The Department of Energy’s renewable energy loan guarantee program has actually gotten more funding in the wake of the GOP clean-energy-smothering budget, reports Kirsten Korosec at BNET. Not that the new GOP congress is actually secret best friends with clean energy, but rather, simply from a little detail that may possibly have slipped by unnoticed. Here’s how it happened.
The “authorization” bucket is how much you can spend.
The “appropriations” bucket is the money you actually have to spend.
Although the budget trimmed the authorization funding, it actually expanded the appropriations funding with credit subsidies. So there are now more funds for clean energy.
Then there are two loan guarantee programs for clean energy: one that Republicans like because it includes CCS and nuclear, and one they tried to cut, because it was passed in the Recovery Act.
The 1703 program provides funding for any not yet commercialized (or fewer than three projects) technology that offers “new or significantly improved” technologies to reduce greenhouse gases – in nuclear, advanced fossil energy coal, and carbon sequestration – but also in biomass, hydrogen, solar, wind, hydropower, electricity delivery and energy reliability, alternative fuel vehicles, industrial energy efficiency projects, and pollution control equipment.
The 1705 program was a Recovery Act program which funds 30% cash upfront for renewable energy projects built by companies that did not make a profit to take a 30% tax credit against. This was to have expired last year, but was miraculously extended in the tax cut deal for millionaires, getting a stay of execution until September 2011. But now it allows applicants that have conditional commitments, but haven’t closed by September to cross over to the no-expiration 1703 program.
Since so many of the new solar projects being permitted involve new technologies, many utility-scale solar projects are eligible. The DOE 1705 program has provided funding for projects whose innovative technologies have difficulty securing financing from traditional lending sources hard hit by the financial crisis and therefore less willing to take on the risk of pouring money into unproven technologies.
Since the new Obama administration hiring of Jonathan Silver, a VC funding pro, to administer the program, the DOE loan guarantee program has funded 27 innovative projects with $30 billion in loans and loan guarantees, and that in turn has elicited 45 billion in additional VC funding for these projects.
Silver, who is former managing general partner at D.C-based venture capital firm Core Capital Partners lit a fire under the loan guarantee program’s decision-making process with the hiring of 180 employees. Under the previous administration, it had only 14 employees and not even a computer-based application process.
What does this mean for clean energy investment? “We actually have new funds in the 1703 program to provide credit subsidies for applicants”, says Silver, “which we’ve never had before.”
- Proposal Aims to Gut DOE Loan Program (online.wsj.com)
- UPDATE 2-Federal green energy loan program lives on (reuters.com)
- U.S. offers $2.1B in loan aid for world’s biggest solar plant (news.cnet.com)
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