Energy > AG Speaking Energy > DOE Announces Two Programs Supporting Renewable and Clean Energy
18 Apr '14

Last week the United States Department of Energy (the DOE) announced two programs supporting the Obama administration’s commitment to renewable energy development.1  On April 16, the DOE released a draft solicitation for up to $4 billion in loan guarantees for renewable energy projects and energy efficiency projects (the Loan Guarantee Solicitation).  Just one day later, on April 17, the DOE announced the $15 million Solar Market Pathways program for community solar development.

Loan Guarantee Solicitation

Under the Loan Guarantee Solicitation, up to $4 billion in DOE loan guarantees will be available for innovative renewable or energy efficiency technologies that reduce or capture greenhouse gas emissions and would have difficulty obtaining traditional commercial financing.

The loan guarantees will be administered under the Section 1703 loan guarantee program under Title XVII of the Energy Policy Act of 2005, which to date has only been used to fund nuclear projects.  It is the first solicitation for loan guarantees for clean energy projects since a hiatus after the expiration of the Section 1705 loan guarantee program in September 2011, which offered $16 billion in loan guarantees for renewable energy and bio-fuels projects under the American Recovery and Reinvestment Act of 2009.

The Loan Guarantee Solicitation is focused on innovative technologies that “will have a catalytic effect on the commercial deployment” of the technology in future projects.  While the DOE will consider any eligible project, the Loan Guarantee Solicitation identified five key categories:

  • advanced grid integration and storage;
  • drop-in biofuels;
  • waste-to-energy;
  • enhancement of existing facilities (such as retrofitting existing wind turbines); and
  • efficiency improvements that improve or reduce energy usage or recover, store or dispatch energy from underutilized renewable sources or waste energy or stabilize intermittent power to transmission lines, smarts grids or micro grids.

In order to be eligible for a DOE loan guarantee under the Loan Guarantee Solicitation, a project must meet all of the following requirements:

  • The project must be located in the United States;
  • The project must be a renewable energy project or use energy efficiency technologies;
  • The project technology must avoid, reduce or sequester greenhouse gas emissions;
  • The project must use new or significantly improved technology that is not currently used in three or more commercial projects in the U.S. in the same general application and that have been in operation for at least five years;
  • The project likely could not be financed with traditional bank financing without the support of the DOE loan guarantee;
  • The project has an expected revenue stream that will support repayment of the principal and interest;
  • The project will have sufficient funds from the guaranteed loan and all other financing sources;
  • The project has undergone National Environmental Policy Act review (which, depending on the project, requires an Environmental Impact Statement, Environmental Assessment or Categorical Exclusion) and has been determined that the project will not have adverse environmental impacts;
  • The project complies with Davis-Bacon Act requirements to pay prevailing wages; and
  • The project complies with the Cargo Preference Act of 1954 regarding use of U.S. flagged vessels carrying cargo in international waters.

Applications will be evaluated in two phases before being selected to negotiate with the DOE.  Phase I will determine whether a project meets the eligibility requirements set out above.  Projects that pass Phase I will be invited to submit applications for Phase II.  In Phase II, projects will be evaluated based on a variety of factors, including financial aspects (if the project could be financed without the DOE loan guarantee, the guaranteed loan will be senior secured debt, and if there will be co-lenders or partial guarantors), if the project would be the best use of the loan guarantee based on efficiency and competitiveness, the sponsor’s experience and the DOE’s due diligence on the project.

The DOE is holding informational public meetings about the Loan Guarantee Solicitation in Austin, TX, Denver, CO, Arlington, VA and Twin Cities, MN.  The draft Loan Guarantee Solicitation is available here and is open to public comment for 30 days.  The final solicitation is targeted to be issued in June.

Solar Market Pathways

The second program announced by the DOE last week, Solar Market Pathways, focuses on assisting communities develop plans to promote affordable solar installation for homes and businesses.  It is being launched under the DOE’s SunShot Initiative of 2011 – a national effort to make unsubsidized solar cost-competitive with traditional energy sources.

Under the Solar Market Pathways initiative, the DOE Office of Energy Efficiency and Renewable Energy (EERE) is requesting case studies of community development plans for solar that have a primary goal of cost reduction and eliminating barriers to entry and are likely to be implemented and replicated by other communities.  The development plans do not have to be implemented during the award period.  Examples of development plans sought by the EERE are those focusing on developing public-private partnerships, streamlining regulatory processes and/or creating shared solar programs.

The Solar Market Pathways announcement is available here.  Concept papers are due May 28, 2014, followed by full applications on July 3, 2014.  The EERE anticipates that awards will be issued in August 2014.

1On December 5, 2013, President Obama issued a presidential memorandum announcing a goal to obtain 20% of U.S. energy from renewables by 2020.