Download: Update on DOE Loan Guarantee Applicants - September 2012
Passed as part of the Energy Policy Act of 2005, the Department of Energy’s (DOE) Title XVII Loan Guarantee Program has $34 billion in authority to give loan guarantees to innovative technologies. The 1705 program also had about $2.4 billion in American Reinvestment and Recovery Act funds to pay for the credit subsidy cost for renewable and energy efficiency projects, but those funds expired on September 30, 2011. So far, the DOE has finalized $15.1 billion worth of loans and committed another $15 billion.
Over the life of the program, the DOE loan programs office has received a total of 460 applications as a result of nine solicitations with an median requested loan amount of $141 million—and a high of $12 billion to support the development of a nuclear power plant. Below is a list of those applicants which have received conditionally committed or finalized loans based largely on our independent research. There are also companies that are in the process of applying for a loan and companies which have withdrawn or defaulted for financial reasons.
Department of Energy: Loan Guarantee Program Overview
Taxpayer Risks with the Loan Guarantee Program
Nuclear Power Facilities
Current DOE loan guarantee authority for the financing of nuclear projects is set at $18.5 billion with an additional $4 billion now identified for uranium enrichment (see see front-end nuclear cycle below). President Obama has requested more. In both his FY2011 and FY2012 budgets, he included an additional $36 billion in loan guarantee authority for nuclear reactors.
In late 2009 and early 2010, reports indicated that the final contenders for the first nuclear loan guarantee were: UniStar Nuclear Energy, SCANA Energy, Southern Company, and NRG Energy. Despite setbacks and uncertainties, DOE offered the first conditional commitment to Georgia Power Company (subsidiary of Southern Company) to build a pair of new reactors in February 2010.
Front-End Nuclear Fuel Cycle
Congress has appropriated $2 billion in loan guarantee authority for Front-End Nuclear Fuel Cycle technology, and the Department of Energy further allocated $2 billion in loan guarantee authority from previously unallocated funds passed by Congress in 2007, leaving $4 billion available for uranium enrichment projects. In May 2010, $2 billion was conditionally offered to French-based AREVA for a uranium enrichment center, pending receipt of the project’s licenses and other publically undisclosed criteria determined by DOE. Just over a year later, AREVA received its license from the Nuclear Regulatory Commission but the $2 billion loan guarantee has yet to be finalized. The project continues to experience financial troubles.
A second uranium enrichment applicant, the United States Enrichment Corporation (USEC), originally appeared to be the front runner for the first uranium enrichment loan guarantee. However, USEC’s loan guarantee has yet to be committed and is still under review after almost being abandoned because of financial reasons.
Coal-Based Power Generation and Advanced Coal Gasification
A second uranium enrichment applicant, the United States Enrichment Corporation (USEC), originally appeared to be the front runner for the first uranium enrichment loan guarantee. However, USEC’s loan guarantee has yet to be committed and is still under review after almost being abandoned because of financial reasons.
Currently, no coal-based projects have been awarded a conditional commitment or finalized loan from DOE, though several companies are currently under review. Congress has approved $6 billion in authority for Coal-based Power Generation and Industrial Gasification and $2 billion for Advanced Coal Gasification. This includes such technologies as coal-to-liquid, or converting coal into a liquid fuel through the Fischer Tropsch Process, and coal gasification. In 2008, DOE held a solicitation for fossil applicants. In response, eight companies applied including:
- Medicine Bow Fuel & Power LLC
- Christian County Generation LLC
- Mississippi Gasification LLC
- Indiana Gasification LLC
- Baard Energy
- TX Energy LLC
- MEP-I LLC
- Mississippi Power Company
Since then, four companies have withdrawn and four remain in line to receive a loan guarantee. The remaining four applications are in the middle of getting environmental impact statements from the loan programs office to determine if their projects are eligible. These projects would receive loans through the 1703 program.
Renewable and Energy Efficiency
The last area of funding under the loan guarantee program is renewable and/or energy efficient systems manufacturing and distributed energy generation, transmission and distribution. This program currently has $1.5 billion available in loan guarantee authority in addition to $170 million allocated for credit subsidy funds. Solar, wind, geothermal, and various energy efficiency technologies have received finalized loans, while other energy alternatives are also under review. In April 2011, Congress decreased the budget authority cap for renewable projects and shifted $170 million to credit subsidy funds. Additionally, as part of the American Recovery and Reinvestment Act of 2009, about $2.4 billion in credit subsidy funds were earmarked specifically for renewable technologies under the DOE program. Those credit subsidy funds expired on September 30, 2011. But before the program fund expired, 28 loan applications were finalized and an unknown amount of pending applications were moved to the 1703 program.
Defaulted Companies
Since the first DOE loan guarantee was finalized in September 2009, a number of companies have gone into default. Below you can find a list of these companies and information regarding their defaults.
Solyndra Inc. was a solar panel manufacturer that received the first Department of Energy (DOE) loan guarantee in September 2009. First the DOE restructured their loan guarantee in early 2011 when Solyndra didn’t have the funds to start paying their loan off on their agreed schedule. Then the DOE allowed Solyndra to accept $75 million worth of new capital that would jump in line in front of taxpayers in the event of a default. On August 31st 2011, the company filed for bankruptcy after spending $528 million of its $535 million loan guarantee. The company was under investigation by the FBI and House Energy and Commerce Committee for 18 months. It is currently unclear how much of the loan guarantee taxpayers will ultimately lose.
Beacon Power Corporation, an energy storage company in Stephentown, NY, became the second loan guarantee recipient to file for bankruptcy after Solyndra. On August 9th 2010, Beacon Power received a $43 million loan guarantee from the DOE to finance the construction of its 20 megawatt ‘flywheel’ energy storage plant. Currently, Beacon Power is still operating with an accumulated deficit of $229 million and its 65 employees are taking a 20% pay cut to retain their jobs. On February 3rd 2012, Rockland Capital, an energy-focused private equity firm, made a $30 million bid to purchase the remaining assets of Beacon Power Corporation. Pending final approval from the Federal Energy Regulatory Commission, Rockland will also adopt a $25 million promissory note to the federal government. In general, DOE officials say federal taxpayers will lose roughly 30 percent of the initial $43 million investment.
Abound Solar Manufacturing, LLC, a solar manufacturing company based in Longmont, Colorado, recently became the third loan guarantee recipient to file for bankruptcy. On December 9th 2010, Abound was awarded a $400 million loan guarantee for the construction of two solar panel manufacturing facilities in Colorado and Indiana. Of the $400 million loan guarantee, Abound had drawn down $68 million when the company ceased all operations on June 28th 2012 and soon after filed for bankruptcy on July 2nd 2012. It is currently unclear how much federal funds taxpayers will ultimately lose at this point.
For more information, please visit www.taxpayer.net
or contact Autumn Hanna at (202) 546-8500
September 2012
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