Energy Department loan chief leaves a shored-up office
When Peter Davidson was hired as executive director of the Department of Energy’s Loan Programs Office two years ago, his was not an enviable position.
The controversial program had been operating without a fulltime director for more than a year, had made no financial commitments in some two years, and was still reeling from the fallout of a major fiasco: the bankruptcy of one of its major clients, the solar-panel maker Solyndra.
Now, Davidson, who resigned in June to return home to New York, is claiming success for a controversial loan program that supports technologies with the potential to transform the ways we use and produce energy, but with risks that can scare off commercial lenders.
And the numbers seem to bear him out..
The office’s portfolio of $32 billion covers more than 30 projects in the U.S., including several of the world’s largest solar-generating facilities, one of the biggest wind farms, the first manufacturing facilities for all-electric vehicles, and the first nuclear power plant built in the U.S. in decades.
Furthermore, the program has received more than $1 billion in interest payments and $4.4 billion in principal repaid so far. DOE estimates that interest payments could exceed $5 billion over the lifetimes of the loans and loan guarantees provided by the department.
The losses? First reported by DOE last fall, they total about $780 million, or less than 3% of the program’s financing. Most of that loss is attributable to Solyndra, which went bankrupt in 2011 after receiving a $535 million loan guarantee from the department.
“I’ve been in the banking business in my career, and I think that number is a very good number and fully competitive with the commercial sector,” Davidson said of the loss ratio in an interview. “I think putting that number out there has helped build our credibility.”
Solyndra, of course, became the poster child for congressional critics of the DOE loan program, who said it was proof that the government was recklessly putting taxpayers at risk for billions of dollars in projects.
“We were still dealing with somewhat of a negative perception in the press,” Davidson said of his arrival at DOE in 2013, understating the situation. “The Solyndra hangover was still there.”
Just days before he left Washington, Davidson watched over the award of $1.8 billion in loan guarantees to the Municipal Electric Authority of Georgia for the construction of two advanced nuclear reactors. It was the final installment of $8 billion in support for the $14 billion project at the Vogtle Electric Generating Plant.
Earlier this year, DOE offered a conditional commitment for a $259 million loan to Alcoa, for a plant in Tennessee where the company will manufacture highstrength aluminum for lightweight, more fuel-efficient vehicles.
Going forward, the program is offering another $40 billion in lending authority for breakthrough technologies in fossil energy, renewable energy, energy efficiency and nuclear power.
DOE hasn’t yet approved any applications under the latest solicitations. Davidson said the department has received $12 billion worth of proposals.