Solyndra Was This Much of an Outlier in the Energy Department's Portfolio
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The latest data from the Department of Energy indicates that the same loan guarantee program which was roundly criticized after the failure of Solyndra has now created more than 20,000 jobs in clean energy, with several companies already paying back their obligations.
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The Department of Energy currently has a portfolio of 28 companies that have received a loan guarantee for clean energy projects. (For the purposes of brevity, we're including nuclear in that category for now.) According to the department's new numbers, those companies — which include some duds like Solyndra — have produced over 20,000 permanent and short-term jobs. All for the guarantee of about $26 billion. After Solyndra shut its doors, the company quickly became political shorthand for the failure of government investment. The truth is, as you might expect, far more nuanced.
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On its face, that sounds like a ridiculous return — costing $1.2 million per job. How much it should cost to create a job is itself open to debate. Depending on salary, benefits, infrastructural resources, etc., the cost is regularly in the six figures. But that comparison does not reflect how the process works.
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SEIA, the Solar Energy Industry Association, has a good overview of the loan guarantee program. Signed into law by President Bush in 2005, it was intended to reduce financing costs for large-scale energy infrastructure projects by offering governnment-backed loans, helping companies cross the bridge from venture capital-backed startup to being a robust actor in the marketplace. Recipients pay the loan back over time, using the guarantee from the government to woo private investors who must then comprise 20 percent of the investment pool. The initial loans from the government involve eye-popping sums — often in the billions — but it's structured as an investment, not a gift.
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The DOE has a portfolio of 28 companies receiving one of its two clean energy guarantees. Some of those companies, like Solyndra, have been failures. The vast majority have not. As the head of the program said in a letter to Congress:
Over the past three years, the loan programs have invested in some of the world’s biggest, most innovative, and most ambitious clean energy projects to date, supporting a balanced portfolio of American clean energy projects that are creating tens of thousands of jobs nationwide and are expected to provide power to nearly three million U.S. households.
Here's what those projects look like across the country.
And here's how it breaks down, by funded company.
But, again, those numbers are deceptive. The loan guarantee is often considered a cost, which it isn't. Some programs — like that wind farm out in Hawaii, are already repaying the loan, though it's not clear how much. Others, like NextEra Energy, never received the full loan amount. We are currently at the high point of the dollars-for-jobs-created ratio. Given the nature of the program, the amount the government is out is reduced gradually over time.
The calculation is only temporarily that 0.8 jobs were created for every $1 million spent. It is nearly as fair to say that the ratio is 20,000-to-zero. The loan guarantee program made possible a number of large-scale projects that might otherwise not have happened.
