Earlier this week, CNN’s Fortune interviewed Jonathan Silver – previous head of the U.S. Department of Energy Loan Program (November 2009-October 2011). Here is an excerpt from that interview, where Silver recommends a long-term federal green bank that would help promote scale and consistency.
How do you currently view the loan program’s performance? Leaving aside the politics and PR, do you believe the performance justifies renewal?
The program has been a significant success. That success has, unfortunately, been obscured a bit by some of the politics around the program. To date, something like 95% or 98% of the funds invested are money good. Less than 10% of the funds Congress appropriated to pay for loan losses has been tapped and several detailed , independent reviews of the program suggested that it would never tap the full amount (even in a worst-case scenario). Much of the technology and construction risk embedded in these transactions is now largely gone and nearly half the projects are already operational. The first few successes, like Tesla (TSLA), are now coming to fruition.
Markets will always have difficulty deploying innovative technologies at scale. Fundamentally, a program like this is necessary to address that market failure.
In an ideal world, the federal government would leverage these programs to create a long-term, self-sustaining infrastructure bank, to provide low-cost loans to innovative technologies on a consistent basis and on a schedule which reflects when both the technology and the company are ready. Other countries are already doing this and have provided meaningful funding for institutions with a much longer time horizon. That approach makes more sense than ours and we are at a comparative disadvantage as a result. It should not be easier to build a clean energy project, particularly with US funding, in India than in Indiana. Full interview available here.