As the federal budget battle continues in Washington with billions of dollars on the chopping block, one program marked for significant cuts could mean the difference between eight renewable energy companies setting up shop in Nevada or not.
One of those is Fulcrum Energy, a company planning a facility in Storey County that would convert household garbage into 10.5 million gallons of ethanol fuel a year. The project is estimated to cost $120 million and has been conditionally approved for an $85 million loan guarantee from the U.S. Department of Energy to help the company attract private investors to fund the company's nascent, and therefore, inherently risky technology. Fulcrum and seven other companies in Nevada still are awaiting approval for their loan guarantee, according to the Center for American Progress, a Washington think tank.
But all that could fall apart, said Ted Kniesche, Fulcrum's vice president of business development, after House Republicans - who took the majority after the general election- stripped the loan guarantee program of most its funding in their budget passed in February.
"We're here on the five-yard line," Kniesche said, "and there's a threat that the whole thing could get pulled out from under us."
The loan guarantee program, established under the 2005 Energy Policy Act and expanded under the 2009 stimulus bill, provides an incentive for private investors to finance renewable energy projects around the country.
So far the DOE has conditionally committed or closed nearly $18 billion in loan guarantees to 20 projects, all of which amount to $28 billion in total investment, said Ebony Meeks, a spokeswoman for the DOE.
Those finalized projects, which span over 14 states including two facilities in Nevada, could mean thousands of jobs and enough clean energy to power 2 million homes, she said.
And while negotiations over the short-term future of the federal budget, as well as the loan guarantee program, still are unknown. Meeks said if funding for the program is cut, the DOE would lose much of its ability to help finance renewable energy projects.
"The proposed cut in loan guarantee authority would result in the withdrawals of six conditional loan guarantees already issued to renewable energy projects, while 25 loan agreements with final term sheets would never be completed," Meeks said in an email. "These 31 projects are seeking $13.6 billion in loans to finance $24.5 billion in new energy infrastructure, which would put more than 25,000 Americans to work."
Rep. Dean Heller, R-Nev., supported the House budget bill that included the provision to cut the loan guarantee program. His spokesman, Stewart Bybee, said Heller has supported renewable energy development in Nevada, including renewable portfolio standards and tax credits.
"Today, it is unclear what the final outcome will be for federal funding for the remainder of this year," Bybee said in a statement. "However, the federal government must stop spending money it does not have and it is necessary to evaluate what the best role for the federal government is in encouraging growth in this industry."
Fulcrum Energy has been vying for one of these loan guarantees for two years, Kniesche said. If everything goes as planned, he said the company would produce 500 construction and engineering jobs in the region and 55 permanent jobs once the facility is built in Storey County.
Jim Croce, the president and CEO of the Nevada Institute for Renewable Energy Commercialization, said countries like Denmark and China are already cornering the wind and solar power markets by using similar programs like loan guarantees.
"It really makes no sense to me from the standpoint of economic policy for the U.S," Croce said. "Really, what it demonstrates is we're willing to continue rolling the dice on Middle East oil, subsidized through our armed forces than take control of our economic destiny," he said.
Kniesche said the Storey County project will be the first of several throughout the country for Fulcrum Energy if it moves forward.
"If we're not able to close this loan guarantee and the government doesn't honor the commitment they've given to us," he said, "the project will be on hold, if not for a long time, then indefinitely."
