investment, Silver said.

But several legislators also expressed concern that they were misled in July by Solyndra officials, who claimed the company was in a good financial position and would double its revenues this year. Solyndra’s chief executive officer and chief financial officer are scheduled to testify before Congress next week.

“I have no reason sitting here today to believe we were misled,” Silver said.

The DOE’s Section 1705 loan guarantee programme is set to expire on 30 September and staffers are working to complete all conditional commitments prior to the deadline. As of 12 September, 18 loan guarantees with a total value of about $8 billion have closed and another 18 projects have received conditional commitments totalling more than $10 billion.

“If the administration was so wrong about Solyndra after nine months of due diligence, how can it possibly exercise the proper controls when doling out $10 billion dollars in a matter of weeks?” asked Fred Upton (R-Michigan), chairman of the House energy and commerce committee.

Renewables development will suffer – IBM

The Solyndra collapse will affect whatever is left of the loan guarantee programme, but it also means that many other manufacturing technologies critical for renewable energy such as storage will not be developed, said Richard Corrigan, associate partner at IBM Global Business Services in Washington, DC, which served as a consultant on the DOE’s programme.

“If Solyndra has a real negative fallout, those technologies will not get money, either in grants or loans,” he said at a conference organised by ratings agency Standard & Poor's in New York this week. “They’re gonna suffer and that’s unfortunate.”

Recent solar bankruptcies in the US will make it difficult to successfully argue that the loan guarantee and other government subsidy programmes should be extended, market experts said.

“One will need to convince lawmakers that the circumstances around these failures can be explained and we’re going to design the next generation of programmes to avoid this,” said Jean-Pierre Boudrias, director of the energy group of the investment banking division of Credit Suisse Securities in New York.

By. Gloria Gonzalez

Source: Environmental-Finance

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News