Jigar Shah is a popular guy. He was mobbed at a Stanford University conference last month by companies interested in securing more than $100 billion in clean energy loans.
He is responsible for the Department of Energy’s Office of Lending Programs, which received a huge boost last year. Its existing programs for advanced vehicle manufacturing, tribal energy projects, and innovative clean energy projects, as well as new programs to modernize energy infrastructure and carbon dioxide transportation infrastructure, are being developed. ‘be mostly juice by the bipartisan Infrastructure Act and the Inflation Reduction Act.
But with great power comes great responsibility. Republicans are watching the money closely, preparing to take advantage of anything that goes south, like the DOE’s infamous $535 million loan guarantee for Solyndra in 2009.
This interview has been edited and condensed for clarity.
Compare the office to what it was under the Trump administration, both in terms of the amount of money you have to donate and in terms of the speed of the process. Will it be fast enough to make it worth it for people?
In terms of comparing the program to previous administrations, what I would say is that what this program really needed from the start was the confidence that it had the support of the entire government. You can imagine there was a lot of walking on eggshells after Solyndra, etc.
Now we average at least $7 billion in new loan applications per month. Let’s call it about 200 requests that we know people are in active dialogue with our office. I would say that today people are very comfortable believing that we are going to process their application fairly and that we will process it in a timely manner.
Do you have any specific plans to try to avoid another Solyndra? Or because there was only one failure, do you think the DOE was too conservative and should have made more bad bets?
There are several ways to answer this. In the first portfolio of projects that we approved from 2009 to 2011, we have about $32 billion in loans that we have made, and we have lost about $1.07 billion. So, in general, the loss rate was less than 3.4%, which is in line with commercial banks. And we separately earn $533 million a year in interest for US taxpayers. The program is now profitable. So there are a lot of people who tell me that we are not taking enough risks.
The second thing I would say is that after Solyndra, there was an extraordinary amount of feedback provided to the loan programs office. And we’ve implemented each of those suggestions, to the point that people inside are now telling us that we now have risk management practices that are as good or better than any other government lending agency.
Then as [DOE] secretary [Jennifer Granholm] suggests, we still have to take a lot of swings at bat. We will get wrong loans. There will be losses on some of the loans we make, but if the losses are around 3.4% of the portfolio, we think that’s very much in line with expectations.
What are the areas that you think are really well placed to address that the private sector would not?
Many coal and natural gas power plants are at the end of their life. And ESG funds don’t want to own those coal plants for even a week, even if what you’re doing is converting a coal plant to solar plus storage or a nuclear plant or a manufacturing plant. We therefore have a unique ability to finance this conversion in this new program 1706 That we have.
In general, our feeling is that all this energy infrastructure that we have built over the last 100 years and which supports a modern way of life for all of us, can almost all be reused within the framework of the energy transition to provide resources and additional income to these local communities and for these workers.
What kind of funding, whether by technology or by type of funding, IRA or bipartisan infrastructure law, do you think the public will notice first?
I don’t know if I’m qualified to answer the question politically, but what I would say is that for a long time we’ve been told here in this country that you can’t do great things, that you can we’re not building big things, that we can’t actually commercialize the technology here.
The purpose of the Lending Programs Office, but also of the DOE at large, with the resources it has received from [the Bipartisan Infrastructure Law] and [the Inflation Reduction Act], is to prove to mayors, to county commissioners, to policy makers that America can do great things, that we can build here, that we can market here, that we can create manufacturing jobs. And I think it takes time for people to gain that level of trust.
We obviously have some successes, but I think the more you see these factories being built, the more people are being hired, the more people are being trained for these high-skilled jobs, the more you see a lot of things in your community, I think the more people will trust that we can really do great things here.
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