Loan Guarantee Department of Energy (DOE). The United States Department of Energy (DOE) has two Funding Opportunity Announcements (FOAs) on July 29, 2009, in which applications for federal loan guarantees. The FOA for the electrical power transmission infrastructure investment projects (Transmission FOA), and the other is for projects that employ innovative energy efficiency, renewable energy and advanced transmission and distribution technologies (Innovation FOA). The FOAs represent the first applications of 5.965 billion U.S. dollars allocated for DOE loan guarantees in the U.S. Recovery and Reinvestment Act of 2009 (ARRA).
Transmission FOA
The Transmission FOA issued under Article 1705 of the Energy Policy Act of 2005 (EP Act). Section 1705 was added to the existing loan guarantee provisions of the EP Act by ARRA. Projects eligible for loan guarantees under the Transmission FOA must meet one of the following criteria:
Transmission The FOA states that projects that support the generation of electricity from renewable energy sources are given special attention.
A project must also meet certain requirements ARRA, including requirements that the project is reasonably likely to start construction before September 30, 2011 and are expected to create or retain jobs in the United States. Significantly, projects for loan guarantees under the transmission FOA must use “commercial technology” (i.e., the technology already in use in three or more commercial projects in the United States for a period of at least five years in each project) and should not be funded from private sources on standard commercial terms.
DOE may guarantee loans up to 80 percent of the cost of the project. For projects with funding from the federal financing bank instead of a private lender can guarantee 100 percent of the DOE project debt. DOE has allocated up to 750 million U.S. dollars from the 5.965 billion U.S. dollars credit to transfer the FOA to pay the credit subsidy costs determined for each loan guarantee. DOE may issue guarantees continue until the allocated funds are exhausted. The Transmission FOA not estimate the total amount of the guarantee will be issued.
Applications for loan guarantees will be divided into two parts. Part I submissions are due on September 14, 2009, and Part II submissions are due in three rounds on October 26, 2009, December 10, 2009 and January 25, 2010. Part I and Part II submissions will be evaluated on an ongoing basis, once they are received, the applicants, Part II, making comments in earlier rounds of a first mover advantages.
Innovation FOA
The Innovation FOA issued under Article 1703 of the EP Act, the DOE loan guarantee program that predates ARRA. To be eligible for a loan guarantee under Article 1703, a project must be new or significantly improved technologies that avoid reduce or sequester air pollutants or greenhouse gas emissions. Projects commercial technologies are ineligible. Innovation The FOA provides a non-exclusive list of technology categories is potentially new or significantly improved technologies:
Unlike loan guarantees under Article 1705, a recipient of a loan guarantee under section 1703, the credit subsidy cost is usually determined to pay the guarantee. DOE has decided to allocate up to 2.5 billion U.S. dollars of credit to his department in 1705 the credit agreement to pay subsidy costs for projects that meet the criteria for both the department in 1703 and 1705. Projects employing advanced biofuels technologies to gain a total of 500 million U.S. dollars in the credit subsidy costs. To qualify under Article 1705, a project must (i) the construction starting on or before September 30, 2011, (ii) meet the additional requirements of arra, such as Davis Bacon wages, and (iii) in one of the categories of projects. The established categories of projects are: (a) renewable energy systems that generate electricity or thermal energy production facilities and related components, (b) electric power transmission systems projects, and (c) advanced biofuels projects using technologies to implement the pilot or demonstration scale.
Like the Transmission can FOA, DOE loan guarantee of up to 80 percent of the total cost of the project for the winning applications. For projects with funding from the federal financing bank instead of a private lender can guarantee 100 percent of the DOE project debt. The total amount of loan guarantees under the Innovation FOA is capped at 8.5 billion U.S. dollars.
Applications are due in two parts, about two months apart, with seven rounds of time available; the first couple of deadlines is September 14, 2009 and November 13, 2009. Like the Transmission wills FOA, DOE review applications on a rolling basis, with early applicants with a first mover’s advantage.
Future Loan Guarantee FOAs
It appears that DOE intends to provide additional FOAs to issue loan guarantees under Article 1705. DOE has a total of up to 3.25 billion U.S. dollars of 5.965 billion U.S. dollars credit under Article 1705 of the transmission and Innovation FOA, 2.715 billion U.S. dollars allocated. Transmission The FOA states that DOE plans to request an additional electric power transmission systems projects concerned. Furthermore, it is generally expected that a DOE FOA for renewable energy projects in technology will provide commercial service. However, the U.S. House of Representatives passed legislation to shift $ 2.0 one billion of the department in 1705 to program the cars discount Allowance System (also known as the “cash for clunkers” program). If the law is the law, the size and scope of the future FOAs (and perhaps send the FOA and FOA Innovation itself) need to be reduced.