Last week, DOE announced plans to continue its provision of loan guarantees for approved renewable energy projects. The announcement comes seven months after the controversy surrounding the agency’s loan to Solyndra, the California-based solar manufacturer which filed bankruptcy after receiving a $535 million DOE loan guarantee.

Solyndra’s loan guarantee was administered under a program authorized by Section 1705 of the American Recovery and Reinvestment Act of 2009, which elapsed in September 2011. The new loans will be directed under a program created by section 1703 of the Energy Policy Act of 2005.

The Section 1703 program has $34 billion in loan authority, some of which is left over from previous years’ budgets, and $170 million to help cover the cost of the upfront fees, or credit subsidies, required by the 2005 law. This credit subsidy assistance makes the Section 1703 program more like the ARRA program, which was more favorable for loan-seeking companies as it did not require such fees.

A recent GAO report criticized the section 1703 program, noting that DOE has administered only six loan guarantees under the program, closing none, and had not “otherwise demonstrated that the program is fully functional.” [E&E News]

Is DOE right to move forward with this program? How might the section 1703 program succeed where 1705 failed? Will better loan administration lead to better outcomes?