Critics contend that the Dept. of Energy’s loan-guarantee and Advanced Research Projects Agency-Energy (ARPA-E) programs are a burden on taxpayers, but current and former DOE officials disagree, saying the programs will enable the U.S. to retain its leadership in an increasingly competitive global energy marketplace.
Since DOE’s loan-guarantee program was established in 2005 to help commercialize innovative energy technologies, it has helped to fund major solar, wind and other non-fossil energy construction projects. But House energy subcommittee Chairman Randy Weber (R-Texas) said at a March 3 hearing on the loan-guarantee program, “The federal government should get out of the way, focus our limited resources on research and development, and let the market drive investment for energy innovation.”
Mark McCall, executive director of DOE’s loan-programs office, said federal guarantees fill “a gap in the marketplace [to fund projects] that cannot access public debt financing.” He said many commercial lenders aren’t willing to invest in unproven technologies because of the potential risk.
The loan-guarantee program has had some high-profile belly flops, such as the bankruptcy of solar-cell manufacturer Solyndra, in 2011. But Gregory Kats, president of a venture capital firm and former DOE director of financing for energy efficiency and renewable energy, said that, as of October 2015, the loan program’s metrics were strong. He said principal repayment exceeded $5 billion, and the expected or actual loan default or loss rate was only 2%.
ARPA-E was launched in 2009 to assist potentially game- changing technologies that are not proven or fully tested and thus are unlikely to attract private investment to commercialize them. But ARPA-E has had successes. DOE said on Feb. 29 that small ARPA-E-funded projects had secured more than $1.25 billion in follow-on private investment.
DOE Secretary Ernest Moniz on March 2 said the Obama administration has “laid the groundwork” for ARPA-E to continue, whoever the next president is. “But in the end,” he said, “we will have to have a president and Congress who can work together.”