A recent brief by the Center for American Progress (CAP) –“Invest in America’s Clean Energy Future”–advocating against substantial cuts in funding for the U.S. Department of Energy (DOE) loan guarantee program proposed by the U.S. House of Representatives provides interesting and heretofore not publicly known details about the pipeline for projects seeking guarantees under Section 1705 of the Energy Policy Act of 2005, for which Division A of the American Recovery and Reinvestment Act of 2009 (Recovery Act) (Section 3001) provides funds to pay credit subsidy costs for loan guarantees for renewable energy and electric transmission projects (for more information on Section 1705 loan guarantees, see Latham’s Client Alerts on this topic; for more information on cuts to the loan guarantee program proposed by the House, see earlier Clean Energy Law Report blog entry).
The CAP brief indicates that in addition to the 18 projects that have reached financial close on loan guarantees, and 10 projects that have conditional commitments from DOE for loan guarantees (information on these projects is available from the DOE Loan Programs Office), there are approximately 95 projects in 38 states and Puerto Rico that have received term sheets but have not advanced to the conditional commitment stage. The brief provides that of the $2.5 billion in appropriations under the Recovery Act currently available to DOE to cover credit subsidy costs for Section 1705 loan guarantees approximately $500 million is obligated to projects that have reached financial close while another approximately $300 million would go to projects that already have conditional commitments if they reach financial close. The brief also indicates that the remaining projects still in the term sheet stage would use up all of the remaining appropriations (approximately $1.7 billion) and still require several hundred millions of dollars more to cover their credit subsidy costs if they reach financial close. (The brief does not provide any references for this information concerning projects still in the term sheet stage, though it does note that helpful insights were provided by a CAP Senior Fellow who was a special advisor to DOE on the loan guarantee program until last fall.) The brief provides that all loan guarantees under Section 1705 for projects that have not reached financial close (reportedly at least 105 projects in at least 39 states) are at risk under the House budget proposal because it seeks to rescind the remaining $2 billion in appropriations not yet obligated.