Federal Loans Open to Clean Energy Projects

Federal Loans Open to Clean Energy Projects



October 2007

 The federal government is 
supporting clean energy projects using innovative technologies with a loan 
guarantee program finalized Thursday by the Department of Energy. The 
program is based on the Energy Policy Act of 2005. 
Energy Secretary Samuel Bodman has invited 16 project sponsors, who 
submitted pre-applications last fall, to submit full applications for loan 
guarantees. 
These projects include advanced technologies involving the uses of 
biomass, fossil energy, solar, industrial energy efficiency, electricity 
delivery and energy reliability, hydrogen, and alternative fuel vehicles. 
"Loan guarantees aim to stimulate investment and commercialization of 
clean energy technologies to reduce our Nation's reliance on foreign 
sources of energy," Bodman said. "Finalizing this regulation for the 
Department's Loan Guarantee program puts Americans one step nloser to 
being able to use new and novel sources of energy on a mass scale to 
reduce emissions and allow for vigorous economic growth and increased 
energy security." 
The final regulation provides that the Department may issue guarantees for 
up to 100 percent of the amount of a loan, subject to the EPAct limitation 
that DOE may not guarantee a debt instrument for more than 80 percent of 
the total cost of an eligible project. 
Under the final rule, if DOE issues a guarantee for 100 percent of a debt 
instrument, the loan must be issued and funded by the Treasury 
Department's Federal Financing Bank. 
Bodman says DOE's intent is to only issue loan guarantees if borrowers and 
project sponsors pay the "credit subsidy cost," that is the long-term cost 
to the federal government of the loan guarantee. So, DOE does not plan to 
use taxpayer funds to pay for the credit subsidy costs of these loan 
guarantees. Also, the borrower must have a "significant equity stake" in 
the project. 
The final rule is the result of a public rulemaking process, which began 
May 16, 2007. 
Congress currently is considering the Energy Department's Fiscal Year 2008 
Budget request for $9 billion in loan guarantee authority and $8.4 million 
to run the Loan Guarantee office. 
Today's announcements build on months of action by DOE to implement its 
loan guarantee program. In August 2006, DOE issued a solicitation inviting 
pre–applications for up to $2 billion in loan guarantees. By the December 
31, 2006 deadline for this solicitation, DOE received 
The 16 pre-applicants invited today to submit full loan guarantee 
applications for review were selected from among 143 pre–applications 
requesting more than $27 billion in loan guarantee protection for project 
costs estimated at more than $51 billion. 
The 16 projects and sponsors invited to submit full applications are:
  
  Coal Gasification 

  Mesaba Energy Project (MEP-I, LLC): Integrated Gasification Combined 
  Cycle, IGCC, Plant - Minnesota This state-of-the-art IGCC plant would 
  allot space in its design for carbon dioxide, CO2, capture and storage. 

  Mississippi Power Company: IGCC Plant that is the first-of-its-kind 
  application. 

  The Energy Department says these two IGCC projects would allow for 
  potential CO2 capture in the future, would provide state-of-the-art 
  emission controls exceeding the emissions requirements specified in the 
  Energy Policy Act of 2005 and would help reduce cost and increase fuel 
  flexibility of IGCC technology. 

  TX Energy, LLC: Coal to Synthetic Gas IGCC Plant - Texas A new 
  polygeneration gasification facility that can isolate a concentrated 
  stream of CO2 while producing large amounts of power and methanol. 


  Energy Efficiency 

  GR Silicate Nano Fibers and Carbonates - Washington An energy efficient 
  process for manufacturing paper. 

  Sage Electrochromics: Electrochromic Window Manufacturing Project - 
  Minnesota A manufacturing facility that would produce energy-efficient 
  windows for the commercial and residential building sectors. 


  Solar Energy 

  Luz II - Nevada An efficient large-scale power project using 
  concentrated solar-thermal technology. 

  Solyndra, Inc. - California Manufacture of efficient thin-film 
  photovoltaic modules. 


  Electricity Delivery 

  Beacon Power - Massachusetts Development of a system that will enhance 
  peak performance of electric generation over the power grid. 


  Hydrogen Fuel Cells 

  Bridgeport Fuel Cell Park, LLC - Connecticut Plans to build the largest 
  single-site installation of fuel cells in the world. 


  Alternative Fuel Vehicles 

  Tesla Motors - New Mexico Battery-electric powered vehicle with enhanced 
  range that can be produced for the consumer market. 


  Cellulosic Ethanol 

  Alico, Inc. - Florida First-of-a-kind commercial-scale cellulosic 
  ethanol plant that would use multiple feedstocks and produce multiple 
  products. 

  Blue Fire Ethanol, Inc. - California Commercial-scale cellulosic ethanol 
  plant using an array of low-cost feedstocks. 

  Choren USA - Southeast An industrial-scale biomass gasification facility 
  for clean synthetic diesel fuels 

  Endicott Biofuels, LLC - Virginia Second generation biodiesel and 
  bio-derived products plant that would feature a high level of feedstock 
  flexibility allowing for the production of a broad range of biodiesel 
  fuels. 

  Iogen Biorefinery Partners, LLC - Idaho Biorefinery to produce ethanol 
  from a wide range of cellulosic feedstocks and byproducts 

  Voyager Ethanol, LLC - Iowa Cellulosic ethanol plant that can 
  accommodate multiple feedstocks in the production of ethanol and 
  byproducts.
  
Following funding and authorization for the program in February 2007, DOE 
established a Credit Review Board to make recommendations to the Secretary 
of Energy on loan guarantees; named an office director and technical and 
financial experts to work in the Loan Guarantee program office; and 
developed guidelines for the financial and technical review of loan 
guarantee applications. 

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