10/14/09 Bowditch & Dewey E-Alert | U.S. Department of Energy makes available funds for Renewable Energy Projects: Billions could be deployed Last week, the Department of Energy set aside $750 million in funding to accelerate the development of conventional renewable energy generation projects. The new funds will cover the cost of loan guarantees, which were a prohibitive barrier to using the program. That amount of funding could support up to 8 billion dollars in lending.
DOE has created a Financial Institution Partnership Program (FIPP) in an effort to use private institutions to accelerate financing of renewable energy projects. FIPP reduces the regulatory requirements imposed by the previous program and should greatly expedite the loan guarantee underwriting process so that an eligible project can leverage private capital for funding. An important difference made by FIPP is that borrowers and project sponsors are required to work with a financial institution. The financial institution, not the project sponsor, applies directly to DOE for the loan guarantee.
Under FIPP, applications will be accepted from eligible lenders for partial, risk-sharing loan guarantees and the guarantee percentage is not to be greater than 80% of the maximum aggregate principal and interest during a loan term. The project debt is required to have a credit rating of at least ‘BB’ or an equivalent rating by a recognized credit agency.
The funding being made available by DOE was authorized under the American Reinvestment and Recovery Act (ARRA). Last February, ARRA created a new Section 1705 under Title XVII of the Energy Policy Act of 2005 (Title XVII) for the “rapid deployment of renewable energy projects and related manufacturing facilities, electric power transmission projects and leading edge biofuels projects that commence construction before September 30, 2011.”
DOE also announced that it will accept applications for conventional renewable energy generation projects under its revised program. These include wind, solar, biomass, geothermal and hydropower. This is a departure from previous funding opportunities under the program, and gives a sector hampered by the credit crunch a well deserved boost.
To learn more about eligible projects, how to qualify as a financial institution, or about any clean energy technology program or incentive, please contact Vincent DeVito at vdevito@bowditch.com or at (617) 757-6518. Vincent DeVito, a partner at Bowditch & Dewey, served as a U.S. Assistant Secretary of Energy and worked to develop the original loan guarantee program while in office.
 About This Email Please do not respond directly to this E-Alert. For any assistance or advice on this issue, please contact Vincent DeVito at vdevito@bowditch.com.
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