DOE update

DOE Releases Loan Guarantee Solicitations for Renewable Energy & Electric Transmission Projects

The Department of Energy (DOE) has released two Funding Opportunity Announcements (FOAs) to provide loan guarantees under the Energy Policy Act of 2005 (EPACT), as amended by the American Recovery and Reinvestment Act of 2009 (ARRA). 

Section 1703 of EPACT authorized DOE to provide loan guarantees for up to 80% of the cost of projects that (1) avoid, reduce or sequester air pollutants or greenhouse gases and (2) employ new or significantly improved technologies, as compared to commercially available technology. In its 2009 Omnibus Appropriations Act, the Congress funded this “innovative technology” loan guarantee program with $8.5 billion, and the DOE is soliciting applications for those guarantees in FOA # DE-FOA-0000140 (FOA-140).

The ARRA amended EPACT by adding Section 1705, which provides loan guarantees for projects that commence construction before October 1, 2011.  These “rapid deployment” projects are eligible for guarantees if they are (1) renewable energy systems that generate electricity, thermal energy, or add incremental hydropower (or are facilities that manufacture related components), (2) electric transmission systems, or (3) leading edge biofuel projects. In the ARRA, the Congress appropriated $6 billion to fund the lending assistance under Section 1705.  In FOA-140, DOE is soliciting loan guarantee applications for these “rapid deployment” projects, and announced that up to $2.5 billion will be used to provide subsidy costs for these projects ($2 billion for renewable energy and electric transmission projects and up to $500 million for biofuels). 

Additionally, in a second FOA (#DE-FOA-0000132), the Agency is soliciting loan guarantee applications under Section 1705 for large transmission projects and announced that up to $750 million will be used for subsidy costs for these projects (FOA-132).

Two significant points should be noted. First, it has been widely assumed that “rapid deployment” projects covered by Section 1705 need not use “innovative technology” (as defined by reference to available commercial technology) to qualify for assistance. Indeed, the DOE confirms that interpretation in FOA-132 where it expressly provides that eligible transmission projects can use “commercial technology.” However, the DOE states that in order to qualify under FOA 140, an eligible project under Section 1705 must use a “New or Significantly Improved Technology” and meet all the requirements of Title XVII of EPACT, including Section 1703. Therefore, no projects using commercial technology appear to be eligible under FOA-140.

Second, the two FOAs account for only $3.25 of the $6 billion appropriated in ARRA, which may leave up to $2.75 billion to be announced in future FOAs.

Initial applications for the first round under both FOAs need to be filed by September 14, 2009.

Links to the DOE’s Press Release and the two FOAS are listed below:

http://www.lgprogram.energy.gov/press/072909.pdf

http://www.lgprogram.energy.gov/2009-ren-energy-sol.pdf

http://www.lgprogram.energy.gov/2009-CPLX-TRANS-sol.pdf

In a separate development, the Treasury Department and the DOE today announced that the Treasury Department is now accepting applications for renewable energy grants that were referenced in our earlier update. A link to that update is attached here.