U.S. Energy Secretary Steven Chu has announced that the Department of Energy (DOE) will provide an additional $750 million in funding from the American Recovery and Reinvestment Act to help accelerate the development of conventional renewable energy generation projects. This funding will cover the cost of loan guarantees that could support as much as $4 billion to $8 billion in lending to eligible projects.
In addition, the DOE has invited private-sector participation to accelerate the financing of these renewable energy projects through the creation of the Financial Institution Partnership Program (FIPP).Â
The FIPP is a streamlined set of standards designed to expedite the DOE's loan guarantee underwriting process and leverage private-sector expertise and capital for the efficient and prudent funding of eligible projects, according to the DOE.
Under this first FIPP solicitation, proposed borrowers and project sponsors do not apply directly to the DOE. They will instead work with eligible financial institutions that will apply directly to the DOE to access a loan guarantee. The solicitation invites applications from eligible lenders for partial, risk-sharing loan guarantees from the DOE.
The guarantee percentage will be no more than 80% of the maximum aggregate principal and interest during a loan term, and the project debt must obtain a credit rating of at least BB or an equivalent with a nationally recognized credit rating agency, the DOE adds.
This solicitation marks the eighth round of solicitations issued by the DOE loan guarantee program since its inception. Information on the loan guarantee program is available here.
SOURCE: U.S. Department of Energy
