Lack of federal loan guarantees slows alternative energy development

A solar cell manufacturing factory near Saginaw, a cellulosic ethanol plant in the Upper Peninsula and a renewable energy park at the former Ford Wixom Assembly Plant are among the Michigan alternative energy projects that say they have been delayed because they haven’t been able to secure expected federal loan guarantees.

The Detroit Free Press reports that the stalled projects, if actualized, would bring $1.2 billion in new investment in the state and more than 3,800 potential jobs.

Production that was supposed to start late this year [at the Ford Wixom renewable energy plant] has been delayed as Clairvoyant Energy and Xtreme Power, the companies behind the project, are still trying to line up the financing needed to buy the 320-acre property. So far, they have not succeeded in obtaining a loan guarantee from the U.S. Department of Energy.

David Hardee, Clairvoyant’s CEO, said the companies hope to complete the purchase of the plant at the end of this year, 12 months behind schedule. The firms are seeking loans from several banks in case they don’t get the loan guarantee. The first phase of the $600-million project will require investments of $250 million.

“Everything’s on track in Wixom,” Hardee said, noting that the companies have received the state environmental permits required for the deal.

The Free Press reports that clean energy companies feel they need federal loan guarantees because it is difficult to find private investors willing to fund expensive new technologies without a track record of success. But some are frustrated with the difficulty of obtaining government backed loans.

Last year, the U.S. Government Accountability Office examined the loan guarantee program and found that the Energy Department “has treated applicants inconsistently, favoring some and disadvantaging others.”

The lengthy approval process for the guarantees also has caused frustration, prompting eight renewable energy trade groups to send Energy Secretary Steven Chu a letter in September that expressed their concerns.

“It’s been difficult for companies,” said Martin Dober, the Michigan Economic Development Corp.’s senior vice president of entrepreneurship and innovation. “You can put a lot of time in this process and not come up with a good result.”