LPO has $8.5 billion in loan guarantee authority for Innovative Clean Energy: Fossil Projects under the Title 17 Innovative Clean Energy Loan Guarantee Program (Title 17), authorized by the Energy Policy Act of 2005. Title 17 helps eliminate gaps in commercial financing for energy projects in the United States that utilize innovative technology to reduce, avoid, or sequester greenhouse gas emissions or air pollutants.
For more detailed information on how LPO can finance Innovative Clean Energy: Fossil Projects, please read the solicitation. Potential applicants are encouraged to engage directly with LPO for no-fee, no-commitment consultations to start a conversation about the project and about LPO's process before formally applying. Email firstname.lastname@example.org to request a consultation with an LPO staff member.
For more information:
- What value can LPO bring as a lender to my project?
- Is my project eligible?
- What kind of financial terms can LPO provide?
- What is the process for obtaining a loan guarantee?
- What are the costs & fees?
- How are greenhouse gases emissions calculated?
- How does LPO treat confidential business information?
- Where can I read the Innovative Clean Energy: Fossil Projects solicitation and find more detailed information?
- How do I apply?
What value can LPO bring as a lender to my project?
LPO administers three distinct loan programs, but all can provide a similar value to borrowers:
- Access to Debt Capital: Through Title 17, LPO can provide access to debt capital for large-scale energy projects that use innovative technology. Projects using technology that has not been deployed at commercial-scale often face difficultly accessing debt from private lenders because the technology does not have a history of commercial operation.
- Flexible, Custom Financing: LPO can provide financing that meets the specific needs of individual borrowers. LPO can be the sole lender to a project or can co-lend with or guarantee loans from private lenders. Additionally, LPO has capacity to finance large projects as a sole lender or to fill gaps in financing as part of a group of lenders.
- Committed Partnership: Lenders often prefer to engage with a project when the deal is fully formed; however, LPO encourages early engagement during project development. LPO can take the time to dive deep and understand the project and its technology. And after loan closing, LPO remains a valuable partner to borrowers throughout the entire loan term.
- Specialized Experience: LPO maintains an in-house team of financial, technical, legal, and environmental experts that has expertise with first-of-kind projects and a variety of deal structures. To date, LPO has provided more than $30 billion in debt financing.
Is my project eligible?
A project must meet all of the following requirements to be eligible for a Title 17 loan guarantee:
- Meet “Eligible Project” requirements as defined by an open solicitation in one or more of the technology areas described therein.
- Employ new or significantly improved technology as compared to commercial technology in service in the United States at the time the guarantee is issued.
- Avoid, reduce, or sequester anthropogenic emissions of greenhouse gases or air pollutants.
- Be located in the United States. Foreign ownership or sponsorship of the projects is permissible as long as the project is located in one of the fifty states, the District of Columbia, or a U.S. territory.
- Provide a reasonable prospect of repayment.
Learn more about technical eligibility requirements by reviewing the Innovative Clean Energy: Fossil Technical Eligibility Reference Guide.
Learn more about the types of CCUS (Carbon Capture, Utilization, and Storage), air pollutant control, distributed energy projects, or electric/alternative-fuel vehicle infrastructure projects that LPO could support under the Innovative Clean Energy: Fossil Projects solicitation.
In addition, an applicant must demonstrate that it has sufficient funds to carry out the project. Projects benefitting from certain other federal support may not be able to be supported, as described in the applicable solicitation.
What kind of financial terms can LPO provide?
LPO can provide flexible, custom financing to meet specific needs of individual borrowers. LPO offers senior, secured debt and can serve as sole lender, or can co-lend with or guarantee loans from other financial institutions and provide to bank syndicates flexible debt capacity that can be upsized or downsized depending on syndication strategy.
LPO has experience with a range of borrowers, including private project developers, investor-owned utilities, publicly-owned utilities and nonprofits. LPO transactions are typically structured as limited recourse project financings; however, some projects use a corporate lending structure.
For more information about the kind of financial terms LPO can provide, including pricing, terms, and structure, read the Title 17 Lending Reference Guide.
The interest rate for loans that are issued by the Federal Financing Bank (FFB) and backed by a 100 percent DOE loan guarantee will be calculated at the applicable U.S. Treasury rate for the tenor of the loan plus a FFB liquidity spread and a risk-based charge that may be collected up front or as a credit-based interest rate spread over the life of the loan. Learn more about the credit-based interest rate spread for Title 17.
What is the process for obtaining a loan guarantee?
Potential applicants are encouraged to engage directly with LPO for no-fee, no-commitment consultations to discuss their proposed project and learn about LPO's process before formally applying. Email email@example.com to request a consultation with an LPO staff member.
FORMAL APPLICATION PROCESS
The following provides a broad overview of the Title 17 application process.
Potential applicants may refer to Suggestions for a Strong Title 17 Innovative Clean Energy Loan Guarantee Application for guidance on preparing an application and should also review all solicitations, supplements, and governing documents on the LPO website.
Application Part I
- LPO evaluates project for basic eligibility (innovation and GHG emissions).
- LPO aims to complete Part I review within 60 days.
- LPO invites eligible applicants to submit Part II application.
Application Part II
- LPO further evaluates the project for factors such as project risk allocation, creditworthiness, technical relevance and merit, technical approach, work plan, construction plan, and legal, environmental and regulatory factors.
- LPO invites eligible applicants into due diligence.
Due Diligence & Term Sheet Negotiation
- LPO performs financial, credit, legal, environmental, market due diligence.
- LPO typically engages external advisors (e.g., legal, technical, financial, market, insurance) to assist in due diligence and structuring. External advisory costs are borne by the applicant.
- LPO reviews project compliance with federal environmental laws.
- LPO structures the transaction, underwrites and negotiates term sheet with the applicant.
- LPO presents the project for credit approval to internal Project Review Committee, external Interagency Review and internal Credit Review Board review.
- Upon review and approval by the Secretary of Energy, LPO issues a Conditional Commitment.
- LPO and the applicant negotiate and finalize the loan guarantee agreement and project documents.
- LPO and applicant execute the loan guarantee agreement at closing.
- Applicant fulfills conditions precedent to close.
What are the costs & fees?
Upon financial closing, the following fees will be due:
- Facility Fee – This covers the underwriting process following Part I and Part II applications. The fee is equal to one percent for the portion of the principal amount of the Guaranteed Obligation less than or equal to $150 million and 0.6 percent for the portion of the amount over $150 million.
- Third Party Consultants Fee – This reimburses LPO for the out-of-pocket costs of third-party consultants engaged by DOE during the due diligence phase, including outside legal consultants, independent engineers, market analysts and financial analysts.
LPO continues to strongly encourage prospective applicants to engage in no-cost pre-application consultations with LPO staff to facilitate a more efficient application review process and a shorter timeline between application submission and financial close.
The annual maintenance fee covers LPO’s administrative expenses, other than extraordinary expenses, in servicing and monitoring the loan guarantee through payment in full. The fee is paid each year in advance, commencing with payment of a pro-rated first annual payment on the closing date of the loan guarantee.
CREDIT SUBSIDY COST
The Federal Credit Reform Act of 1990 (FCRA) requires agencies to estimate the cost to the government of extending or guaranteeing credit. This cost, referred to as subsidy cost, equals the net present value of estimated cash flows from the government minus estimated cash flows to the government over the life of the loan and excluding administrative costs.
The credit subsidy cost is calculated prior to loan closing and LPO, in consultation with the Office of Management and Budget, uses historical information and various assumptions, including the probabilities of default, borrower prepayments, or recoveries, and the projected timing of these events, to make informed predictions about expected future cash flows.
How are greenhouse gas emissions calculated?
Eligible projects must avoid, reduce, or sequester anthropogenic emissions of greenhouse gases. When submitting a Part I application, applicants must submit Attachment C, Summary Lifecycle Greenhouse Gas Emissions Data Worksheet to help LPO complete its lifecycle greenhouse gas emissions analysis of the proposed project.
The worksheet linked above reflects updates issued on January 26, 2015 to better assist applicants by putting carbon inputs and outputs on an annualized basis for ease of inventorying and providing carbon flows with auto-populated fields for ease of carbon accounting. The original Attachment C without these improvements can be found here.
How does LPO treat confidential business information?
Refer to the Treatment of Confidential Materials fact sheet.
Where can I read the Innovative Clean Energy: Fossil Projects solicitation and get more detailed information?
Applicants should review the final solicitation AND all supplements before submitting an application.
- Annotated Solicitation (April 18, 2022)
Governing Documents: Refer to the Title 17 Governing Documents webpage.
Environmental Compliance: Refer to the Environmental Compliance web page.
How do I apply?
Potential applicants are encouraged to engage directly with LPO for no-fee, no-commitment consultations to start a conversation about the project and about LPO's process before formally applying. Email firstname.lastname@example.org to request a consultation with an LPO staff member.
In addition to the solicitations, supplements, and governing documents, potential applicants should refer to Suggestions for a Strong Title 17 Innovative Clean Energy Loan Guarantee Application for additional guidance prior to formally applying.