We’re here to help you… by killing your chances of success!

4 Nov

Ready… aim… fire!

Are DOE loan standard requirements actually shooting down good projects?

We’re a country in search of affordable, sustainable, and “environmentally friendly” fuel. Right?

Well, good luck getting it!

You see… once again, Big Government is there to jump in and lend a hand.

How? Well… apparently by making it nearly impossible to get it.

I’ve told you about “government analysts” that are basically “hired guns,” whose job it is… to shoot down viable energy projects. Seriously.

“We have money and you can’t get it… Na-na-na-na-na-nahhhhhh!”

But wait! There’s more…

In Washington, the US Department of Energy is requiring that renewable energy projects meet a debt rating standard higher than 63 percent of all US corporate first-time debt issuers since 2007, in order to qualify for DOE loan guarantees. The loan guarantees were originally designed “to encourage early commercial use in the United States of new or significantly improved technologies in energy projects.”

A ‘BB or higher’ rating requirement chokes bioenergy development, say bankers, attorneys, and project developers.

Okay… here’s the meat of the issue;

Congressional legislation for DOE loan guarantees typically require “a reasonable prospect of repayment of the principal and interest on the obligation by the borrower.”

The Department of Energy is generally left with the responsibility of interpreting “reasonable”.

In this case, the DOE, as advised by investment banks, has developed minimum threshold for loan guarantees of a “BB” or higher rating (prior to the guarantee).

According to Standard & Poor’s, 333 of all US corporate first-time debt issues since 2007 – out of a total of 528, failed to meet that standard.

In many cases, these issuers would not have been attempting to bring transformative technologies to market in support of  national policy – based on what EPA Administrator Lisa Jackson said was designed to produce “green jobs, innovation and technology, and action on global climate change.”

Once again, it’s apparent that money has been placed into a non-existent pipe by Congress, so that they can make claims that they’re actually doing their jobs.

Is it any wonder that all the jobs are going to Malaysia?

According to David Jacob, Executive Managing Director and Head of Structures Finance Ratings for Standard & Poor, ratings for renewable energy projects range from BBB- to CCC, with a preponderance of ratings weighted towards CCC, or two ratings below the threshold set by the DOE. Jacob was speaking at a recent meeting on energy finance in New Jersey.

My personal thanks to the fine folks at  BioFuels Digest for bringing this to my attention, and for ruining my day…

Stay tuned.

The Renaissance Ronin

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2 Responses to “We’re here to help you… by killing your chances of success!”

  1. clarkscottroger November 5, 2009 at 6:29 am #

    Being in the other end of the business (the retail end of real estate, if you will) I would like to add some perspective to this Post specifically and the whole blog generally.
    You write well and while you enjoy the comic, over the top, ‘is-this-guy-kidding’ thing, it clearly comes through how much you care about this subject.
    I must qualify my compliments, am not nearly as optimistic and ‘still gonna make this come out right’ as you appear in this latest Post.

    I can offer one ‘constructive’ suggestion that I have, benefit of a career in sales, including timeshare sales and that is, people are afraid of what is new.
    If you do not deal with that element (the fear) then you cannot give it away.
    People want to do what they think other people are already doing. Why do you think timeshare salesrooms are so big and noisy? And why, if you hadn’t noticed, are all the sales people sitting on the same side of their tables as each other and facing the same way?
    So that the ups are watching other ups buy. (‘Up’ is a term used to refer to a customer/prospect).
    Anyway, your ideas about ways of creating/providing good affordable housing are wonderful and you will not be able to give them away if you don’t sell them first.

    (Now here is where you will have the most trouble) if you are like most of us, because you believe in this idea so much, you can’t imagine that everyone else won’t be waiting and willing line up to buy/support/generally get behind the movement.

    Sorry. Won’t happen.

    And it is not just because the whole system is controlled and driven by a scary small number of corporate interests. No the people in fear will be led by those who don’t need affordable housing. And they are out there.

    To end on a positive note, I have friends in an organization that believes it is best to grow by using attraction rather than promotion.
    Find the peole who genuinely like this idea, they will not be able to do much in terms of the real world, stay true to them and growing into a larger group will bring you to the attention of those guys with the money.

    (You know what I say about people being willing to be led is true otherwise how can we possibly have the media tell us that most people are angry and want Washington to ‘keep your hands off our health care system’. Tell me about how the corporations are not able to led the fearful.)

    • renaissanceronin November 5, 2009 at 1:57 pm #

      Wow,

      Thanks Clark!

      I always thought that sitting through a “timeshare presentation” was like getting inducted into “the Moonies…” Make ’em sit long enough to have to pee, and they’ll sign anything, just to get out! 🙂

      In my “past life” I worked closely with a pal who was a “deprogrammer.” You’ve seen these guys on TV. And before that? He was one of the top salesmen in the country. His whole life was an epic about “the manipulation of fear.”

      I’m reminded of a children’s story, called “The Tortoise and the Hare.” You remember… the one where the rabbit ran like hell, but the tortoise, using the “slow and steady” method, won the day.

      I’m hoping that we, the ever growing legion of “Corten Crusaders…” can accomplish the same outcome, by sticking to what we know and then ramming it to the man! 🙂

      (You were waiting for that, weren’t you…admit it…) 😉

      I’m also reminded that Hollywood was founded on “attraction” and not “promotion.” Although that seemingly endless loop of commercials touts “this” new movie or “that” one… it’s “the Star,” that we’re usually drawn to…

      If I could just bottle that… Hmmm…

      Watch for my NEW business venture…

      “Snake Oil Steel Works!” 😉

      Ronin

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