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posted by martyb on Monday November 17 2014, @07:20AM   Printer-friendly
from the pretty-good-ROI dept.

Bloomberg via Business Week reported:

The U.S. government expects to earn $5 billion to $6 billion from the renewable-energy loan program that funded flops including Solyndra LLC, supporting President Barack Obama's decision to back low-carbon technologies.

The Department of Energy has disbursed about half of $32.4 billion allocated to spur innovation, and the expected return will be detailed in a report due to be released as soon as tomorrow[*], according to an official who helped put together the data.

The results contradict the widely held view that the U.S. has wasted taxpayer money funding failures including Solyndra, which closed its doors in 2011 after receiving $528 million in government backing. That adds to Obama's credibility as he seeks to make climate change a bigger priority after announcing a historic emissions deal with China.

A $5 billion return to taxpayers exceeds the returns from many venture capital and private equity investments in clean energy, said Michael Morosi, an analyst at Jetstream Capital LLC, which invests in renewable energy.

[*] See also: Solyndra Program Vilified by Republicans Turns a Profit

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  • (Score: 0) by Anonymous Coward on Monday November 17 2014, @07:41AM

    by Anonymous Coward on Monday November 17 2014, @07:41AM (#116626)

    The potential gains are the first estimate for the loan guarantee program released by the Energy Department. The $5 billion to $6 billion figure was calculated based on the average rates and expected returns of funds dispersed so far, paid back over 20 to 25 years.

    the headline is misleading if the so called 'profits' being touted are mere projections... when keynesians start projecting profits in renewable energy its a surefire bet that we should start buying stock in coal mining companies

    https://www.youtube.com/watch?v=MnekzRuu8wo [youtube.com]

    • (Score: 3, Interesting) by davester666 on Monday November 17 2014, @08:05AM

      by davester666 (155) on Monday November 17 2014, @08:05AM (#116631)

      not only that, but it seems proud that eventually it will get a return of $6B after disbursing over $16B.

  • (Score: 1, Insightful) by Anonymous Coward on Monday November 17 2014, @08:12AM

    by Anonymous Coward on Monday November 17 2014, @08:12AM (#116632)

    Both parties have decided that Obama is a failure; at this point, he could perform actual miracles and anything he did would be attributed to his enemies.

    • (Score: 1) by CirclesInSand on Monday November 17 2014, @01:05PM

      by CirclesInSand (2899) on Monday November 17 2014, @01:05PM (#116694)

      How can you disrespect a man who earned the Nobel Peace Prize?

  • (Score: 5, Interesting) by bradley13 on Monday November 17 2014, @08:15AM

    by bradley13 (3053) on Monday November 17 2014, @08:15AM (#116633) Homepage Journal

    The government doesn't do accounting like normal people. Here is a blog article describing some of the BS in the government's figures [coyoteblog.com].

    Quick sampling:

    - To get the numbers up, this includes loans to "green" businesses like Ford Motor Company.

    - The study includes interest and returns for the next 20 years, assuming no more companies default on their loans (Solyndra, anyone?).

    - The study includes counts future interest 100% as "present value" - something no bank or investor would do.

    So, no, the government doesn't really expect to earn $5 billion. This is just marketing to make the program look better than it really is...

    --
    Everyone is somebody else's weirdo.
    • (Score: 0) by Anonymous Coward on Monday November 17 2014, @12:39PM

      by Anonymous Coward on Monday November 17 2014, @12:39PM (#116680)

      ...and, after 20+ years, the return is 20% (https://www.americanprogress.org/issues/technology/report/2012/12/10/47481/the-high-return-on-investment-for-publicly-funded-research/

      • (Score: 0) by Anonymous Coward on Monday November 17 2014, @02:23PM

        by Anonymous Coward on Monday November 17 2014, @02:23PM (#116727)

        I'd love to meet the guy that can accurately project returns 5+ years into the future... let alone 20+.

    • (Score: 1) by brocksampson on Monday November 17 2014, @03:48PM

      by brocksampson (1810) on Monday November 17 2014, @03:48PM (#116772)

      While all of that is true, it begs the question: why does the government need a return to begin with? If taxpayer money can be sunk into overseas military campaigns--what's the ROI on dropping a bomb?--then why not into seeding companies that could potentially benefit Americans enormously? Governments already fund research, but most scientists aren't going to quit their jobs to risk everything in a startup venture the moment they get a patent. So why is it such a crime for the government to fund that next step, to give seed money for people who do want to run with that patent and risk a startup? Sure, market forces will eventually figure out the real cost of fossil fuels, but over what time frame and at what cost to humanity? Renewable energy, in particular, is a daunting challenge for new entrants because the entire global economy is built on top of fossil fuels and as a result it benefits from decades of favorable regulations, mature technologies, and "customers" that cannot live without their product. I mean, we're not talking about potentially putting Facebook out of business, we're talking about replacing the foundation of modern civilization... but apparently we have to make a profit doing it or it's a huge scandal. (And how much did this program cost in comparison to oil and gas subsidies--not just tax breaks, but exploitation rights, Naval defense of shipping lanes, overthrowing regimes, environmental disasters?) We can disagree on whether or not renewable energy technology is worthwhile (i.e., if you accept anthropogenic global climate change), but it's not like BP/Total/Exxon/etc. have a huge incentive to disrupt their own business model, so who else has the resources besides governments?

      • (Score: 2) by sudo rm -rf on Monday November 17 2014, @04:13PM

        by sudo rm -rf (2357) on Monday November 17 2014, @04:13PM (#116786) Journal

        You made some good points there. A small to medium company would almost never start research in a high risk field (regarding profit) by its own. Having money granted from the government to do exactly this kind of research can ease monetary pressure, lead to new jobs and sometimes can bring up amazing new ideas. And the money is never wasted, because it gets spent by the employees to pay their bills etc.

      • (Score: 3, Insightful) by Silentknyght on Monday November 17 2014, @04:46PM

        by Silentknyght (1905) on Monday November 17 2014, @04:46PM (#116805)

        why does the government need a return to begin with?

        The government doesn't need a return, you're correct, but it DOES (or SHOULD) need to define the parameters of success prior to initiating a project. I think it's reasonable to expect that our government spends money seeking a particular outcome, and that it does its best to ensure that the money is well-spent, not wasted. One way to evaluate that is whether or not the program was a success. ROI is used because it's easy, but you're correct in suggesting that it's not necessarily the most appropriate metric for all projects.

        I'm okay with the government trying new things, even if they don't work out. But, I'd prefer if it defines the parameters of success (which I don't think it does very well, right now), and I'd also prefer if it actively audits said programs to evaluate success (and aside from politically-calculated ROIs, I don't think it does this very well right now, either).

      • (Score: 2) by VLM on Monday November 17 2014, @05:29PM

        by VLM (445) Subscriber Badge on Monday November 17 2014, @05:29PM (#116824)

        why does the government need a return to begin with?

        I propose that they're really only trying to break even, and they accept that will require $5B in theoretical profit, when $5B of revenue will be pure hollywood accounting.

        So imaginary $5B, minus $5B of corruption, equals it about broke even. Which isn't all that bad or immoral of a goal.

        I suppose you'd like a "profit" equal to roughly the inflation rate, to really break even. So maybe its only $4.5B of predicted corruption and pencil whipping of the figures. Thats a pretty fine detail on the general idea.

        Also WRT

        Taxpayer money

        About a trillion and a half of income tax and other sources, vs around 3.5T spent?

        So isn't about half the money spent, technically bondholders money and future SS recipients money, not taxpayers money? We run considerable deficits, you know.

        Even if you add the SS taxes as another trillion income tax (which in practice is all it really is, its just a pyramid scheme) that's still about one third or so of all money spent is bond holder money not taxpayer money.

        I just think its funny that decades ago when I was a kid, when the .gov spent money, it really was taxpayer's money, but now that we're in permanent economic collapse mode, only about half the money .gov spends is actually taxpayer money, the rest comes from selling bonds and printing presses.

        How the current bond buyers think my kids and grandkids generation will pay off those bonds is, I'm sure, hilarious. Other than revving up the printing presses even faster I don't think there is any end game plan. AFAIK it boils down to run it foot to the floor till the wheels fall off, then try to be in a good position for the big financial system reboot, I guess.

        • (Score: 2) by urza9814 on Wednesday November 19 2014, @04:22PM

          by urza9814 (3954) on Wednesday November 19 2014, @04:22PM (#117739) Journal

          I just think its funny that decades ago when I was a kid, when the .gov spent money, it really was taxpayer's money, but now that we're in permanent economic collapse mode, only about half the money .gov spends is actually taxpayer money, the rest comes from selling bonds and printing presses.

          Man, you must be one of the oldest people alive! Other than a couple years at the end of WWII and a couple years under Clinton, we've been running a deficit since the Great Depression. There have been times since then when our deficit was over 30% of our GDP. Today it's a bit over 3%.

          • (Score: 2) by VLM on Wednesday November 19 2014, @06:52PM

            by VLM (445) Subscriber Badge on Wednesday November 19 2014, @06:52PM (#117798)

            Today it's a bit over 3%.

            Not in the US. Maybe you are in Canada, eh?

            We have end of year stats for last year, $2.77T in, vs $3.45T out? I just checked and got those numbers from wikipedia, my memory of news reports wasn't very far off. Social security is running about net $100B positive which sounds good, other than the whole "we're just tax and spending it away" so the real deficit is about $100B worse than reported, in the long run.

            From memory during '09 or so, didn't the deficit hit nearly 50%? Not motivated enough to research but I know it was higher.

            • (Score: 2) by urza9814 on Wednesday November 19 2014, @07:49PM

              by urza9814 (3954) on Wednesday November 19 2014, @07:49PM (#117821) Journal

              Yeah, as you noted, deficit for this year is about $500M. GDP for this year is about $17 trillion. That works out to around 3%.

              In '09 it was around 13%. Would have been close to 50% of *tax revenue* though. I can't seem to find any historical data comparing deficits to revenue though; everybody uses %GDP for these kinds of comparisons.

              • (Score: 2) by VLM on Wednesday November 19 2014, @10:04PM

                by VLM (445) Subscriber Badge on Wednesday November 19 2014, @10:04PM (#117869)

                OK well then. Of GDP. I'm not sure why that would matter in context. Tonight I'm taking my wife and kids to Culvers for dinner because school fundraiser etc and just for the heck of it and its a pretty cheap place to eat because we can get outta there well under two trillionths of GDP, but the $40 cash in my wallet is somewhat more relevant to the discussion of costs and affordability.

                I don't usually eat fast food, but when I do, I eat the king of fast food.

                • (Score: 2) by urza9814 on Thursday November 20 2014, @02:06PM

                  by urza9814 (3954) on Thursday November 20 2014, @02:06PM (#118107) Journal

                  It does matter, because there have been times when we had higher taxes and still a higher deficit as a percentage of revenue. If you have a 10% tax rate and your deficit is 50% of revenue, that's not too bad -- either cut spending, or raise taxes to 15%, or a bit of both. If you have a 90% tax rate and your deficit is 50% of revenue, you're pretty much fucked. There's no possible way out without MASSIVELY slashing spending. GDP is used as a proxy for *potential* tax revenue rather than actual tax revenue.

                  Don't get me wrong, the debt and the deficit are certainly problems, but they've been worse in the past and we've gotten through it.

      • (Score: 1) by CirclesInSand on Tuesday November 18 2014, @12:00AM

        by CirclesInSand (2899) on Tuesday November 18 2014, @12:00AM (#117011)

        While all of that is true, it begs the question

        No. It doesn't. It "raises the question". To "beg the question" is a reference to the sophistry of assuming the point you are trying to prove. The arguer is "begging" his listener to assume the "question".

        Now you might want to reply "but that is common usage". Well, common people can't reason. They have no interest in it. You don't allow those who have never studied mathematics to redefine mathematical terms do you? So before replying "it is common usage", realize that degrading the language of reasoning to pamper to common people is to eliminate it's usefulness.

        If taxpayer money can be sunk into overseas military campaigns--what's the ROI on dropping a bomb?--then why not into seeding companies that could potentially benefit Americans enormously?

        Since X is so bad, and Y is less terrible, let's do Y. Figure out what is wrong with that yourself.

        but it's not like BP/Total/Exxon/etc. have a huge incentive to disrupt their own business model

        Their business model is serfdom. They have exclusive access to a limited resource, in other words, they have bought rights from the government that are not generally available to everyone.

        The solution isn't to give your money away to private individuals (Solyndra, etc) which only increases the serfdom. It is to realize that limited resources must be rationed, and no private entity can be allowed to "own" them. This applies to much more than just oil.

    • (Score: 2) by DeathMonkey on Monday November 17 2014, @06:51PM

      by DeathMonkey (1380) on Monday November 17 2014, @06:51PM (#116878) Journal

      The study includes ....
       
      The report isn't even out yet. It is pretty impressive that you have debunked a methodology that hasn't even been published.

      To get the numbers up, this includes loans to "green" businesses like Ford Motor Company.
       
      So they can give loans to Fisker and Tesla for green transportation tect but not Ford?

  • (Score: 2) by Thexalon on Monday November 17 2014, @12:37PM

    by Thexalon (636) on Monday November 17 2014, @12:37PM (#116675)

    I'm not talking about investments in large firms like you'll find in the Dow Jones Industrial Average, but investments in little-known companies with a great new idea. The vast majority of them fail - a vulture capitalist generally expects roughly 95% of the companies they give funding to will completely collapse to nothing, with the hope that the massive return on the 5% that do make it will more and pay off those that don't.

    I'd also consider this to be dirt cheap compared to the amount the US government provides to oil, coal, natural gas, and nuclear power. Especially if you consider the military efforts overseas to create a more favorable governmental situation as part of the government giveaway.

    --
    The only thing that stops a bad guy with a compiler is a good guy with a compiler.