Department of Energy Proposes $9 Billion in Clean Energy Loans

Nine billion dollars could flow to guarantee loans to clean energy projects under a May 10 Department of Energy (DOE) Notice of Proposed Rulemaking (NOPR) under the Energy Policy Act of 2005. Each approved project could receive guarantees covering up to 80% of total project costs.  To be considered by the agency, written comments must be submitted within 45 days from notice in the Federal Register "” likely late June or early July.

DOE proposes loan guarantees for ten categories of projects and technologies, including:  renewable energy systems; advanced fossil energy technology, including qualifying coal gasification systems; residential, industrial or transportation hydrogen fuel cell applications; advanced nuclear facilities, carbon capture and sequestration practices; efficiency in electrical generation, transmission and distribution; end-use efficiency technologies; production facilities for fuel efficient vehicles; pollution control equipment; and certain crude oil refineries.

Allocation of the $9 billion in loans will not be equally distributed among the ten categories; rather, $4 billion is reserved for central power stations, $4 billion for biofuels and clean transportation fuels, and only $1 billion for projects involving new technologies for electric transmission or renewable power generation systems.  According to DOE, precise allocation of the guarantees will depend upon the merits and benefits of a particular proposal and the accompanying statutory and regulatory requirements.

While the program is a positive development for the energy industry as a whole, efficient and fair implementation by DOE is critical, and that implementation is the specific subject-matter of the May 10 NOPR.  Provisions of particular interest to potential loan applicants include payment of the Credit Subsidy Cost, assessment of fees to loan recipients, rules on financial structure and eligibility of lenders, regulatory review, and default and audit rules.

Those industries now participating in eligible technologies and those planning expansion into clean energy projects can find public comment and public meeting procedures at Section III of the NOPR.