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Section 1703 Loan Program

About the Section 1703 Loan Program

Section 1703 of Title XVII of the Energy Policy Act of 2005 authorizes the U.S. Department of Energy to support innovative clean energy technologies that are typically unable to obtain conventional private financing due to high technology risks. In addition, the technologies must avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases. Technologies we will consider include: biomass, hydrogen, solar, wind/hydropower, nuclear, advanced fossil energy coal, carbon sequestration practices/technologies, electricity delivery and energy reliability, alternative fuel vehicles, industrial energy efficiency projects, and pollution control equipment. Technologies with more than three implementations that have been active for more than five years are excluded.

Section 1703 Eligibility
  1. In order to be eligible for a section 1703 loan, an applicant must:
  2. Be located in the U.S. (Foreign ownership or sponsorship of the project is permissible as long as the project is located in one of the fifty states, the District of Columbia or a U.S. Territory);
  3. Employ a new or significantly improved technology that is NOT a commercial technology;
  4. A commercial technology means a technology in general use in the commercial marketplace in the U.S. at the time the term sheet is issued by the Department;
  5. A technology is in general use if it has been installed in and is being used in three or more commercial projects in the U.S. in the same general application as in the proposed project, and has been in operation in each such commercial project for a period of at least five years by the time the term sheet is issued; and
  6. Meet Davis Bacon requirements.
Section 1703 Application Information

The Section 1703 program is currently accepting applications through its Advanced Fossil Energy Projects Solicitation and we are still evaluating previously submitted applications for other technology areas. Please check our Solicitations page regularly for updates.
Section 1703 Credit Subsidy Cost

Section 1703 Credit Subsidy Cost

Title XVII specifies that the Energy Department must receive either an appropriation for the Credit Subsidy Cost (CSC) – the expected long-term liability to the Federal Government in issuing the loan guarantee – or payment of that cost by the borrower.  Under Section 1703, borrowers pay the CSC directly.

Section 1703 Credit-Based Interest Rate Spread

The LPO is announcing that a credit-based interest rate spread will be added to certain loans that are issued by the Federal Financing Bank (FFB) and backed by a 100 percent loan guarantee issued by the Department of Energy.  Full information is available here.

Sample 1703 Projects
  1. Georgia Power Company (GPC), Oglethorpe Power Corporation (OPC), and the Municipal Electric Authority of Georgia (MEAG) are using an $8.33 billion loan to construct and operate two new nuclear reactors at a plant in Waynesboro, Georgia. The project will create just over 4,000 jobs, output 18 million MWh a year, and about 10 million tons of CO2.
  2. AREVA Enrichment Services, LLC, is using a $2 billion loan to support the Eagle Rock Enrichment Facility in Idaho Falls, Idaho. The project will supply uranium enrichment services and create 1,300 jobs.