Today, the Department of Energy (DOE) Loan Programs Office (LPO) released updated Program Guidance for the Title 17 Clean Energy Financing Program, which can provide a total principal amount of more than approximately $300 billion in loan guarantees for clean energy, facility decarbonization, and energy infrastructure reinvestment projects. The new Program Guidance updates program eligibility, application requirements, and evaluation criteria; consolidates several existing solicitations into one easy-to-read document; and incorporates new authorities established by the Infrastructure Investment and Jobs Act (IIJA) in 2021 and the Inflation Reduction Act (IRA) in 2022. Those include the Energy Infrastructure Reinvestment (EIR, Section 1706) authority and a new category of financing under the existing section 1703 program for projects supported by a State Energy Financing Institution (SEFI). This guidance will help advance President Biden’s Investing in America agenda by helping facilitate clean energy projects in communities across the country.
POTENTIAL FINANCING THROUGH FOUR PROJECT CATEGORIES
Under Title 17, LPO can provide loan guarantees for projects in the United States that support clean energy deployment and energy infrastructure reinvestment. As part of this update, the Program Guidance organizes Title 17 into four broad project categories through which eligible projects can receive financing:
- Innovative Energy projects deploy qualifying New or Significantly Improved Technology that is technically proven but is not widely commercialized in the United States.
- Innovative Supply Chain projects employ a New or Significantly Improved Technology in the manufacturing process for a qualifying clean energy technology or manufacture a qualifying New or Significantly Improved Technology.
- State Energy Financing Institution (SEFI) projects support deployment of a qualifying clean energy technology and receive meaningful financial support or credit enhancements from an entity within a State agency or financing authority. SEFI projects are not required to employ innovative technology.
- Energy Infrastructure Reinvestment (EIR) projects retool, repower, repurpose, or replace energy infrastructure that has ceased operations; or enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or emissions of greenhouse gases. EIR projects are not required to employ innovative technology.
These different categories under Sections 1703 and 1706 cover projects across a range of sectors, including heavy industry and chemicals, clean hydrogen, carbon management, critical minerals, electricity transmission, renewable energy, advanced nuclear, energy storage, and clean energy manufacturing.
The Program Guidance lays out eligibility under these categories on page 11.
Applicants can also find more information about the application process on page 38 of the Program Guidance. Applicants can find the Part I Applications Instructions here and the Part II Applications Instructions here.
MEETING THE COMMUNITY BENEFITS PLAN REQUIREMENT
The Program Guidance also includes a new requirement for all Applicants to submit a Community Benefits Plan as part of their Part II Application. The Community Benefits Plan should discuss how the Applicant is engaging and will engage with stakeholders affected by the proposed project, including community, labor, and union engagement; job quality and workforce continuity; diversity, equity, inclusion, and accessibility; and contributing to the Justice40 initiative goal that 40 percent of the overall benefits from federal investments flow to disadvantaged communities (DACs). LPO considers the quality of a Community Benefits Plan among the factors that indicate the prospect of loan repayment. It is anticipated that elements of the Community Benefits Plan will be incorporated into the resulting loan agreements. Public transparency of the Community Benefits Plan will be important during project implementation. The Community Benefits Plan may evolve through the duration of the project. More information on Community Benefits Plans can be found on page 16 of the Part II Application Instructions.
WHAT THE NEW GUIDANCE MEANS FOR CURRENT APPLICANTS
Applicants should review the full Program Guidance document including project eligibility and evaluation criteria. The new Guidance consolidates and replaces previous Title 17 solicitations archived here (including Innovative Clean Energy, Innovative Clean Energy: Nuclear, and Innovative Clean Energy: Fossil solicitations).
Projects currently under review in LPO’s Title 17 application process do not need to resubmit in light of the Guidance, and prior determinations made with respect to eligibility of those applications do not change. LPO will work with current applicants to help them understand the new requirements and structure and will make accommodations to transition current applicants to the new requirements of the Guidance in a reasonable and timely manner.
Updated application instructions included with the new guidance will take effect for pending submissions. For example, an applicant who has been invited to submit a Part I application but has not yet submitted, should update their application materials in line with the new instructions. Similarly, an applicant that is invited to submit a Part II application should follow the updated Part II instructions. LPO may ask for additional project information for Part I or Part II applications currently under review, to meet requirements in the updated guidance.
Current applicants should note that the guidance includes an updated interpretation of the categories of fees the Department of Energy will collect at financial closing of a Title 17 loan guarantee. Concurrently, LPO is reaching out to existing applicants to help them understand what this guidance means for their application.
CHANGES FROM INTERIM FINAL RULE
The Program Guidance is being released concurrently with an Interim Final Rule (IFR), which amends the regulations implementing the loan guarantee provisions of Title 17 of the Energy Policy Act of 2005 to implement provisions from the latest legislative changes. Some notable changes from the IFR include:
- DOE specifies that it will obligate the credit subsidy cost of a loan guarantee at the time of Conditional Commitment. This program modification represents an alignment of the Title 17 Loan Guarantee Program with other federal lending programs pursuant to the Federal Credit Reform Act of 1990. More information on credit subsidy can be found on page 36 of the Guidance.
- The IFR clarifies how Title 17 applicants interact with the program with respect to transaction costs / third-party advisor costs. These changes are in line with the Energy Act of 2020 direction. LPO will continue the practice of charging and collecting a Facility Fee sufficient to cover administrative expenses at the time of the transaction's financial closing. LPO will revert to its previous practice of requiring applicants to enter into sponsor payment letters / borrower support letters during due diligence. The IFR confirms that the outside advisor costs of DOE as loan guarantor represent transaction costs associated with providing financing to the applicable project; and such costs can be included as projects costs. More information on these clarifications can be found on page 37 of the Guidance.
For detailed information on the Clean Energy Financing Program, including information about project categories, eligibility requirements, engaging with LPO, costs and fees, and the application process, please refer to LPO’s Title 17 web pages and the Program Guidance.
After consulting the Program Guidance, interested parties are invited to request a no-cost pre-application consultation. To facilitate a productive consultation, all potential applicants are encouraged to include information summarizing the project goals, technology, financing needs, and timing. During the consultation, LPO will work with you to determine whether the project may be eligible for financing.