Hilary Kao


In the year following the Fukushima nuclear disaster in March 2011, the renewable and clean energy industries faced significant turmoil— from natural disasters, to political maelstroms, from the Great Recession, to U.S. debt ceiling debates. The Department of Energy’s Loan Guarantee Program (“DOE LGP”), often a target since before it ever received a dollar of appropriations, has been both blamed and defended in the wake of the bankruptcy filing of Solyndra, a California-based solar panel manufacturer, in September 2011, because of the $535 million loan guarantee made to it by the Department of Energy (“DOE”) in 2009. Critics have suggested political favoritism in loan guarantee awards and have questioned the government’s proper role in supporting renewable energy companies and the renewable energy industry generally.

This Article looks beyond the Solyndra controversy to examine the origin, structure and purpose of the DOE LGP. It asserts that loan guarantees can serve as viable policy tools, but require careful crafting to have the potential to be effective programs. It concludes that the DOE LGP did not have consistent or achievable legislative directives nor did it have a reasonable timetable to implement its Loan Guarantee Program. Overall, projects supported by the DOE LGP are likely to remain a relatively low-risk portfolio (notwithstanding Solyndra and several outliers). This risk profile, however, reflects the DOE’s failure to meet some of its statutory goals, because the DOE had competing and contradictory Congressional directives, dooming the Loan Guarantee Program’s ability to succeed.