Loan guarantees are one of the most effective tools available to the federal government, and are widely used by the federal government to support financing of projects that have substantial public value. The federal government manages a successful loan guarantee portfolio of approximately $1.2 trillion which, on balance, returns more to the Treasury than it costs the taxpayer.
Loan guarantees cost the taxpayers money when a company defaults. That’s collateral damage from the the Solyndra collapse, because the company had received one - with a good deal of fanfare.
Why offer loan guarantee at all? Well, they lower the cost of a loan, making it more plausible for a company to risk the considerable cash needed to erect a nuclear facility or solar array. And as Fertel points out, they are “are widely used by the federal government to support financing of projects that have substantial public value.”
By reducing the cost of capital, loan guarantee programs serve the public interest by accelerating the deployment of clean energy technologies at a lower cost to consumers.
Or, to be honest, anything that requires large loans to bring off successfully - shipbuilding, steelmaking and affordable housing, to name a few. The government recognizes the need and private industry does most of the heavy lifting.
I’ve seen the failure of Solyndra used as a whipping post for loan guarantees, renewable energy, the solar industry and green jobs. Ignore all of it. Solydra was a company that failed – we’ll learn more about why it failed as we go along and whether the government did adequate due diligence – but companies fail all the time. Even the federal government can back a bad horse sometimes.
The Energy Department has offered one conditional loan guarantee for a nuclear energy project, to Southern Co.’s Vogtle reactors in Georgia. The company’s exceptional financial strength and 30-year history of safely operating nuclear energy facilities make it a solid credit-worthy candidate for the DOE loan guarantee.
Southern Co. is different company, in no danger of failing and taking advantage of a loan guarantee to build new reactors at its Vogtle facility. The result will be a lot more electricity for Georgians – at minimal risk – and at a lesser cost.
Fertel has this subject exactly right. Read the rest at the link.
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Siemens has left the building, shuttering (most of) the nuclear aspects of its business. This is a major shift for the company:
"The chapter is closed for us," [Siemens head Peter] Löscher said. "We will no longer be involved in managing the building or financing of nuclear plants."
Siemens is international in nature, with a lot of its work in Europe and especially in Germany, where it had a hand in all 17 nuclear facilities there. The decision to shut all the nuclear plants there no doubt caused Siemens to rethink its options. This didn’t help, either:
An arbitration tribunal in May ordered the German company to pay €648 million ($927 million) to France's Areva after it failed to meet contractual obligations in a nuclear joint venture with Areva that it left earlier this year.
Although that could have been mitigated by this:
The nuclear exit would mean that the company would shelve a long-planned joint venture with Russian nuclear firm Rosatom, he [Löscher] said, adding that he still wanted to work with the Russian partner in other areas.
Just two years ago, the Munich-based conglomerate announced a venture with the Russian firm to build up to 400 nuclear plants by 2030.
No doubt there will be much more about this story. For example, the New York Times turned up this tidbit:
The Siemens decision does not amount to a boycott of the nuclear energy industry. A spokesman said the company would continue to make systems that could be used in nuclear power stations.
“We will provide conventional steam turbines that can be used for nuclear power plants and conventional power plants,” Alfons Benzinger, a spokesman for Siemens’s energy business, said Sunday.
Always wise to leave a crack open in the door.
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Chancellor Angela Merkel's authority is being undermined by leading members of her coalition partners, the FDP and CSU parties, who have openly challenged her policy on the euro. There is growing speculation that her coalition may collapse, prompting a return of the right-left grand coalition of conservatives and SPD.
Don’t ask me to try to explain German politics, but I do know that SPD are the Social Democrats. They are closest in nature to our Democrats. FPD are the Free Democrats and leans to the right fiscally and the left socially – sort of like what used to be called Rockefeller Republicans here, mostly from the Northeast, that held similar views. The CSU, Merkel’s party, are the Christian Democrats, closest to our Republicans.
Switching from a CSU-FPD to CSU-SPD coalition would be kind of goofy from an American perspective (though it would be closer to what we actually do have now when you think about it), but the result still would not be noticeably better for German nuclear energy. Whereas the CSU supported nuclear energy before the accident in Japan, the SPD took up that position while in power in the late 90s and got the ball rolling on closing the nuclear facilities. And that hasn’t changed. So, Siemens may see no way back.
Still, it provides an evil tingle to read this:
[A] January 2007 report by Deutsche Bank warned that Germany will miss its carbon dioxide emission targets by a wide margin, face higher electricity prices, suffer more blackouts and dramatically increase its dependence on gas imports from Russia as a result of its nuclear phase-out policy.
Evil, of course, because we don’t want any of this to happen. But so it goes.
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