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").

Highlights

  • 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.

Overview

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:

Round

Part I Submission Deadline

Part II Submission Deadline

1

September 16, 2009

November 13, 2009

2

October 22, 2009

January 15, 2010

3

December 23, 2009

March 12, 2010

4

February 18, 2010

May 14, 2010

5

April 22, 2010

July 19, 2010

6

June 24, 2010

September 17, 2010

7

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
Total

Part I Payment
(25%)

Part II Payment
(75%)

$0 – $150 million

$75,000

$18,750

$56,250

$150 million+ – $500 million

$100,000

$25,000

$75,000

More than $500 million

$125,000

$31,250

$93,750


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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions