Loan Guarantee Flip Side: No Deal, No Jobs?

The Solyndra bankruptcy has turned a spotlight on renewable-energy companies and projects backed by federal government loan guarantees, with critics suggesting the U.S. Department of Energy (DOE) has been slipshod or even corrupt in putting taxpayers money at risk. But even as DOE Secretary Steven Chu was taking responsibility for key decisions in the Solyndra case this week, stories were emerging about companies that failed to receive support, with devastating economic consequences.

Through a spokesman, Chu told the news site Politico that in the early days of the Obama administration he pushed the DOE to “streamline” the loan-guarantee process that resulted in the Solyndra deal closing. Then, early this year, as Solyndra teetered on the brink, Chu backed a reworking of the loan deal that brought in additional private investors but also gave those private investors first dibs on Solyndra’s assets if the company crashed and burned.

loan guarantees, Stirling Energy Systems

image via Stirling Energy Systems

That is the story consuming Washington, D.C., but in Michigan, folks have other concerns. As the Detroit Free Press reports, the failure of several Michigan companies to receive the loan guarantees they sought has “quashed plans for a renewable-energy park at Ford’s former Wixom assembly plant, significantly delayed the building of a $300-million cellulosic ethanol plant in the Upper Peninsula and stalled efforts to build a $250-million solar cell factory in the Saginaw area.”

A similar story is unfolding in Piketon, Ohio (assuming you count nuclear power as renewable). There, the Columbus Dispatch reports, the company USEC announced it would slash its investment in a uranium-enrichment plant by nearly a third, and will let 450 employees in Ohio and elsewhere know that layoffs could be in the offing. The company applied for a loan guarantee three years ago, but hasn’t been approved.

Even in Arizona, where loan guarantees for the Solana, Agua Caliente and Mesquite solar power plants did close, the government’s unwillingness to back some big solar projects has been felt. Stirling Energy Systems had aimed for its concentrating solar power “SunCatchers” to be used at two proposed solar plants, Calico and Imperial Valley, that were being pursued by its sister company, Tessera. But Tessera, after applying for but failing to get loan guarantees for the projects, foundered. Sterling has now followed suit, the Wall Street Journal reports, filing for bankruptcy this week.

Sports columnist, newspaper desk guy, website managing editor, wine-industry PR specialist, freelance writer—Pete Danko’s career in media has covered a lot of terrain. The constant along the way has been a fierce dedication to knowing the story and getting it right. Danko's work has appeared in Wired, The New York Times, San Francisco Chronicle and elsewhere.