The Department of Energy To Issue New Loan Guarantee, Grant Solicitations Soon

The Department of Energy To Issue New Loan Guarantee, Grant Solicitations Soon

04/15/2009

By Ian Talley
Of DOW JONES NEWSWIRES


WASHINGTON -(Dow Jones)- The Department of Energy is close to issuing new solicitations for renewable energy and transmission project loan guarantees and grants, possibly as soon as Thursday, according to people close to the matter.

In the midst of economic doldrums, renewable and transmission companies are eagerly awaiting a new funding opportunity under the stimulus bill signed into law earlier this year. The federal government approved around $60 billion in loan guarantee authority and more than $30 billion in energy grants.

Announcements on the solicitations could come as soon as Thursday, when Vice President Joe Biden is expected to discuss progress under the recovery act at an ABB (ABB) factory in Missouri that produces transformers for a wind farm.

"Very soon we're going to issue a new set of solicitations under the new funding authority, specifically around more mature renewable technologies and energy infrastructure, particularly transmission infrastructure projects," said Matthew Rogers, a senior advisor to Energy Secretary Steven Chu, in an interview.

An industry official familiar with the DOE's funding authority said Biden was expected to announce grant funding for "smart grid" projects designed to transform the power transmission system into an artificially intelligent system that could more efficiently manage electricity use.

Rogers said the DOE was working with the White House's Office of Management and Budget to finalize the stimulus funding portfolio and the agency planned to make the remainder of grant funding available through the next few weeks.

"The money is beginning to flow, [and] the secretary has reviewed and approved substantially all of the plans for the rest of the funds," he said.

Under the recovery funding, the DOE was given around $33 billion in grant and contract authority. Around $21 billion is currently available for applications.

Rogers also said several projects solicited under loan guarantee authorities granted under the previous Administration would now be funded by the recovery bill authority.

That could prove to be a windfall for the handful of companies that are eligible, said Salo Zelermyer, a former DOE counsel and now an associate at Bracewell & Giuliani. Under the recovery act loan guarantee provisions, the government will also pay for costly credit fees that have proved prohibitive to some firms wanting to apply.

Rogers declined to say exactly specific projects that are eligible for the new funding, but a number of companies are in the final stages of negotiating their loan guarantee deals, including BlueFire Ethanol Fuels (BFRE), BrightSource Energy and Beacon Power (BCON), according to several people close to the matter.

California solar company Solyndra Inc., was the first to benefit under the DOE's renewable program, last month being awarded a $535 million loan guarantee to fund a new manufacturing plant. Although the application was made and given preliminary approval under the George W. Bush administration - and funds appropriated for the program by Congress - the firm was also eligible under the recovery legislation.

Funds appropriated under the previous administration but not used for the projects that are now eligible for recovery support will likely be used for another solicitation, Rogers said.

Rogers, a former senior partner with the consulting firm McKinsey & Co., said the DOE was currently able to process one loan guarantee project a month, but was aiming to work up to processing two a week.

"We are getting the machine limbered up...[and] it may take a few months to get to that position, but that's the direction we're headed," he said.

Loan guarantees for new nuclear power plants and coal-fired power stations designed to cut carbon dioxide emissions approved under the Bush administration haven't shared the same urgency as renewable energy and transmission projects under the Obama administration. Secretary Chu has previously said nuclear and coal loan guarantees wouldn't be in the first tranche of projects to be announced.