Senators propose solution to DOE loan program

By Kris Bevill
Posted May 7, 2009, at 9:34 a.m. CST

New legislation introduced April 30 by Senators Jeff Bingaman, D-N.M., and Lisa Murkowski, R.-Alaska, would streamline the current U.S. DOE loan guarantee program and provide additional options for the commercial deployment of renewable energy technologies. The 21st Century Energy Technology Deployment Act (S.949) would create a new agency within the DOE - the Clean Energy Deployment Administration - to administer funds for high-risk renewable energy projects and to eventually replace the struggling loan guarantee program.

"If we're serious about addressing global climate change, we need to provide the financial support for those who are trying to develop the next generation of clean energy technology," Murkowski said. "This bill will allow innovators to pursue promising new technologies by facilitating access to much-needed capital."

The U.S. DOE loan guarantee program was created in the Energy Policy Act of 2005 with the purpose of providing loan guarantees to renewable energy projects. The program was meant to encourage early commercial use of new renewable technologies, but the program did not award a single loan guarantee for the first four years of its existence. Witnesses at a recent Senate energy and natural resources committee hearing expressed frustration with the speed at which the current program was moving and applauded the new legislation as being a step in the right direction.

Dan Reicher, climate change and energy initiatives director at Google, testified that the proposed legislation focuses on funding technology projects which are ready to be scaled-up from a pilot project to commercialization. The "valley of death" stage, as it is commonly referred to, is where many projects get stuck and ultimately fail. "Failing to bridge [the valley of death] has cost us serious progress on many clean energy technologies," Reicher said. "In some cases, investors from other countries have stepped into the breach and the technology has advanced but we have lost the tax and employment benefits of a company based in the U.S." Reicher said the introduced legislation could be extremely important as clean energy projects are experiencing increasing difficulties in acquiring financing.

If the bill is passed, the CEDA would serve to provide various types of financial support for renewable energy technologies, including loan guarantees, loans and secondary market support. The agency would seek out and finance high-risk projects that would otherwise be deemed too risky for commercial bank investors, thus providing a mechanism for deployment of the most innovative technologies.

Senate Energy and Natural Resource Committee press secretary David Marks said the legislators would like the clean energy act to be included as part of a larger bi-partisan comprehensive energy bill to be passed later this year.