DOE refines clean energy loan program

A federal loan guarantee program to encourage development of commercial-scale advanced clean-energy projects moved a step closer to reality recently when the Department of Energy released a regulatory proposal for the program. The program, intended to spur commercialization of untested technologies, was established by the Energy Policy Act of 2005. However, DOE has not implemented it. Congress and financiers have criticized early drafts of the proposal for providing too little project funding. Under the latest plan, DOE would guarantee funding for as much as 90% of a single loan covering up to 80% of the project's total cost. Congress wants the program in operation by late summer, but DOE officials say it is unlikely to be able to process guarantees until 2008. DOE has requested authority to guarantee $9 billion in loans for 2008: $4 billion for nuclear or large coal facilities, $4 billion for biofuels projects, and $1 billion for electrical transmission systems or renewable energy projects. So far, however, DOE has received 143 loan applications that request more than $27 billion in loan guarantee protection for projects worth more than $51 billion. Looking at requests for the top three areas, 49% were for biomass technology projects, 16% were for fossil energy projects, and 12% would support solar projects. In terms of money, almost two-thirds of the guarantees requested are in the fossil fuel category.