DOE to offer $8 billion in clean fossil-fuel project loan guarantees
Washington (Platts)--9Dec2013/507 pm EST/2207 GMT
The US Department of Energy will announce in the next two weeks the
opening of a solicitation for up to $8 billion in loan guarantees for
fossil-energy projects that will use innovative technologies to reduce
carbon emissions, the head of the department's loan guarantee program
said Monday.
The solicitation is aimed at technology that has not been deployed in
the US, and could be for projects in the oil, coal and gas, from
extraction to generation, Peter Davidson, executive director of the loan
program office at DOE, said during at appearance before the United
States Energy Association in Washington.
It will be the first new solicitation in the DOE loan guarantee program
in two and a half years, said Davidson, who joined DOE six months ago.
He said new Energy Secretary Ernest Moniz is seeking to increase
activity of the DOE in loan guarantees, which target clean energy
technologies that are first of a kind and have trouble getting bank
financing.
DOE received billions of dollars in loan guarantee authority in the 2005
Energy Policy Act, but much remains unused. Critics blasted the program
when one of the leading recipients, solar energy company Solyndra, filed
for bankruptcy protection in 2011.
Only 2% of the DOE's loan guarantees and commitments have been lost,
well within a cushion set by Congress, Davidson said.
DOE is eager to see applications for the new fossil energy solicitation
that reduce greenhouse gas emissions, Davidson said, citing as examples
technologies that reduce methane leakage at wellheads and those that
reduce water use in hydraulic fracturing. He said energy-efficiency
measures related to fossil fuels could also be eligible, giving as an
example, combined heat and power projects, in which heat from power
generation is sold to industrial customers.
The solicitation is the first for a DOE loan guarantee program in which
municipalities, universities and port authorities will be eligible,
Davidson said. Universities could apply for microgrid projects, he said.
Unlike previous loan guarantee programs for renewable energy, nuclear
power and advanced automobile technologies, where the average loan
guarantee was $1 billion, the fossil solicitation is aimed at large and
small borrowers, Davidson said. The loan amounts could be as little as
$25 million, although there is no upper limit, he said.
The program will require borrowers to pay a so-called credit subsidy
fee, a percentage of the loan amount collected by the government to
compensate it for the cost of extending the guarantee. In previous loan
guarantee solicitations for renewable power and advanced automobile
technologies, Congress appropriated money to cover the credit subsidy.
Nuclear energy projects must pay the fee themselves.
Davidson said DOE is considering a new solicitation next year for
nuclear energy projects including small modular reactors. The
solicitation would come from the unused loan guarantee authority from
the 2005 energy bill.
DOE provided $8.3 billion in conditional loan guarantees for partners in
the 2,200-MW Vogtle nuclear plant expansion in 2010, although the loan
guarantees have not been finalized. There remain $10 billion in
unexpected authority for new advanced nuclear power technologies that
could be used in a new solicitation, Davidson said.
"We're trying to figure out how we can be helpful to the nuclear
industry," he said.
There could be news on the Vogtle loan guarantees "in the next two to
three weeks," he said, declining further comment.
Oglethorpe Power, one of the recipients of a conditional loan guarantee
for the Vogtle expansion in Georgia, said last month it had reached new
terms for a deal with DOE. Other partners in the Vogtle expansion that
received conditional loan guarantees are Georgia Power and the Municipal
Electric Authority of Georgia.
--William Freebairn, william.freebairn@platts.com
--Edited by Derek Sands,
derek.sands@platts.com
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