Energy Department Announces $30.5 Billion Loan Guarantee Solicitation
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The U.S. Department of Energy Monday formally put in motion a solicitation process that will provide $30.5 billion in federal loan guarantees for a variety of projects employing advanced energy technologies to reduce air pollution and greenhouse gas emissions.
In a statement, energy officials announced three solicitations that fall into the broad categories of energy efficiency, renewable energy and advanced transmission and distribution, which will qualify for a total of up to $10 billion; nuclear power facilities, for a maximum of $18.5 billion; and advanced nuclear facilities for the front end of the nuclear fuel cycle, an element getting up to $2 billion in guarantees.
Ellen S. Friedman (pictured), a New York energy partner for Thelen, who has recently written about the program, said Monday that the department's announcement and the materials it made available have formally started the clock by setting forth a number of critical deadlines. Those include a Sept. 29 due date for "Part I" applications relating to nuclear facilities. Friedman said the department has recognized that because of the scope and complexity of nuclear power projects, applicants may be unable to submit a fully complete "Part II" application by the December 19, 2008, deadline. Applicants therefore are required by the solicitation to update "substantially complete" Part II applications every 90 days.
In addition, Friedman said:
"This solicitation gets into much more detail and has much more specificity about how they are going to evaluate the applications they receive."
She noted, for instance, that officials have included charts showing what weight will be given to each of the various factors it will use in weighing the projects' qualifications. In each case, creditworthiness of the project is defined as the most significant factor in the department's evaluation matrix.
In the department's announcement, Jeffrey Kupfer, acting deputy secretary of energy, outlined the program's goals:
“Loan guarantees from the department will enable project developers to bridge the financing gap between pilot and demonstration projects to full commercially viable projects that employ new or significantly improved energy technologies. Projects supported by loan guarantees will help meet President Bush’s goal of diversifying our nation's energy mix with energy projects that will improve the environment while increasing energy efficiency.”
The department said the process was organized into four phases, including application, project evaluation, conditional approval and closing of a loan guarantee agreement. Criteria for awarding the guarantees will focus on the project's ability to "avoid, reduce or sequester" air pollutants or greenhouse emissions; the speed with which the technologies can go into commercial service; the prospects that the guaranteed debt will be repaid and the potential for the long-term success of the technologies in the marketplace.
Friedman cautioned that prospective applicants would have their work cut out for them:
"The department's application requirements force potential applicants to think through and present a complete project finance proposal which must comply in all respects with DOE guidance."
This isn't the last solicitation this year. The department said that later in the summer it expects to issue a similar call for advanced fossil energy projects hoping to qualify for up to $8 billion in guarantees.
