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Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking

By Jeff Spross  

"Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking"

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Credit: John Moore / Getty Images

The Department of Energy’s Loan Guarantee Program was started in 2005 under the Bush Administration, but ramped up thanks to the 2009 stimulus passed by President Obama and the Democrats. It has gotten a bad rap ever since the high-profile failure of Solyndra, one of the solar tech companies the program invested in.

But, of course, a certain amount of failures and losses just come with the territory of investments in new technology. And The Atlantic Wire reports that the latest numbers reveal the program’s successfully shepherded 28 companies with various renewable energy projects, while creating over 20,000 jobs. Throw in the Advanced Technology Vehicles Manufacturing loan program, and the total created jobs come to around 60,000.

The purpose of the program, which is no longer handing out new loans, was to help companies cross the “valley of death” — the point when a company’s debt is at a maximum, because it’s already spent money investing in capacity and research and development, but hasn’t yet seen enough success in the market to have the revenue to begin paying those loans back. The government guarantee then encourages private investors, who must ultimately make up at least 20 percent of the investment pool under the programs rules, to take the risk of backing the company. The government’s own contributions are also structured as a loan, meant to be paid back over time.

As The Atlantic Wire notes, that last point is especially important to remember. The loan program has paid out $26 billion in total, resulting in a less-than-impressive ratio of $1.2 million per job created. But that’s with the government’s expenditures all out the door, and the returns from the companies yet to come in:

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.

Obviously, the 20,000 jobs for $0 is an almost-certainly unattainable ideal, but that’s the direction in which the ratio is headed. And for the curious, here’s a map The Atlantic Wire compiled of the various projects and their numbers:

According to the Solar Energy Industries Association, the loan program has already brought one utility-scale solar project to operation, with ten more in the process of construction, in states such as Michigan, Kentucky, and Alabama. When they’re all completed, the eleven projects will supply over 2,700 megawatts — enough power to run roughly half a million homes. Another one of the loan program’s projects is expected to install 750 megawatts of solar arrays on commercial rooftops, across 28 different states.

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One Response to Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking

  1. Paul Klinkman says:

    Our Rhode Island state government made wonderful noises about funding both energy and high technology. Then a baseball pitcher showed up at our Republican governor’s fundraiser. He got all the money because baseball players make incredibly good CEOs of software companies.

    POP! $100 million of the state’s money was just plain gone, no intermediate audits had ever been taken of how badly the company was doing. The first sign of any problem was a bit of begging on knees just before the very end. Suddenly the company’s doors closed, and it was as if the company had never existed.

    Lets perform an autopsy here.

    First we see that governments always want to throw vast amounts of money at a supposedly too big to fail company. They never ever want to think small.

    Second, governments never want to look over the big company’s shoulder. They never want to say, “your company doesn’t have a prayer so we’re cutting our losses now.” A smart angel managing an embryonic startup would always watch her/his own wallet.

    With Solyndra we also see that Congress would never, ever stand up to the blatant monopoly predations of China, Inc., not even when their own national money was in the game. Far better to lose and then disingenuously blame it all on Obama, even if Junior Bush wanted to approve the same loan first. Apparently half of politics is about gratuitous blame these days.