On July 29, the Department of Energy (DOE) released two solicitations for its loan guarantee program that renewable energy and transmission project developers have been anticipating since the passage of the American Recovery and Reinvestment Act (ARRA) last February.  The solicitation for transmission infrastructure investment projects (DE-FOA-0000132) will be the subject of a later Alert.  This Alert focuses on the  renewable energy, energy efficiency and advanced T&D technologies solicitation (DE-FOA-0000140), which will fund up to $8.5 billion in loan guarantees to support projects utilizing new or significantly improved technology for renewable energy, leading edge biofuels for transportation, energy efficiency and electricity T&D. 

The solicitation lists nine technical categories of eligible projects:

• alternative fuel vehicles
• biomass
• efficient electricity transmission, distribution and storage
• energy efficient building technologies and applications
• geothermal
• hydrogen and fuel cell technologies
• energy efficiency projects
• solar
• wind and hydropower 

Guarantees are available both for stand-alone projects and for facilities that utilize new or significantly improved technologies to manufacture the components of eligible projects.  “New or significantly improved technologies” are, generally, technologies that have not been used in three or more commercial projects in the United States for at least five years.

The new solicitation includes guarantees under both the existing DOE loan guarantee program (Section 1703 of the Energy Policy Act of 2005) and the new program established by the ARRA (Section 1705 of EPAct 2005).  Although the industry generally expected that DOE would release a new set of rules for its loan guarantee program, DOE instead retained its existing rules, including the requirement that eligible projects utilize “new or significantly improved technologies,” which was not included in the statutory language of the ARRA.  Still, differences remain between the two programs, and the self-selection of one program or the other at the time of application may have important implications.  For example, certain qualifying Section 1705 projects are eligible to have their credit subsidy cost (i.e., the cost of the loan guarantee) paid by the DOE, but project construction must begin by September 30, 2011, and the guarantee recipient will be subject to the various reporting, purchasing and labor requirements that commonly attach to ARRA funding.  By contrast, Section 1703 applicants must front the credit subsidy cost, but they generally are not subject to the requirements of the ARRA. 

The loan guarantee application process requires applicants to file two sequential parts.  Part I contains an executive summary, project overview and initial information.  Part II contains more detailed information DOE will use to conduct its due diligence.  The DOE will review applications in seven rounds.  Part I applications for the first round are due no later than September 16, 2009, with Part II for that round due two months later.  The final round of Part I applications will be due August 24, 2010 (followed by Part II in December of 2010).  According to DOE, applicants applying in the early rounds will enjoy a “first-movers advantage” relative to later applicants.  Non-refundable application fees, which vary by the amount of the guarantee sought, are due with the filing of both the Part I and Part II applications. 

The 85-page solicitation, which provides detailed information about the application and selection process, can be found here: http://www.lgprogram.energy.gov/2009-ren-energy-sol.pdf.  If you would prefer to discuss the new program with one of our attorneys, please contact:

William Hewitt at 207.791.1337 or whewitt@pierceatwood.com

John Gulliver at 207.791.1296 or jgulliver@pierceatwood.com

Tim Schneider at 207.791.1433 or tschneider@pierceatwood.com