The Department of Energy’s Loan Program Office (the “DOE”) announced on April 16, 2014, a new loan guarantee program for up to $4 billion under Section 1703 of Title XVII of the Energy Policy Act. The announcement coincides with the DOE’s release of a Draft Renewable Energy and Energy Efficiency Project Solicitation (the “Draft Solicitation”) for innovative renewable energy and efficient energy projects in the U.S. that reduce, avoid, or sequester greenhouse gases. The aim of the Draft Solicitation is to foster renewable energy and energy efficiency technologies that are “catalytic, replicable, and market ready.”
The Draft Solicitation identifies five (5) technology areas of interest to the DOE.
Advanced Grid Integration and Storage
The technologies in this area are focused on renewable energy systems that mitigate issues related to variability, dispatchability, congestion, and control. This area encompasses technologies such as: renewable energy generation, distributed generation, smart grid systems, demand response, energy efficiency, micro-grid projects, storage projects, and other advanced systems designs.
The projects in this area focus on biofuels that are more compatible with today’s engines, delivery infrastructure and refueling station equipment. Eligible technologies in this area include: nearly identical bio-based substitutes for crude oil, gasoline, diesel fuel, intermediate fuel feedstocks and modifications to existing production facilities.
This area focuses on projects harnessing waste products, such as landfill methane and segregated waste, as a source of energy, and are intended to enable commercial scale utilization of waste materials which are otherwise discarded. The types of eligible technologies in this category include: methane from landfills or ranches via biodigesters, crop waste to energy and bioproducts, and forestry waste to energy and cofiring.
Enhancement of Existing Facilities
Projects under this category are intended to significantly enhance performance or extend the lifetime of the generating asset by incorporating renewable generation technology into existing renewable energy and efficient energy facilities. The qualifying projects under this area include: integration of power production into currently non-powered dames, the addition of variable speed pump-turbines into existing hydro facilities, and retrofitting existing wind turbines.
Under this category, the DOE seeks to encourage projects that incorporate new or improved technologies which increase efficiency and substantially reduce greenhouse gases. Projects under this category may include projects that: reduce or improve energy usage in residential, commercial, or industrial buildings, facilities, or processes; recover, store, or dispatch energy from curtailed or underutilized renewable energy sources; and, recover, store or dispatch waste energy from thermal, mechanical, electrical, chemical, or hydro processes.
While each proposal’s eligibility will be evaluated on a project-by-project basis, the Draft Solicitation potentially offers access to capital to a broad range of technologies. Applications responding to the final solicitation will undergo a two-part review: Part I will determine the initial eligibility of a project and whether it is ready to proceed. Those applications that clear Part I will then proceed to Part II, which includes the full application process. Finally, viable projects that are granted a conditional commitment from the DOE will then undergo a complete underwriting process and negotiation of terms for the loan guarantee.