Study: US Could Lose $2.7B on Clean-Energy Loans

(NewsCore) - The US government could lose $2.7 billion as a result of the loans and loan guarantees it offered to clean-energy companies, according to a White House-commissioned study carried out in the wake of Solyndra LLC's bankruptcy.

The Obama administration, which has defended its aid for clean energy in the wake of the solar-panel maker's demise, said the estimate was in line with its own projections.

Republicans have attacked President Barack Obama over the Department of Energy loan program, saying it wasted taxpayer dollars and put too much faith in unproven technologies. Solyndra closed in September after receiving $528 million in US government loans.

The White House in October acknowledged the need to review the program and ordered an independent analysis by Herb Allison, a former Merrill Lynch & Co. president who had served in the Bush and Obama administrations.

Allison's review, released Friday, depicted the Energy Department's process of making and monitoring loans as sometimes poorly organized and lacking in oversight, though he didn't discuss any specific decisions regarding Solyndra.

To improve the odds that taxpayers get paid back, the department should create a new position of chief risk officer and make sure individual managers, not committees, are held accountable for decisions, the report said.

The Energy Department has committed to provide more than $23 billion in loans or loan guarantees to companies in solar, wind and other clean-energy areas, but it has dispersed only $8.3 billion so far. A loss of nearly $3 billion would represent 12 percent of the total program at the department.

Republicans stepped up their criticism of the program following Allison's report. "When taxpayers are the ones paying the price, this sort of managerial soul-searching should take place before billions of dollars are doled out, not after," said Rep. Fred Upton (R-Mich.), chairman of the House Energy and Commerce Committee, which is investigating Solyndra's loan guarantee and the broader program.

Energy Secretary Steven Chu said in a statement Friday that it was "very likely" other companies backed by the government would fail, given the inherent risk of backing new technologies, but "the vast majority of companies are expected to pay the loans back in full, on time, and with about $8 billion in interest."