On April 16, 2014, the Department of Energy's Loan Program Office ("DOE") announced a Draft Renewable Energy and Energy Efficiency Projects Solicitation ("Draft Solicitation"), which is a new $4 billion loan guarantee program under Section 1703 of Title XVII of the Energy Policy Act of 2005. The program provides long-term financing for innovative broadly-defined clean energy projects that reduce greenhouse gas emissions and are located in the United States.
The Draft Solicitation is intended to apply to any replicable, market-ready, and innovative renewable energy and energy efficiency projects in the US that reduce, avoid, or sequester greenhouse gases.
Projects that demonstrate their catalytic effect on the commercial deployment of future renewable energy or energy efficiency projects that replicate or extend the innovating features of such eligible project will be viewed favorably by DOE under this Draft Solicitation.
Program applicants will be required to demonstrate that the project technology is either new or significantly improved, specifically excluding technologies that are already used on a commercial scale, subject to the conditions set forth in the definitions of "New or Significantly Improved Technology" and "Commercial Technology" under 10 CFR Part 609.
Technologies eligible for financing under the Draft Solicitation include a broad range of new or significantly improved technologies in any of the following areas of interest:
Advanced Grid Integration and Storage
Technologies that DOE seeks to encourage in this technology area include: renewable energy generation, distributed generation, smart grid systems, demand response, energy efficiency, micro-grid projects, storage projects, and other advanced system designs.
Drop-In Biofuels
Eligible technologies in this category include: nearly identical bio-based substitutes for crude oil, jet fuel, gasoline, diesel fuel, intermediate fuel feedstocks; delivery infrastructure; refueling station equipment; new biorefineries; modifications to existing ethanol facilities. The projects under this category would not be restricted by the current ethanol/ biodiesel blend levels.
Waste-to-Energy
Technologies eligible for financing in this area include: landfill methane-to-heat and power, municipal solid waste-to-electricity, crop waste-to-energy and –bioproducts, forestry waste-to-energy.
Enhancement of Existing Facilities
DOE seeks to encourage significant enhancements to existing facilities by funding projects that incorporate power production into currently non-powered dams, including variable speed pump-turbined into existing hydro facilities, and retrofitting existing wind turbines. Projects that significantly extend the lifetime of an energy generating asset will also qualify.
Efficiency Improvements
Any new or improved technologies that increase efficiency and substantially reduce greenhouse gases will qualify for funding under this technology area. Such projects may include projects that improve or reduce energy usage in residential, institutional, and commercial buildings, facilities, or processes; recover, store, or dispatch energy from curtailed or underutilized renewable energy sources; recover, store, or dispatch waste energy from thermal, mechanical, electrical, chemical, or hydro processes.
The program is not subject to any statutory or regulatory dollar limit for any single project; however, DOE views favorably the use of partial guarantees and co-lenders. DOE ultimately is seeking not only to have its guarantees repaid, but to see the projects under this program be built and operate successfully. The Draft Solicitation is broad in scope and the DOE explicitly is interested in receiving applications from a wide variety of market participants and technologies.
To be eligible for the program, an applicant must demonstrate satisfaction of all eligibility criteria, subject to DOE review and assessment. The application consists of two submissions, Part I and Part II. The Part I submission determines the initial eligibility of a project for funding, while the Part II submission includes completion of the full application process. Only applications that are accepted following DOE's Part I review may be invited to submit the Part II submission of the application. The Part II review will include a determination of the project's viability based on financial, technical, and programmatic factors. Viable projects that are granted a conditional commitment will then undergo the complete underwriting process and negotiation of terms for the loan guarantee.
On April 16, 2014, the DOE initiated a 30-day public comment period on the Draft Solicitation. The first deadline for filing Part I of the application has not been announced as of the date of this Client Alert. The total non-refundable fee for the application is targeted at between $150,000 and $400,000 payable in two installments: $50,000 upon submission of Part I of the application, and upon submission of Part II of the application, $350,000 for senior debt exceeding $150 million or $100,000 for senior debt at or less than that amount. Program costs, which include the application fee and other costs, must be borne by the applicant and cannot be covered under this program's loan guarantee. The Draft Solicitation may be accessed by clicking here: http://1.usa.gov/1mdQTGt
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