The Department of Energy (DOE) plans to make an additional $4 billion in loan guarantees available to help commercialize U.S. renewable energy and energy efficiency technologies that avoid, reduce, or sequester greenhouse gases.
The DOE on Wednesday issued a draft loan guarantee solicitation under Title XVII of the Energy Policy Act of 2005 (through Section 1703 of the Loan Guarantee Program) to back technologies that are unable to obtain full commercial financing, but which are “catalytic, replicable, and market ready.” While it notes that “any project that meets the eligibility requirements is eligible to apply,” the DOE outlined five key areas of interest: advanced grid integration and storage; drop-in biofuels; waste-to-energy; enhancement of existing facilities; and efficiency improvements.
Particularly relevant to the power sector, the “advanced grid integration and storage” technology area focuses on renewable systems that mitigate issues related to variability, dispatchability, congestion, and control, by incorporating technologies such as demand response or local storage. Those designs are expected to demonstrate greater grid compatibility of generation from renewable resources and “open up an even larger role for renewable power generation,” the DOE said. Projects could include distributed generation, storage, and smart grid systems that incorporate demand response, energy efficiency, or sensing.
The “waste-to-energy” technology area focuses on projects that incorporate renewable generation technologies into existing renewables or efficient energy facilities to significantly enhance performance or extend the lifetime of the generating asset. These could include non-powered dams, retrofitting of existing wind turbines, or including variable speed pump-turbines into existing hydropower projects.
The DOE now plans to initiate a 30-day public comment period and schedule public meetings. Once the draft solicitation is finalized, the DOE’s Loan Programs Office (LPO) will accept applications.
As Douglas Schultz, DOE director of origination, explained at ELECTRIC POWER 2014 earlier this month, applications will undergo a two-part review. Part I will determine the initial eligibility of a project and whether it is ready to proceed. Part II, for applications that clear Part I, includes the full application process. The DOE then grants a conditional commitment to selected applicants, who then undergo the complete underwriting process and negotiation of terms for the loan guarantee. The DOE is even willing to consider projects that “need 100% lending from us because no other lender is willing to come forward,” Schultz said.
To date, the agency has disbursed $32.4 billion to 30 projects under Sections 1703 (all to nuclear projects, including Southern Co.’s Vogtle reactors, and AREVA’s Eagle Rock Enrichment Facility), 1705 (which expired in September 2011 and furnished mostly renewables, transmission, or biofuels projects with loan guarantees), and advanced technology vehicles manufacturing.
At least $40 billion remains to be disbursed. The $8 billion advanced fossil energy projects solicitation announced this December reopens a 2008 solicitation, which was limited to coal gasification technologies but whose applicants withdrew as natural gas prices fell, Schultz explained.
Schultz said that almost all of the federally financed “first-of-a-kind” projects have been a success. Only 2% of the total amount disbursed proved to be outstanding losses, such as from the bankruptcy of the now-infamous thin-film solar cell maker Solyndra.
—Sonal Patel, associate editor (@POWERmagazine, @sonalcpatel)