These six banks submitted comments to DOE on the Title 17 loan guarantee program in July of 2007 that resulted in much more favorable terms for lenders. Soon after, the financial crisis hit the US, and demonstrated that the banks had not done such a good job managing risk even in their own operations. This chart illustrates how they fared; an "X" means the bank ceased operating as an independent entity.
The goal of the Department of Energy's Loan Guarantee Program (Program), as defined in the Energy Policy Act of 2005, is to provide Federal support, in the form of loan guarantees, to spur commercial investments in clean energy projects that use innovative technologies. The Department estimates that the Program, one of the largest of its kind in U.S. history, can guarantee at present up to $71 billion in loans.
DOE has taken steps to implement the Loan Guarantee Program (LGP) for applicants but has treated applicants inconsistently and lacks mechanisms to identify and address their concerns. Among other things, DOE increased the LGP’s staff, expedited procurement of external reviews, and developed procedures for deciding which projects should receive loan guarantees. However, GAO found:
Government involvement in financing large scale energy projects has a checkered past. Historical forays into loan guarantees for biofuels and syn-fuels have been expensive failures. Large hydroelectric dams and federally-owned uranium enrichment facilities were built and operated as government-owned entities, though not without substantial subsidies. Title XVII of the Energy Policy Act of 2005 initiated a new wave of multi-billion dollar federal loan guarantees to large scale, high risk, privately owned energy infrastructure.
Formal comments outlining market distortions and structural weaknesses in DOE's multi-billion dollar program to subsidize favored energy technologies. Authorized under Title XVII of the Energy Policy Act of 2005, the program creates a huge potential windfall to the nuclear sector. Also accessible on DOE site. (July 2007).