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Reserved for Energy
The Department of Energy's (DOE) Loan Programs Office (LPO) has $8.5 billion in loan guarantee authority for Advanced Fossil Energy Projects under the Title 17 Innovative Energy Loan Guarantee Program (Title 17), authorized by the Energy Policy Act of 2005. Title 17 helps eliminate gaps in commercial financing for energy projects in the United States that utilize innovative technology to reduce, avoid, or sequester greenhouse gas emissions.
What value can LPO bring as a lender to my project? LPO administers three distinct loan programs, but all can provide a similar value to borrowers:
- Access to Debt Capital: Through Title 17, LPO can provide access to debt capital for large-scale energy projects that use innovative technology. Projects using technology that has not been deployed at commercial-scale often face difficultly accessing debt from private lenders because the technology does not have a history of commercial operation.
- Flexible, Custom Financing: LPO can provide financing that meets the specific needs of individual borrowers. LPO can be the sole lender to a project or can co-lend with or guarantee loans from private lenders. Additionally, LPO has capacity to finance large projects as a sole lender or to fill gaps in financing as part of a group of lenders.
- Committed Partnership: Lenders often prefer to engage with a project when the deal is fully formed; however, LPO encourages early engagement during project development. LPO can take the time to dive deep and understand the project and its technology. And after loan closing, LPO remains a valuable partner to borrowers throughout the entire loan term.
- Specialized Experience: LPO maintains an in-house team of financial, technical, legal, and environmental experts that has expertise with first-of-kind projects and a variety of deal structures.
- To date, LPO has provided more than $30 billion in debt financing.
Is my project eligible? A project must meet all of the following requirements to be eligible for a Title 17 loan guarantee:
- Meet “Eligible Project” requirements as defined by an open solicitation in one or more of the technology areas described therein.
- Employ new or significantly improved technology as compared to commercial technology in service in the United States at the time the guarantee is issued.
- Avoid, reduce, or sequester anthropogenic emissions of greenhouse gases or air pollutants.
- Be located in the United States. Foreign ownership or sponsorship of the projects is permissible as long as the project is located in one of the fifty states, the District of Columbia, or a U.S. territory.
- Provide a reasonable prospect of repayment.
In addition, an applicant must demonstrate that it has sufficient funds to carry out the project. Projects benefitting from certain other federal support may not be able to be supported, as described in the applicable solicitation. Applicants must also meet all applicable eligibility requirements set forth in the Energy Policy Act of 2005, the Final Rule as amended, and the relevant solicitation.
What kind of financial terms can LPO provide? LPO can provide flexible, custom financing to meet specific needs of individual borrowers. LPO offers senior, secured debt and can serve as sole lender, or can co-lend with or guarantee loans from other financial institutions and provide to bank syndicates flexible debt capacity that can be upsized or downsized depending on syndication strategy. LPO has experience with a range of borrowers, including private project developers, investor-owned utilities, publicly-owned utilities and nonprofits. LPO transactions are typically structured as limited recourse project financings; however, some projects use a corporate lending structure.
Interest Rate The interest rate for loans that are issued by the Federal Financing Bank (FFB) and backed by a 100 percent DOE loan guarantee will be calculated at the applicable U.S. Treasury rate for the tenor of the loan plus a FFB liquidity spread and a risk-based charge that may be collected up front or as a credit-based interest rate spread over the life of the loan. Learn more about the credit-based interest rate spread for Title 17.
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For more information, please visit: https://www.energy.gov/lpo/innovative-clean-energy-loan-guarantees