Thank you to the National Center and Chris James for this opportunity to address you remotely. RES has always been a great opportunity for DOE and the Loan Programs Office to connect with Indian Country and network directly with tribal leaders and members. While I’m unable to attend in person, I’m glad that senior leaders from my office are able to be there in person.
This gathering is an important one for the Loan Programs Office at the Department of Energy and the Tribal Energy Loan Guarantee Program. It was where we first rolled out the loan guarantee program in 2018 and it was the final event that we were able to attend in person prior to the pandemic keeping us all at home. And I’m proud that it is the first event that our team is able to travel to in-person again.
In some ways, the inability to meet in person in 2020 made it more difficult to engage with tribes. But in other ways, thanks to technology, we were able to engage across the country in a manner that we’d previously not done. Likewise, the pandemic shifted priorities for many tribes from putting resources toward energy development and toward ensuring the health and safety of their citizens.
That’s what makes the theme of this week so accurate; tribes are moving “forward with resiliency and reinvention.” We look forward to doing so with you.
As attention shifts back toward the economic potential of energy and mineral development, we will continue to be accessible through video and phone teleconferences to discuss your projects and hear your feedback about our program. From the conversations we’ve had during the first half of the year, we’re inspired by tribes’ aspirations in the energy space.
It’s an essential part of environmental justice pillar that the Biden-Harris Administration has put forth for the Energy Department. With up to $2 billion in available loan guarantees, the Tribal Energy Loan Guarantee Program can play a large role in that effort. Let me also note that we have loan programs that are focused on innovative technologies that have yet to be widely deployed and on auto manufacturing projects. That’s why we welcome tribes to talk us about their proposed projects so that we can work with them to find the best fit for their debt capital needs.
But we can’t have an impact if we can’t get the money out the door. And Secretary Granholm has made it clear that our mission is to deploy, deploy, deploy. We recognize that to do that we need to make some changes to improve access to the Tribal Energy Loan Guarantee Program.
That goes to another directive from the Secretary, which is to actively engage with and listen to tribes. Secretary Granholm and other senior DOE officials hosted a listening session in April, and I joined the director of DOE’s Office of Indian Energy, Wahleah Johns in May for a roundtable to hear and discuss the challenges in developing tribal energy projects and how funding and financing programs offered through DOE can be structured to address them.
More than 350 participants took part in the session and provided valuable feedback on making DOE programs more effective for Indian Country to meet tribal economic development and energy resilience needs. We thank you for using the listening session as an opportunity to look at LPO further for access to energy capital. The session elicited more than 140 questions.
There were a number of great points and questions that we received from the roundtable, but overwhelmingly, the two major takeaway’s that we received were that (1) Lack of capital is a significant impediment to tribal energy development and that (2) tribes are having difficulty understanding and using our Tribal Energy Loan Guarantee Program to help address these needs.
Now, on the first point about access to capital, I have a lot of experience developing renewable energy projects, so I understand that the costs of developing a project can be steep before you even get to the point of seeking a loan. That development capital for things like studies, designs, and legal costs can be very difficult to come by. Finding equity or bank financing for building the project can also be very challenging. And it can be especially challenging to come by for entities like tribes that are building energy projects for the very purpose of stimulating much needed economic development.
To address the challenges of the lack of development capital and making sure that the DOE Tribal Energy Loan Guarantee Program is part of the solution, not part of the problem, we are evaluating a number of potential changes that are intended to make it more affordable, especially in the earlier parts of the process, and to ensure that we can support the types of projects that tribes are engaging in.
We are taking a thorough look at the ways in which we can update the program based on the current statute, including:
- The first change we are looking at is the possibility of deferring fees until loan closing: We understand that you may be hesitant to invest resources and money into a process that may not end up in a loan. That’s why we are working to remove the risk of upfront application fees and make TELGP align with the direction Congress gave us for our Innovative Energy Loan Guarantee Program at the end of last year.
- We are also examining the possibility of streamlining the Part I application process: We understand the ebbs and flows of project development and requiring a lot of the pieces to be in place when you apply can be a deterrent. We’re looking at a process that focuses the Part I review on simply confirming that the borrower is or will be a tribe or tribal energy development organization and a general project description to confirm that it is energy development related and has an eligible ownership structure. Consistent with the approach we are now taking in our Innovative Energy Loan Guarantee Program to remove barriers to applying, the project would not need to demonstrate the project’s creditworthiness until Part II of the application is submitted.
- Additionally, we are looking at how we can knock down barriers to support smaller projects: We’ve heard that costs, fees, and the time to go through our process can be a deterrent for smaller projects. To improve accessibility to the loan guarantee program for smaller projects, we are looking at ways to reduce the time and cost of the application and underwriting process. Among the changes under consideration are a greater reliance on the diligence and underwriting process of lenders, particularly when considering the need for an independent credit rating or separate consultant reports for guarantees below a certain threshold.
- And finally, we are reexamining our view of eligible borrowers and projects: Energy markets change rapidly and we need to be able to evolve with them. We are looking closely at our statutes and rules to identify how they can support the ownership and financing structures that tribes are considering. For instance, we are actively working on potential structures to include tax equity structures.
I’ve directed my team at the Loan Programs Office to work as quickly as possible to identify what we need to do to make these changes happen so that we can do as Secretary Granholm has charged us: help deploy tribal energy projects. My mission is focused; by the time we gather for RES in 2022, I want to be able to talk about actual applicants to the Tribal Energy Loan Guarantee Program. I hope you’ll be able to connect with my colleagues, John Lushetsky and Matt Ferguson who are there at RES this week, but if not, we are always accessible through our website, energy.gov/lpo.
We are excited about the opportunity that we have to work with Indian Country to move forward tribal energy development.
Thank you again to the National Center for this opportunity.