President Obama has made it clear the nation that wins the clean energy race will likely be the nation that leads the global economy.
In just over two years, the Department of Energy’s Loan Programs Office has become one of our most significant and most effective tools to meet this challenge and promote America’s leadership in clean energy production and manufacturing.
In that time, we have issued loans, loan guarantees, and conditional commitments for loan guarantees to 28 clean energy projects, 16 of which have reached financial close, meaning that they have met all requirements and their full loans are finalized. That equates to over $30 billion in financing for those projects with total project costs of over $47 billion. Project sponsors estimate these 28 projects will create or save over 61,000 jobs, including construction and operating jobs, while also building a foundation for clean energy technology manufacturing here in the United States.
One of the three types of loans or loan guarantees offered by our office – Section 1705 loan guarantees from the Recovery Act – will expire by statute on September 30, 2011. To qualify, projects must have commenced construction and closed their loan guarantees by that date. Under 1705, we have issued 19 loan guarantees or conditional commitments since March 2009 that total $11 billion in investment.
Sample projects include the country's largest wind farm; two solar thermal power plants that will nearly double the amount of commercial solar thermal electricity produced in the United States today; one of the largest photovoltaic generation facilities in the world; and a biodiesel refinery that will triple America’s domestic biodiesel production.
These 19 projects are expected to account for nearly two-thirds of the program’s $2.4 billion in appropriated funding. In light of the impending, statutorily imposed deadline, we expect that all, or nearly all, of the remaining funding will be utilized by a group of other projects already in the pipeline that have the strongest chance of completing all necessary steps prior to the September 30th deadline. Unfortunately, this means that we will simply not have the opportunity to support every project that has applied for the program.
Accordingly, today we are notifying a group of companies that are farthest along in the process that we will be working with them to take the final steps required to complete a loan guarantee. Given the rigorous technical, legal, and financial requirements, it is possible that not all of these projects will succeed by September 30th, but each of them will have a chance to compete for the remaining funding.
Recognizing that generating an application and supporting it through the review process is both time consuming and expensive, we are placing a number of other applications on hold. This does not mean they are not quality projects, it simply means other applicants that are further along are more likely to meet the program’s deadline and consume the available funding.
If, in the future, the Loan Programs Office has sufficient budget resources, we may be able to continue evaluating these projects. Some might also be eligible for new funding that was recently approved by Congress for the 1703 program, which also provides loan guarantees for renewable energy projects. We are working to develop a process for implementing this new provision.
The success and impact of this program is already clear in the major projects under construction and coming online across the country, creating jobs and building the foundation for a clean energy economy. As with any major grant or loan program, it is unfortunate that not every project deserving of support will be able to receive a conditional loan, but the overwhelming response is a testament to the ingenuity of Americans and our ability to stay competitive in the 21st century clean energy economy.
Jonathan Silver is the Director of the Loan Programs Office.