The U.S. Department of Energy is setting aside up to $750 million out of a $6 billion fund from the stimulus package for a new loan guarantee program to support power plants that use "conventional" renewable energy technologies.
The money would be used to support $4 billion to $8 billion worth of loans for solar, wind, geothermal, biomass and other means of electricity generation, the DOE said Wednesday.
The program aims to help companies line up financing for power plants that use technologies that already are widely available. DOE is running another loan guarantee program that supports emerging technologies.
Funding for these loan guarantee programs is coming from the American Recovery and Reinvestment Act enacted in February this year to stimulate the economy.
The AARA authorized $6 billion for loan guarantees, which the government says would support up to $60 billion in loans for building renewable energy power plants and equipment manufacturing facilities, upgrading electric grids, and constructing biofuel projects. The DOE would administer the funding based on rules laid out by Section 1705 of the energy bill passed in 2005 that created the first DOE loan guarantee program for renewable energy.
Loan guarantee recipients must start building their projects by Sept. 30, 2011.
Back in July, the DOE announced it would spend $3.25 billion from the $6 billion authorized to support $22 billion worth of loans for renewable energy generation and biofuel projects. Applicants had 45 days to apply for these loan guarantees, and the DOE hasn't announced recipients.
Incidentally, Congress took $2 billion out of the $6 billion a few months back to fund the Cash for Clunkers program. The Solar Energy Industries Association is lobbying Congress to restore that $2 billion.
The DOE is implementing a different review process for the new program announced Wednesday.
Instead of accepting applications from power plant developers, the DOE is asking the developers to line up lenders first. The financial institutions will then apply to the DOE for the loan guarantees.
The government won't back up 100 percent of each loan, but will only guarantee up to 80 percent of the principal and interest of the loan.
The DOE said the new process, which it calls the Financial Institution Partnership Program, would help the government make a quicker decision on which projects deserve loan guarantees.
The government has become the biggest booster for the renewable energy industry, which has found it difficult to line up financing from banks and other private sources over the past year.
Many solar power plant developers have applied or plan to apply, including BrightSource Energy and Tessera Solar.