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Passed as part of the Energy Policy Act of 2005, the Department of Energy’s (DOE) Title XVII Loan Guarantee Program currently has $34.8 billion in taxpayer-backed authority to award loan guarantees to various energy technologies. Additionally, a section of the program created in the Stimulus had approximately $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.

To date, the DOE has finalized guarantees for more than $15 billion in loans and offered conditional commitments for another $10.3 billion in guarantees for projects that are considered ‘active’ by DOE today. Further, DOE is actively reviewing nine applications totaling $4.8 billion for additional projects that could be offered conditional commitments.

In its nine solicitations for projects, the DOE loan programs office has received a total of 460 applications with a median requested loan amount of $141 million—and a high of $12 billion to support the development of a nuclear power plant. Project applicants can apply to receive loan guarantees provided in various pools of authority set aside by Congress within the Energy Policy Act of 2005. These include renewable energy systems, advanced fossil energy technologies, hydrogen fuel cell technologies, advanced nuclear energy facilities, carbon capture and sequestration technologies, energy transmission and distribution technologies, energy efficiency technologies, production of high fuel economy vehicles, pollution control equipment, and oil and gas refineries.

Below is a list of those applicants, separated by energy sector, which have received conditionally committed or finalized loans. Also included below are companies that are in the process of applying for a loan guarantee and companies which have withdrawn from the program or defaulted on their loan guarantee..

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) and its utility partners 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.

As of January 2013, only one fossil fuel applicant remains ‘active’ within the loan guarantee program. As reported by DOE, the undisclosed applicant intends to construct a coal gasification facility with carbon capture and sequestration technology and has requested a loan guarantee amount of $2.8 billion. The remaining seven applicants have been deemed ‘inactive’ by the Department of Energy.

Renewable and Energy Efficiency

The most active area of the loan guarantee program has been with the renewable and/or energy efficient systems manufacturing and distributed energy generation, transmission and distribution portion of the program. This sector 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, 30 loan applications were finalized and an unknown amount of pending applications were moved to the 1703 program. As of January 2013, eight applications totaling $4.8 billion for renewable and energy efficiency loan guarantees under the 1703 program are being reviewed by DOE for conditional commitments.

Defaulted Companies

Since the first DOE loan guarantee was finalized in September 2009, three companies have defaulted. 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 31^st 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 9^th 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 3, 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 9^th 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 28, 2012 and soon after filed for bankruptcy on July 2, 2012. It is currently unclear how much federal funds taxpayers will ultimately lose at this point.

For more information, please contact Autumn Hanna at (202) 546-8500 x112
Or autumn@taxpayer.net.