Threatened Solyndra Loan Program Gets Boost From Nuclear Deal

(Bloomberg) -- President Donald Trump has discovered a use for a green-minded federal loan program that's been widely seen as a candidate for the chopping block: supporting troubled nuclear reactors.

The Energy Department announced Friday $3.7 billion in additional loan guarantees to Southern Co.'s Vogtle nuclear plant, an unexpected lifeline to the last hope of a U.S. nuclear revival. The companies behind the project had previously received $8.3 billion in support.

The news is also a sign that the agency's loan programs office -- famously known for backing the failed solar manufacturer Solyndra LLC -- is still in the energy-financing business, at least for now.

“Alive? Absolutely,” Kenneth Hansen, a Washington-based partner at Norton Rose Fulbright LLP, said in an interview Friday. “Well? Remains to be determined.”

The office dates to the George W. Bush administration, and was an important part of the Obama administration's clean-energy strategy. It backed some of the first large-scale U.S. solar photovoltaic farms and helped advanced solar-thermal, advanced nuclear and molten-salt energy storage technologies. It's also been a financial success, granting 30 guarantees to clean-energy projects, with a loan-loss ratio of 2.3 percent. It expects to make a $5 billion profit for the government.

‘Corporate Welfare'

The office's future has been less clear since Trump won the presidency last year. Both the House and the Senate have crafted appropriations bills that would end the program, concurring with Trump's budget recommendation. The conservative think tank the Heritage Foundation says the office is tasked with “corporate welfare.”

Still, there's been some indication that congressional leaders are willing to explore continued support for this program, said Rich Powell, the Washington-based executive director of ClearPath Foundation, a conservative group advocating low-carbon energy.

Even the Energy Department isn't sure what's going to happen. While the program has funding for the coming months, “it will be up to Congress to determine the future of the loan program,” Shaylyn Hynes, a department spokeswoman, said by email Friday.

The Vogtle announcement didn't sit well with some conservatives.

“If the economics don't work at $8 billion in loan guarantees, I don't see how $11 billion is going to change that,” Tom Pyle, who led Trump's energy transition team, said in a text message Friday. “Let's fix the regulations and the tax code instead of throwing more money at the problem.”

The decision shows “there's still appetite for these types of programs -- unfortunately,” said Nicolas Loris, an energy fellow at the Heritage Foundation.

It also indicates that the White House may be recognizing that the loans have some benefits, said Peter Davidson, the former executive director of the program under then-President Barack Obama.

“They have come to agree with the Obama administration and the Bush administration that using the loan programs office to create new energy jobs and new innovative companies in the United States is a worthwhile goal,” he said in an interview Friday.

--With assistance from Ari Natter and Mark Chediak

To contact the reporter on this story: Brian Eckhouse in New York at beckhouse@bloomberg.net.

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Will Wade, Mark Drajem