Department of Energy closes Loan Guarantee Program

The U.S. Department of Energy announced today that it will no longer accept applications to the 1705 Loan Guarantee program, which has helped 19 clean energy projects gain financing for their projects through other sources. The program, established under the American Recovery and Reinvestment Act of 2009, has a sunset date of Sept. 30, 2011. But some companies that may not receive a loan guarantee under the popular program may still qualify for under 1703, a similar program.

The loan guarantee program, which essentially gives federal backing to solar and other clean-energy projects, like the $400 million loan-guarantee that’s helped Abound Solar attract financing to expand its thin-film photovoltaics manufacturing capacity to 840 megawatts of annually. Or the $1.7 billion BrightSource loan guarantee that allowed the company to attract a $168 million investment from Google, Inc. to build the first phase of its 392-megawatt Ivanpah Solar Electric Generating System.

In all, the DOE has committed $11 billion in investments through the 1705 program, said DOE Director of the Loan Programs Office Jonathan Silver, in a post describing the fate of the program. “These 19 projects are expected to account for nearly two-thirds of the program’s $2.4 billion in appropriated funding,” he said. “We expect that all, or nearly all, of the remaining funding will be utilized by a group of other projects already in the pipeline that have the strongest chance of completing all necessary steps prior to the September 30th deadline.”

The announcement leaves some companies that have applied for a loan guarantee in the drift. The department issued letters to companies that had applied and were in the application process. One letter was sent to those companies that were most likely to meet the ‘shovel-ready’ deadline. DOE will continue the application process for those applicants.

Those project applicants deemed less likely to meet the requirements on deadline received a letter informing them that their applications would be put on hold. “This does not mean they are not quality projects, it simply means other applicants that are further along are more likely to meet the program’s deadline and consume the available funding.”

“There were dozens that received the hold letter and fewer than that received the other letter,” said a department official, speaking on background. The official said the names of companies affected aren’t being released at this point because it's business-sensitive information.

Some companies that have applied for the 1705 loan guarantee may be eligible for a loan guarantee under DOE’s 1703 loan guarantee program, which recently received new Congressional funding. The department now is working on developing a process that would allow that to happen.

Image courtesy of DOE's Loan Programs Office, of the BrightSource project