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Section 1705 Loan Program

About the Section 1705 Loan Program

The Section 1705 Loan Program authorizes loan guarantees for U.S.-based projects that commenced construction no later than September 30, 2011 and involve certain renewable energy systems, electric power transmission systems, and leading edge biofuels. To become more familiar with the program, please review Title XVII and the Final Rule and read each solicitation carefully for specific requirements that were required to be met..

Section 1705 Eligibility

In order to be eligible for a section 1705 loan, the applicant must be a renewable energy systems project, an electric power transmission systems project, or a leading edge biofuels project. The applicant must also:

  • Be located in the U.S.;
  • Have begun construction on or before September 30, 2011
  • Meet Davis Bacon requirements; and
  • Meet all applicable requirements of the Recovery Act.
Section 1705 Application Information

The Section 1705 Loan Program expired on September 30, 2011. LPO will continue to monitor projects that have already received loan guarantees under the 1705 program, but no new loan guarantees will be issued.

Section 1705 Credit Subsidy Cost

Title XVII specifies that the Department of Energy 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. The Department appropriated funds to pay the Credit Subsidy Cost of Section 1705 projects. In some cases, 1703 eligible projects may also be eligible under 1705, thereby qualifying them for appropriated CSC.

Financial Institution Partnership Program

The Financial Institution Partnership Program (FIPP) is a robust, risk-sharing partnership between the Energy Department and qualified finance organizations for loan guarantees issued under Section 1705. To learn about FIPP, please view the solicitation here.

Sample 1705 Projects

Here are two sample 1705 projects:

  • Abengoa Bioenergy Biomass of Kansas LLC is using a $132.4 million loan guarantee to support the development of one of the country’s first commercial-scale cellulosic ethanol plants. The project, located in Hugoton, Kansas, will create approximately 300 construction jobs and 65 permanent jobs.
  • Caithness Shepherds Flat is using a $1.3 billion loan to finance the Caithness Shepherds Flat wind project. One of the world’s largest wind farms to date, Caithness Shepherds Flat is an 845 megawatt wind-powered electrical generating facility located in eastern Oregon that will create 400 construction jobs.