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The Department of Energy announced that up to $4 billion has been made available to guarantee loans for innovative renewable energy and energy efficiency projects that “avoid, reduce, or sequester greenhouse gases”.  Secretary Ernest Moniz stated that the Loan Guarantee Program is meant to build on and accelerate on the Department of Energy’s past success in using loan guarantees and other investments to foster the growth of the renewable energy industry in the U.S.    The loan solicitation issued by the Department of Energy gives guidance as to the types of technologies the Department is looking to support, key among which are, advanced grid integration and storage, drop-in biofuels, waste-to-energy, enhancement of existing facilities including micro-hydro or hydro updates to an existing non-powered dams, and efficiency improvements.  The loan solicitation, which can be found by following this link:, provides additional guidance as to eligible projects under each of these five key areas.



Under the Program, the Department would guarantee up to 80% of the eligible project costs.  The solicitation sets out the requirements  for project eligibility in more detail, including without limitation, that : (1) the Project must be located within the US or a US Territory, (2) the Project must employ a new or significantly improved technology that is not a commercial technology (i.e., technology that is not in general use in the commercial marketplace in the US at the time the Department issues the term sheet to the Applicant);   (3) the Project meets the Davis Bacon requirements for prevailing wages in the Project area; (4) the Project has a “reasonable prospect of repayment” of not only the guaranteed loan but all other debts; and (5) the Project has sufficient funds to carry out the proposed work.


In my opinion, the one downside to the Program is that it is not yet set up  to support smaller start up technology ventures.  For instance, all applicants must pay an initial application fee of $50,000 prior to the expiration of the applicable Phase I deadline.  A second application fee ranging from $100,000 to $350,000, depending on the amount of the loan guaranteed, is due prior to the expiration of the applicable Phase II deadline.    In addition, the Applicant pays a facility fee which is split into an installment due upon execution of the term sheet with the Department and a final installment for the balance of the fee prior to closing.  The Department also charges a loan maintenance fee on an annual basis to administer the loan.  The solicitation also sets forth other fees and costs for which the Applicant would be responsible, including without limitation, the Department’s outside counsel and consultant fees and costs.  In short, the Program is not likely suited for that small start up companies looking to develop innovative renewable energy technology.