FINANCING AMERICA'S ENERGY INFRASTRUCTURE

A BRIDGE TO PRIVATE FINANCING

The Department of Energy Infrastructure Investment Initiative (EIII) manages programs that bridge a gap in financing large-scale energy infrastructure projects.

Commercial lenders tend to prefer projects that use technologies or reach markets that are established and proven because they have history of operations and can be replicated. Emerging technologies and markets may hold great potential but are frequently bypassed for commercial lending because those technologies and markets may not be as well understood.

Projects using innovative technologies, tribal borrowers, and advanced technology vehicle manufacturing facilities may have trouble accessing capital markets because those markets may not be well understood yet by private lenders. There can be little incentive to take the time necessary to understand new technologies and markets. EIII’s programs were created by Congress to be a bridge for projects that support America’s energy infrastructure but cannot easily gain access to private financing until proven at commercial-scale.

EXTENDING AMERICA'S INFRASTRUCTURE INVESTMENTS

EIII aims to support energy infrastructure projects that can enable the growth and development of a regional infrastructure, improve awareness of the labor needs and skills required to deploy and run the technology, facilitate the development of a supply chain that never had existed before, and catalyze new and innovative logistics to support the project. Labor skills, insurance products, supplies, and more evolve expressly to meet the needs of this emerging technology. As the technology grows and scales, so does the surrounding ecosystem needed to support it. This facilitates job development, contributes to economic expansion, accelerates dissemination and uptake through economies of scale, and may even catalyze further innovation.

Specifically, LPO endeavors to:

  • Encourage commercial- and utility-scale development and adoption of new or significantly improved energy technologies;
  • Fund innovative technologies that reduce greenhouse gas emissions;
  • Create jobs by financing the growth of commercial clean energy technologies;
  • Provide direct loans to eligible automobile manufacturers and component suppliers for projects that re-equip, expand, and establish manufacturing facilities in the U.S. to produce advanced technology vehicles and components for such vehicles; and
  • Protect U.S. taxpayers by only making loans or issuing loan guarantees if we believe there is a reasonable prospect of repayment.

Commercial lenders are often unwilling to finance the first few commercial-scale projects that use a new technology since there is not yet a history of performance or operation. As a result, the initial commercial deployment of new energy technology is often limited by a project developer’s inability to secure sufficient long-term debt financing to build the project.

LPO was established to fill this critical role in the marketplace by financing the first deployments of a new technology to bridge the gap for commercial lenders.

Once the technology is proven at commercial scale through the first few projects, DOE stops providing financing and lets the private market take over. 

Learn more about LPO's mission and how it has performed in the LPO Financial Performance report.