A 'green bank' for renewables

The notion of a “green bank” to fund renewable energy projects (as we wrote over the weekend) is hardly new. As Paul Dickerson, an attorney with Haynes and Boone and former Chief Operating Officer of the DOE’s Office of Energy Efficiency and Renewable Energy told us, the idea has been kicked around Washington, D.C. for several years.
“It started with the realization that we could quickly put federal dollars to work on a cellulosic ethanol plant so long as it wasn’t in the United States,” Dickerson said, referring to the Overseas Private Investment Corp., a federally backed program that helps U.S. businesses invest overseas. The OPIC model is part of the inspiration for the “green bank” effort.
“The capital costs of a pilot cellulosic ethanol plant can be cost prohibitive for venture capital investors and too risky for private equity,” Dickerson said. “So it’s the perfect candidate for a government loan guarantee that can help push that technology to market. If we as a nation care about creating our own fuels, we need to stand behind such efforts.”
A U.S. solar panel manufacturing plant would also be a good use of green bank loans, as well as businesses building advanced electric vehicle batteries, Dickerson said.
“Outsourcing the warranties for lithium ion batteries for the domestic car fleet would be a good use of fund since right now the U.S. auto industry is unable to shoulder that risk,” Dickerson said.
Doesn’t the Department of Energy already make such loans? Sure, but it took nearly three years for a program started in 2005 to make its first loan to a solar manufacturing project in California earlier this year. Most businesses can’t sit around that long waiting for a yeah-or-neigh on funding.
Of course, some parts of the renewable energy business were going great guns before the economic downturn and credit crunch that started last year. In Texas, for example, wind power projects were being put up in West Texas at a steady pace through 2007 and early 2008. Indeed Texas kept the top spot in the U.S. for wind power while Iowa bypassed California for the No. 2 spot, according to the 2008 industry update from the American Wind Energy Association. But there were plenty of areas where Texas was missing out, said Dickerson, particularly solar energy.
“This collective pause or stutter-step in the market has actually created an opportunity for Texas to get into the game,” Dickerson said. “The reason I came back to Houston after leaving the DOE instead of New York is I can see a steady migration to Texas of established clean technology projects and companies in the coming years. It’s become Texas’ game to lose.”

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