The Department of Energy (“DOE”) issued a draft solicitation yesterday for a new Renewable Energy and Energy Efficient Projects Loan Guarantee Program.  Once finalized, the Program is expected to make as much as $4 billion in loan guarantees available to innovative clean energy technology projects that are not currently in commercial use.  Based on DOE’s previous practices, we expect the final solicitation to be issued later this year.

Established in support of the Administration’s “all-of-the-above” energy strategy, the Program represents yet another opportunity to obtain financial assistance for innovative clean energy technology projects, in addition to the previously announced Advanced Fossil Energy Project solicitation.  In announcing yesterday’s draft solicitation, Secretary Ernest Moniz noted that DOE’s existing renewable energy loan guarantees “helped launch the U.S. utility-scale solar industry and other clean energy technologies that are now contributing to our clean energy portfolio.”  Secretary Moniz further explained that DOE wants “to replicate that success by focusing on technologies that are on the edge of commercial-scale deployment today.”

In the draft solicitation, DOE identifies five areas of technology that it hopes will benefit from the Program, including advanced grid integration and storage, drop-in biofuels, waste-to-energy, enhancement of existing facilities, and efficiency improvements.  Specific examples of eligible projects include technology that:

  • improves renewable energy distribution systems;
  • provides bio-based substitutes for crude oil, gasoline, diesel fuel, and jet fuel;
  • harnesses energy from landfill methane and segregated waste;
  • enhances or extend the lifetime of an energy generating asset;
  • reduces commercial or residential energy usage; or
  • recovers dispatch or waste energy.

DOE will look favorably on projects that have a catalytic effect, replicating or extending new or significantly improved technologies once established in the commercial marketplace.

Upon issuance of the final solicitation, DOE plans to review applications in a two-step process.  After making an initial eligibility determination, DOE will subject applicants to a more complete process, including underwriting and further negotiation upon DOE’s conditional commitment to provide a guarantee.  The draft solicitation indicates that projects must be market ready, and applicants for financial assistance must be prepared to provide an equity contribution.  In addition, the draft solicitation indicates that DOE plans to give preference to projects that cannot be fully financed by commercial means.

DOE is accepting comments on the draft solicitation for a thirty-day period.  Additional details and a schedule for public meetings being held to discuss the draft solicitation can be found here.