Paving the Way for Renewable Energy Innovation

According to reports from 2013, the United States was the leader in oil consumption with an average use of 18,961 thousand barrels used per day. The second leader was China with 10,303 thousand barrels used per day. With reports of how oil consumption is harming our environment, the push for cleaner and renewable energy sources is becoming more of thing of now and not just of the future. There are many forms of renewable energy technologies that have become more and more cost effective and reliable over the past ten years.

There has been an increase in the total investment of clean energy from 2004 -2012 according to the US PREF (U.S Partnership for Renewable Energy Finance) from both the United States and from around the world. Clean Energy Policies have played a big part in driving a massive private capital investment.

New Clean Energy Investment

Investment was its highest back in 2011 and saw a sudden drop from both the United States and the World back in 2012. Even back in 2004, there was very little investment in renewable energy due to the risk that was involved.

The amount of investments and who invested changed however and some of this change could be credited to the Energy Policy Act of 2005.

This energy policy act established the Loan Guarantee Program from the Department of Energy. This program was created to help out investors and to accelerate the domestic commercial deployment of innovative and advanced clean energy technologies at a scale sufficient to contribute meaningfully to the achievement of the national clean energy objective. As the “Financing Force Behind a Clean Energy Economy” the DOE Loan Guarantee Program aims to create jobs, reduce the dependency on foreign oil, improve the United States environmental legacy, and help America’s competitiveness in the global economy of the 21st century. More specifically the DOE Loan Guarantee Program endeavors to:

· Encourage commercial- and utility-scale development and adoption of new or significantly improved energy technologies

· Fund innovative technologies which reduce greenhouse gas emissions

· Create jobs by financing the growth of commercial clean energy technologies

· Provide direct loans to eligible automobile manufacturers and component suppliers for projects that re-equip, expand, and establish manufacturing facilities in the U.S. to produce advanced technology vehicles and components for such vehicles

· Protect U.S. taxpayers by ensuring the loans and loan guarantees we provide have a reasonable prospect of repayment

The DOE Loan Guarantee Program helps to finance the growth of innovative clean energy technologies in these areas:

  • Biomass
  • Hydrogen
  • Solar
  • Wind and Hydropower
  • Advanced Fossil Energy
  • Carbon Sequestration practices and technologies
  • Electricity Delivery and Energy Reliability
  • Alternative Fuel Vehicles
  • Industry Energy Efficiency Projects
  • Pollution Control Equipment

Even though the DOE Loan Guarantee Program was created back in 2005, it did not start making loan guarantees till December 2010. Since that first agreement, the Loan Program Office has supported a large diverse portfolio of more than $30 billion in loans, loan guarantees, and commitments covering over 30 projects. Below is a map showing the locations of many of the projects in the renewable energy sector.

Locations DOE Loan Guarantee Projects

Here is a break down of what kind of technology the DOE Loan Guarantee Program invested in:

· 1 Biofuel Project

· 1 Energy Storage Technology

· 3 Geothermal Energy Technologies

· 11 Solar Generation Technologies

· 3 Solar Manufacturing Technologies

· 1 Transmission Technology

· 4 Wind Generation Technologies

Out off all the 24 renewable energy technology agreements that were made with the DOE Loan Guarantee Program, only two of the technologies supported were discontinued. One was solar manufacturing through Abound Solar who filed bankruptcy back in 2012 after receiving a $400 million loan commitment through the DOE Loan Guarantee Program. Abound Solar only drew $68 million of the $400 million and the amount to be recovered is still pending. The other one was also solar manufacturing through Solyndra Inc. who went bankrupt in 2012 after receiving a $536 million loan commitment through the DOE Loan Guarantee Program. Solyndra drew all of the $536 million and only $165 million has been recovered. Out of the 24 technologies invested in, 17 of them are currently generating energy through the use of renewable energy sources.

From the above technologies, the DOE Loan Guarantee Program financed the development of some groundbreaking projects.

In the Utility-Scale Solar Sector:

· Some of the world’s largest photovoltaic (PV) facilities: Agua Caliente, Desert Sunlight, CVSR, AVSR.

· The world’s largest solar thermal plant: Ivanpah.

· Created “Night-Time Solar” with world’s largest thermal energy storage: Solana, Solar Reserve Tonopah.

Onshore Wind:

· One of the world’s largest wind farms at Shepherds Flat.

The 1705 Program (which is the section for renewable energy technologies) ended back in the fall of 2011. All the technologies listed above had a mandate to be finished by this time. However, since the DOE Loan Guarantee Program ended there has been an increase in privately financed renewable energy projects. As seen below, the Ten Privately Financed Projects came to be in the Utility-Scale Photovoltaic Market in the United States after the program ended.

Increase in Private Investment after Program Ended

The DOE Loan Guarantee Program has also helped reduce the cost of solar energy.

With all this said however the United States has seen drop in the amount invested in clean energy investment. As seen by the graph below, the peak of the United States investment in clean energy was back in the end of 2010 and middle of 2011, right around the time that the DOE Loan Guarantee Program was active. There has since then been a steady increase Chinese investment in the global clean energy race.

It would be safe to say that the DOE Loan Guarantee played a part in the amount of investment going into the renewable energy sector. And with the United States needing to compete in the clean energy sector and more specifically in the renewable energy sector, the DOE Loan Guarantee Program has been reopened. It has recently open back up back in April 2014, seeking application for up to $4 billion in the renewable energy sector. This reopen will hopefully pave the way for other investors to come along side new innovative technologies that will increase the U.S footprint in renewable energy technology.

There has been some political backlash from many people in Washington however on how the program has done with the money that it has been given. This is mainly due to the Solyndra Bankruptcy, causing politicians to say that the program is not spending tax dollars very well and that the projects are risky. To sum up how the program did financially, the program since its creation has only lost $800 million in tax payers dollars — just two percent of the total $34.4 billion portfolio, and well with in the bad loan margin of just about any private bank.

Before the loan program started, the amount of investment going into the clean energy sector was very little. However it started to increase from 2004–2010 and saw its biggest year of invest in 2011 when the DOE Loan Guarantee program was active. The loan program took a risk to invest in new technologies and paved the way for other investors to come along side them. Overall the loan program offered incentives for investment and there has been an increase in private investment in technology ever since the closure in 2011. Now with its reopening, the hope to pave the way for more investment is bigger then ever.


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