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DOE Announces $750 Million in Loan Guarantees for Conventional Renewable Energy Projects By SGN Staff Oct 7, 2009 - 12:23:50 PM
DOE will provide up to $750 million in loan guarantees to hasten development of conventional renewable energy generation projects. The loan guarantees will come from stimulus funds dedicated to creating and implementing Smart Grid technologies and meeting national policies for jobs creation, increasing renewable energy generation and reducing greenhouse gas emissions.
DOE says the funding could support between $4 billion and $8 billion in lending for eligible projects. The department plans to invite the private sector to participate in the effort to speed up financing for those projects.
To accommodate the public/private sector collaboration, the DOE has established a new Financial Institution Partnership Program (FIPP) which is a set of streamlined standards designed to accelerate the agency's loan guarantee underwriting procedures and to leverage private sector expertise and capital for efficient project funding.
The Recovery Act established a new section under Title XVII of the Energy Policy Act of 2005 (EPAct05) specifically for accelerated deployment of renewable energy projects and related manufacturing facilities, electricity transmission projects and leading biofuels projects that begin construction before Sept. 30, 2011.
The solicitation for applications under this new program is for conventional renewable energy projects only, including wind, solar, biomass, geothermal and hydropower. Previous renewable energy solicitations were geared toward research, development and demonstration of new or innovative Smart Grid technologies not yet in general use.
In addition to expediting the loan guarantee process and soliciting participation from private sector financial institutions, the FIPP will enable DOE and its private sector partners to balance risk between them. In this initial solicitation, applicants and project sponsors work directly with qualified private institutions that will then apply to DOE for the loan guarantees. The guarantee percentage can be no more than 80% of the total principal and interest during the term of a loan. Also, project debt must earn a credit rating of at least "BB" or its equivalent from a recognized rating agency.
Conventional renewable project loan guarantees from DOE
DOE loan guarantee program background
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