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DOE provides loan guarantee application tips

By Anna Austin
Posted Sept. 9, 2009

The U.S. DOE provided application suggestions to potential loan guarantee candidates during a Sept. 8 Webinar, emphasizing key attributes that may positively influence a project's financial and technical evaluations during the Loan Guarantee Program application review process.

DOE Program Manager Michael Fraser identified characteristics to strengthen the financial review of project applications. Information on third–party supply and off-take agreements to support revenue and cost projections, or having a reliable source of raw materials or a buyer committed to purchasing the output of a project at a certain price, are compared favorably to applications that do not, he said, as these are helpful determinants of credit quality.

While strong engineering, procurement and construction (EPC) contracts may not be entirely feasible for every project, applications that lack them, or do not provide insight into key EPC terms or include contracts presenting highly variable costs may be deemed weaker than comparable applications that include them, according to Fraser.

Other significant financial review characteristics discussed during the Webinar included detailed construction budgets; full identification and accounting for all resources necessary for the project to become fully operational; fulfillment of all permitting requirements in project timelines; demonstration of clear rights to intellectual property necessary to implement the project; demonstration of readily available equity; identification and demonstration of control over a project site; a working financial model and the provision of information on markets and competition.

On the technical attributes side, Fraser said in general, applicants proposing innovative projects should be able to submit a minimum of 1,000 to 2,000 hours of operating data from a demonstration or pilot plant that uses the same technology as proposed in the loan application. Engineering reports must be included, as well as discussion regarding how the proposed technology constitutes a new or significant improvement over existing competing technologies in the commercial marketplace today-for example, greenhouse gas emission avoidance.

Experienced staffers are another positive influence. Fraser said all applications should provide clarity of the roles of key staffers, as well as their biographies and explanations of how experience and skills of key employees will contribute to the success of a project.

When submitting applications, the DOE suggests using a searchable PDF application file, rather than PDF files generated from printed, scanned documents, which are not searchable. Consolidation of materials into the fewest amount of files possible is also helpful.

To learn more about the U.S. DOE Loan Guarantee Program, visit http://www.lgprogram.energy.gov/.
 

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