United States: U.S. DOE Issues Two Loan Guarantee Solicitations Under The Recovery Act

The U.S. Department of Energy ("DOE") has announced two new solicitations for loan guarantees pursuant to its loan guarantee program under the Energy Policy Act of 2005 ("EPAct 2005").


  • The solicitations relate to projects that either (a) employ "New or Significantly Improved Technology" related to a renewable energy system or a leading edge biofuels project or (b) improve transmission infrastructure using commercial technology.
  • Combined, the solicitations make available more than $12 billion in federally funded guarantees.
  • Applications are accepted on a rolling basis, with those applicants who participate in earlier rounds receiving a "first mover's advantage." Two applications are required to be submitted, with a specific due date for the second application based on when the first application is submitted.
  • Preliminary applications under the transmission infrastructure solicitation are due by Sept. 16, 2009.
  • Eligible projects are required to commence construction no later than Sept. 30, 2011.


On July 29, 2009, the DOE announced two solicitations for loan guarantees authorized under Section 1703 and 1705 of Title XVII of the EPAct 2005.

The first solicitation (the "Innovative Technologies Solicitation") offers $8.5 billion in loan guarantees to applicants under the pre-Recovery Act loan guarantee program (the "Section 1703 Program") in support of eligible projects employing "New or Significantly Improved Technologies," with an additional $2.5 billion in American Recovery and Investment Act ("Recovery Act") funds to be used to back the credit default risk of projects that qualify under the Recovery Act. "New or Significantly Improved Technology" is defined in the DOE regulations as "a technology concerned with the production, consumption or transportation of energy and that is not a Commercial Technology...and that has either only recently been developed, discovered or learned...." Generally, the term applies to technologies that have not been used in three or more commercial projects in the United States for at least five years.

The second solicitation (the "Transmission Infrastructure Solicitation") offers loan guarantees, supported by $750 million to pay the Credit Subsidy Costs associated with such guarantees, for "Electric Power Transmission Infrastructure Investment Projects" that meet the requirements of the temporary loan guarantee program established by Section 1705 of the EPAct 2005 (the "Section 1705 Program"). The Transmission Infrastructure Solicitation is available for transmission projects using "Commercial Technology."

Innovative Technologies Solicitation

The loan guarantees under the Innovative Technologies Solicitation are limited to 80 percent of the project costs and require that the borrower contribute a significant cash equity contribution. Projects that request a loan guaranty of less than 80 percent of the project costs will be given priority. The solicitation is specifically directed toward projects that employ innovated energy efficiency, renewable energy, and advanced transmission and distribution technologies. Projects employing commercial technologies that are in-service in the United States are not eligible. Eligible projects must have an identified project site and must create or retain jobs in the United States. Finally, the technology must be successful (both on a pilot and demonstration scale), being supported by at least six months of operational performance data, including at least 1,000 hours of operational data.

Projects meeting the eligibility requirements set forth above must also fall within one of the following sectors: (i) alternative fuel vehicles; (ii) biomass; (iii) efficient electricity transmission, distribution and storage; (iv) energy efficient building technologies and applications; (v) geothermal; (vi) hydrogen and fuel cell technologies; (vii) energy efficiency projects; (viii) solar; and (ix) wind and hydropower.

Project Types

DOE is actively promoting projects that fall within the following two general but distinct project types: (1) manufacturing projects and (2) stand-alone projects. The applicant is requested to specify which, if any, of the two project types and technology categories most accurately represents its project:

  1. Manufacturing Projects – This project type category envisions eligible facilities that utilize New or Significantly Improved Technologies in manufacturing that result in long-term reductions in manufacturing and product costs, higher factory throughput, and improved product performance, compared with the manufacturing technologies in place at the time the Term Sheet is issued.
  2. Stand-alone Projects – This project type category is focused on renewable energy projects that produce energy from renewable resources, produce fuels from renewable sources, utilize energy efficiency technologies, build advanced efficient electricity transmission and distribution systems, build advanced efficient renewable fuel delivery systems, build energy storage projects, or deploy energy efficient building technologies within a single project. The DOE is encouraging applicants to propose technologies that constitute New or Significantly Improved Technologies that can be scaled to provide gigawatts of renewable energy electricity generation, widespread deployment and utilization of energy efficiency technologies, and the development of long-range electricity transmission and advanced efficient renewable fuel transportation systems connecting remote production locations with load and population centers.

The primary goals and objectives desired of each of the above project types (in no priority order) are to achieve:

  • The greatest impact in avoiding, reducing or sequestering air pollutants or anthropogenic emissions of greenhouse gases
  • The lowest cost of delivered energy based on the costs of the full supply chain (basic elements of production to final consumption), including minimizing needs for new infrastructure
  • The greatest impact on reducing reliance on insecure sources of energy
  • The greatest impact on reducing infrastructure vulnerabilities
  • The fastest time to project completion
  • The extent to which the proposed technology employed constitutes a New or Significantly Improved Technology
  • The most competitive or efficient use of the loan guarantee issued under Title XVII
  • The readiness of the New or Significantly Improved Technology to be employed commercially, replicated and available for further commercial use in the United States
  • The greatest use of a New or Significantly Improved Technology(ies) that constitute(s) an important improvement(s) in technology, as compared with Commercial Technologies in service in the U.S. at the time the Term Sheet is issued, and as compared with technologies proposed in other applications submitted in response to the Solicitation
  • The greatest extent by which the DOE loan guarantee facilitates the proceeding of the project

The Innovative Technologies Solicitation offers applicants seven rounds of review, with applicants in earlier rounds receiving a "first mover's advantage" in terms of priority of review.

The submission deadlines for such rounds are in the chart below:


Part I Submission Deadline

Part II Submission Deadline


September 16, 2009

November 13, 2009


October 22, 2009

January 15, 2010


December 23, 2009

March 12, 2010


February 18, 2010

May 14, 2010


April 22, 2010

July 19, 2010


June 24, 2010

September 17, 2010


August 24, 2010

December 31, 2010

A nonrefundable fee is payable upon submission of the Part I application, equal to 25 percent of the total application fee (with the remaining 75 percent due upon submission of Part II), depending on the amount of the loan guarantee, as follows:

Loan Guarantee Amount

Application Fee

Part I Payment

Part II Payment

$0 – $150 million




$150 million+ – $500 million




More than $500 million




DOE is to present the applicant with an assessment of its Part I application in order to provide information to assist the applicant in making a decision as to whether to proceed with completing the full application.

Transmission Infrastructure Solicitation

Projects are eligible under the Transmission Infrastructure Solicitation if they: (i) utilize a "Commercial Technology" (a defined term meaning a technology in use in three commercial projects for at least two years at each site); (ii) are reasonably likely, at the time of the submission of the Part I application, to commence construction on or before Sept. 30, 2011; (iii) meet the other requirements of the EPAct 2005 (including "Buy American" provisions); (iv) cannot be financed from private sources on standard commercial terms; and (v) fall into one of the following categories:

  • The project involves new or upgraded lines of at least 100 miles of 500 kV or higher, or 150 miles of 345 kV.
  • The project has at least 30 miles of transmission cable under water.
  • The project has a high-voltage direct current (DC) component.
  • The project is a major interregional connector.
  • The project is designated as a National Interest Electric Transmission Corridor by DOE under EPAct 2005.
  • The project is associated with offshore generation, such as open ocean wave energy, ocean thermal, or offshore wind.
  • The project mitigates a substantial reliability risk for a major population center.
  • The project provides to an integrated system within a state or region, a set of improvements that together aggregate to meet the above criteria.

Part I of the Transmission Infrastructure Solicitation is due by Sept. 16, 2009. Part I requires the applicant to provide a summary of the project, including eligibility, financing strategy, and progression in critical path schedules, particularly expected approvals. Part II of the application may be submitted Oct. 26, 2009, Dec. 10, 2009, or Jan. 25, 2010. Applicants who submit their Part II applications earlier will have a first-mover advantage.

A nonrefundable fee of $200,000 is due with the Part I application. DOE is to present the applicant with an assessment of its Part I application in order to provide information to assist the applicant in making a decision as to whether to proceed with completing the full application.

This article is presented for informational purposes only and is not intended to constitute legal advice.

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