Secretary of Energy Samuel W. Bodman today announced that the Department of Energy (DOE) has issued the final regulations for the loan guarantee program authorized by Title XVII of the Energy Policy Act of 2005 (EPAct). DOE’s action today will pave the way for federal support of clean energy projects using innovative technologies and will spur further investment in these advanced energy technologies.Senator Pete Domenici (R-N.M.) issued the following statement in wake of the news:
DOE also today invited 16 project sponsors, who submitted pre-applications last Fall, to submit full applications for loan guarantees. These projects include advanced technologies involving the uses of biomass, fossil energy, solar, industrial energy efficiency, electricity delivery and energy reliability, hydrogen, and alternative fuel vehicles. Projects supported by loan guarantees will help fulfill President Bush’s goal of reducing our reliance on imported sources of energy by diversifying our nation’s energy mix and increasing energy efficiency.
“Loan guarantees aim to stimulate investment and commercialization of clean energy technologies to reduce our Nation’s reliance on foreign sources of energy,” Secretary Bodman said. “Finalizing this regulation for the Department’s Loan Guarantee program puts Americans one step closer to being able to use new and novel sources of energy on a mass scale to reduce emissions and allow for vigorous economic growth and increased energy security.”
The final regulation provides that the Department may issue guarantees for up to 100% of the amount of a loan, subject to the EPAct limitation that DOE may not guarantee a debt instrument for more than 80% of the total cost of an eligible project. Under the final rule, if DOE issues a guarantee for 100% of a debt instrument, the loan must be issued and funded by the Treasury Department’s Federal Financing Bank. While Congress must provide authority in an appropriations act for the loan guarantees that the Department will issue, DOE’s intent is to only issue loan guarantees if borrowers and project sponsors pay the “credit subsidy cost” for any loan guarantee they receive. Therefore, DOE does not plan to use taxpayer funds to pay for the credit subsidy costs of these loan guarantees.
“I am very pleased that DOE has issued the final regulation for its Loan Guarantee Program. At last, we now know that the program will proceed in a way consistent with our intent in the Energy Policy Act of 2005.More later. When the regs get published online, we'll have the link.
“In particular, I would note that the Administration has kept its commitment to me to guarantee up to 100 percent of a loan, subject to the overall cap of 80 percent of the project cost. This represents a significant and important change from the proposed draft rule.
“While alternative energy projects have attracted strong interest and growth, they have not yet secured the stable debt financing necessary to ensure their long term success. It is my belief and hope that a robust loan guarantee program will provide these projects the stability that will allow them to flourish, starting with the 16 pre-applicants that will now be invited to submit full applications.”