Solyndra who? DoE loans programme back in black

PVTech ^ | 11/14/2014 | John Parnell

[Prophet2520]

The US Department of Energy loans guarantee programme has made more from interest payments than it lost on failed companies such as Solyndra.

Figures released by the department this week show it is on track to make more than US$5 billion profit by the time it closes with US$810 million it has received to date, exceeding the US$780 million in losses from companies that defaulted.

[Timocrat]

My tolerance for endless, useless arguments today has already reached its limit.

Flounces off stage left !

[PieterCasparzen]

When computing these numbers they don’t take into account the cost to the treasury of borrowing the money to lend out to these solar companies i.e. borrowing costs to the government are not attributed to the program. Not exactly GAAP.

Of course the biggest favor to those who receive taxpayer backing for loans is MUCH lower interest rates.

If you wanted to build a solar plant in the desert, with the stated plan of generating and selling power over the next few decades, and you went to the corporate bond market...

investors would be mostly institutional investors, first of all. They would see tons of RISK in your plan. Energy prices typically keep climbing, but they could go down at times over the next few decades due to unforseen situations such as new discoveries. There can be population shifts, other new competitive energy companies can start up in that area; any number of things can "go wrong" with the profitability of such an endeavor.

Every business, over the span of decades presents a risk to a bond investor that the company will run into financial difficulty - even if their plans include no new technology.

New technology, of course, is very RISKy as an investment.

Accordingly, interest rates on the bonds or loans would have to be quite high in order to attract investment.

Assuming the deal can even be made, when looking at the P&L of the business, the Interest Expense line would be several times as big as it is with government-backed loans.

With government-backed loans/bonds, if the issuing company defaults on them, investors get paid by the US taxpayer. This makes them much more attractive as investments, thus they can have much lower interest rates.

[Prophet2520]

” One prominent economist notes that, if you include government borrowing costs to finance the loans, it puts “taxpayer losses in the hundreds of millions of dollars....”Sounds good, but a tiny footnote in the DOE’s report casts some doubt on the overall profitability of the green loan program, which has so far funneled more than $30 billion to finance renewable energy and alternative vehicle projects.

The DOE did not factor in borrowing costs incurred by the Department of Treasury in financing the green loans.”

This is potentially a legitimate argument. Though looking at this actual DOE page on it I cannot confirm or deny the allegations.
http://energy.gov/articles/energy-department-s-loan-portfolio-continues-strong-performance-while-deploying-innovation

More importantly it brings up a topic far more important than the alt. energy loans. The Treasury Department should NEVER have to pay borrowing costs. It prints money. Only the evil implementation of the FED allows for such nonsense bankster stealing from Americans.

[Prophet2520]

“But don’t expect an honest analytical response from Prophet2520”

“Talking to yourself is a sign of impending mental collapse.”

Do you EVER say anything of any meaning or is your wit limited to insults?

[showme_the_Glory]

I’m expecting a rebate any day now.........

[Timocrat]

You're right. Venture capital ( Which is what these companies are or were) requires a far greater potential return than say an investment in Exxon. Also a normal investment would require a sound Debt/Equity ratio, which was not present in Solyndras case See here

The abscence of a proper Debt/Equity ratio would mandate an even higher return to the bondholders or loan guarantors.

[Darksheare]

Yes.

Do you post honest pieces that aren’t environmentalist propaganda PAP or are you here to push the enviro agenda?
Also, since you seem to think this place is a waste of your time and everyone is “ignorant”, why are you here?

[WayneS]

Someone in the Obama malAdministration is lying...

...again.

[WayneS]

Right!

And therein lies the lie.

[WayneS]

OTOH, it’s VERY easy to claim one has made a profit when one does not count all of one’s expenses (not to mention counting as income money which has not yet as been collected).

When they computed their “profits”, they failed to take in to account the costs associated with having the U.S. Treasury borrow the money needed to make the loans.

That is a significant factor and it makes a big difference to the bottom line.

[facedown]

Also, since you seem to think this place is a waste of your time and everyone is “ignorant”, why are you here?

Same reason cogitator used to hang around here. Alinsky called them "facilitators". Their purpose is to shape "consensus" by massaging anyone who seems amenable to their purpose and ridiculing anyone who doesn't. IOW a troll.

[WayneS]

Yup.

Fortunately, not too many people here seem amenable to his purpose.

And we’ve been ridiculed before. I’m sure we’ll be ridiculed again in the future. We can take it.

[GeronL]

That is another reason the government should not be in the loan business, aside from all the freedom issues, it can print money.

If these loans were actually profitable, they would not need government ‘loans’.

[GeronL]

the article is pap

[Doulos1]

This is not the function of the federal government.
If the private industry wants to borrow money and
take the risk, well and good.
The federal government should just take from us what
they need to run the government to do those things
stipulated in the Constitution, like protect us
from invaders coming across our borders.

[Darksheare]

Yup!

[jazusamo]

It seems Prophet took a permanent vacation.

[Darksheare]

Vacation?
Oops.
Permaflounce off stage left did he?
Gee, that’s terrible.

Of course, enviro propaganda really irritates the heck out of me.

[dfwgator]

[dfwgator]

The Willie Green of Solar Panels.