“The FT writes, the Biden admin is rushing to award billions in loans to cleantech companies before Trump’s inauguration.” By Doug Sheridan

“ Our Take 1: The optics of so much money going out the door last minute aren’t good. Still, what matters is how much gets repaid. LPO heads point to its historically low loan-loss rate.”

The FT writes, the Biden admin is rushing to award billions in loans to cleantech companies before Trump’s inauguration. The DOE’s financing arm, the Loan Programs Office, has committed more than $38bn—half of all awards issued during Biden’s term—since Nov 5. Five of the new loan commitments are among the largest awards in the history of the program.

The acceleration of awards to clean energy companies comes amid concern the incoming admin plans to dramatically scale back or abolish the program. About $43bn in conditional loans already committed by the LPO could also be at risk.

The loan program, a central pillar of Biden’s industrial strategy, has been a frequent target of attacks by the GOP, who argue it is biased against fossil fuel projects, has failed to properly scrutinize loan applications and wastes taxpayer money. The threat to the office has already caused some companies to reconsider loan requests.

Formed in 2005, the LPO has served as a low-cost public financing alternative for nascent energy tech that struggles to get the backing of Wall Street. The office, which counts Tesla among its successes, was hit hard by the 2011 collapse of Solyndra, a solar panel manufacturer backed by a $535mn LPO loan, triggering decade-long attacks and investigations.

Companies have repaid the program $14.3bn and made interest payments of $4.9bn, according to the LPO’s most recent annual report. Estimated losses total $1bn, about 3% of total disbursed funds.

Of the LPO’s $108bn portfolio, approximately $43bn are in conditional commitments. According to its Nov update, the office has 212 active applications for funding, totaling $324.3bn in requests.

Under the first Trump admin, the LPO announced and finalized one loan, a $3.7bn expansion of a previous commitment to Vogtle, a nuclear plant in Georgia.

Some companies brush off concerns the LPO could be shuttered, citing the high volume of clean energy dollars headed to GOP-led states and escalating tensions with China, the dominant cleantech producer. More than half of the projects that received loan awards under the Biden admin were located in GOP-governed states.

Our Take 1: The optics of so much money going out the door last minute aren’t good. Still, what matters is how much gets repaid. LPO heads point to its historically low loan-loss rate. And it is true that 3% is in line with what one might expect given the nature of the borrowers. But there are rough seas ahead for cleantech and plenty of opportunity for another Solyndra-type failure to punctuate the news cycle. Stay tuned.

Our Take 2: We believe the energy transition as it is currently being defined and pursued by Western gov’ts will soon be universally recognized as having been a failure. But it won’t be because there weren't massive amounts of US gov’t financial support for most anything green. However you slice it, the Biden admin LPO has doled out some serious green scratch.