A new authority waives the innovative technology requirement in Title 17 for projects receiving financial support or credit enhancements from a state energy financing institution (SEFI). Previously, all projects funded under Title 17 were required to employ technologies that were new or significantly improved compared to commercially available technologies. Now, projects that reduce greenhouse gas emissions without using an innovative technology may be eligible for loans under Title 17, so long as the projects receive qualifying funding from a SEFI (e.g., a state green bank or other qualifying state entities) and fall into one of the categories of eligible projects under Title 17.  

Congress enacted this change to Title 17 in part to provide access to debt for borrowers seeking to deploy already commercialized clean energy technologies. By providing loan guarantees to SEFI-supported projects (which can include guarantees of loans made by eligible private lenders), the Loan Programs Office (LPO) can now offer project financing to a wider range of borrowers under Title 17, including small, rural, and underserved communities.

The expanded authority was established by the Bipartisan Infrastructure Law and funded by the Inflation Reduction Act (IRA). The IRA provided an additional $40 billion of loan authority for projects eligible for loan guarantees under section 1703 of the Energy Policy Act of 2005, and that authority will remain available through September 30, 2026.

The SEFI-related authority broadens the scope of projects LPO can finance under Title 17 and will further advance private sector-led, government-supported efforts to reduce greenhouse gas emissions.

Typographic image explaining that the innovative technology requirement has been waived for Title 17 Clean Energy Loan Guarantee projects that receive financial support or credit enhancements from a SEFI.

Hypothetical Project Applications

The following scenarios represent example projects and funding structures that might be eligible for a loan from LPO under this authority.

Example 1: A private lender provides debt financing and servicing to small businesses that acquire, renovate, and rent or re-sell mid-market single-family homes. The small businesses use the proceeds to install on-site renewable energy generation, build EV infrastructure, and improve the overall energy efficiency of the homes. Several state energy offices provide subordinated debt capital or loan loss reserves for the project. The lender seeks a loan guarantee from LPO for senior debt used to originate or purchase the portfolio of small business loans.

Example 2: A community solar developer is constructing multiple solar facilities. The project portfolio has SEFI funding in the form of up-front state grants, which the developer receives for serving certain geographic areas of the state. The developer may be eligible to receive additional state grants if it serves lower- and moderate-income and disadvantaged communities. The developer applies for an LPO SEFI loan guarantee to support deployment of solar facilities. The developer repays the loans for facility construction through customer subscriptions. The developer would like LPO to guarantee a multi-draw construction loan or similar facility used to finance the portfolio.

Example 3: A state has invested in a project to transport natural gas for use in production of blue ammonia. The developer secured SEFI support for electrolyzer facilities to complement existing state-backed blue ammonia infrastructure. Because the project receives SEFI support, the developer explores a guarantee for the new infrastructure under Title 17. In addition to providing financing for the electrolyzers, a loan guarantee from LPO would come with valuable technical expertise.

Example 4: A private developer builds residential housing projects to high energy efficiency standards. As a result, the state housing finance agency provides grants and credit enhancement for the construction, potentially making the developer’s projects eligible for a loan from LPO under Title 17. The developer mentions this to the state housing finance authority, which also supports dozens of other developers. The SEFI decides to bundle projects from multiple developers into a single application to LPO. The SEFI seeks a loan guaranteed by LPO to further incentivize developers to prioritize energy efficiency in new buildings.

Example 5: A company finances the purchase of energy-efficient appliances through an online utility marketplace platform and provides point-of-sale rebates for customers throughout the United States. In several states, the company developed loan-loss reserve (LLR) programs with state energy offices. The LLR programs cover a significant portion of qualifying losses resulting from consumer loan defaults, which are infrequent. The company seeks a loan guaranteed by LPO to scale up its service offerings and make more loans available to consumers in states where it receives SEFI funding.

Typographic image that provides examples of potential SEFIs, such as Housing Finance Agencies, Economic Development Authorities, State Green Banks, and State Energy Offices.

What qualifies as a SEFI?

The provision defines a SEFI as a quasi-independent entity or an entity within a state agency or financing authority established by a State to satisfy two broad functions:

  1. Provide financing support or credit enhancements, including loan guarantees and loan loss reserves, for eligible projects under Title 17.
  2. Create liquid markets for eligible projects, including warehousing and securitization, or take other steps to reduce financial barriers to the deployment of existing and new eligible projects.

Examples of SEFIs may include, but are not limited to:

  • Housing Finance Agencies.
  • Economic Development Authorities.
  • State Green Banks.
  • State Energy Offices.

Note that for the provision to apply, the project must receive financing or credit enhancement from a SEFI.

What qualifies as financing or credit enhancement from a SEFI?

Qualifying SEFI support can take many forms. Until a rulemaking and related guidance are issued, LPO will assess applications on a case-by-case basis to determine whether the project funding structure meets the criteria.

Examples of qualifying funding may include, but are not limited to:

  • State providing equity/subordinate portion of capital stack. 
  • State providing loan loss reserve with respect to junior portion of capital stack. 
  • State or SEFI co-lending with LPO (pari passu or mezzanine).
  • State backstop of specific key project elements that may be subject to regulatory or local market risk​.

How to Apply

Potential applicants should become familiar with requirements applicable to all loans and loan guarantees issued under Title 17. These requirements can be found in the Title 17 Innovative Clean Energy (section 1703) solicitation here. Further guidance for potential applicants to apply under the SEFI authority will be provided in an upcoming Title 17 rulemaking and subsequent guidance.

To apply using the SEFI authority, potential applicants should follow these additional instructions for Part I:

  • Replace “Eligible Project” Condition 2 (New or Improved Technology) with “Receives qualifying support from a qualifying SEFI.”
  • Applicants should fill out Attachment A with the following two updates:
    • In addition to providing the information requested in Section C/Part 1 (Executive Summary), applicants should also explain how the proposed project meets the SEFI funding requirements defined in this provision.
    • In Section D/Part 2 (Description of New or Significantly Improved Technology), applicants should describe the technology being deployed but are not required to explain how it is new or significantly improved.

LPO’s Outreach and Business Development team will provide guidance regarding potential eligibility and work with applicants to prepare applications. Applicants will have ample opportunity and support to refine their initial applications to ensure they comply with the requirements set forth in any rulemaking.

LPO encourages interested parties to begin the application process as soon as possible by calling 202-586-8336 or writing to lpo@hq.doe.gov to schedule a no-fee, pre-application consultation.

Jigar Shah
Director of the Loan Programs Office
more by this author