News Media Contact(s): 

Megan Barnett, (202) 586-4940

For Immediate Release

October 4, 2007

DOE Announces Final Rule for Loan Guarantee Program

Invites 16 Pre-Applicants to Submit Applications for Federal Support of Innovative Clean Energy 

Projects

WASHINGTON, DC – Secretary of Energy Samuel W. Bodman today announced that the Department 

of Energy (DOE) has issued the final regulations for the loan guarantee program authorized by Title 

XVII of the Energy Policy Act of 2005 (EPAct). DOE’s action today will pave the way for federal 

support of clean energy projects using innovative technologies and will spur further investment in these 

advanced energy technologies. 

DOE also today invited 16 project sponsors, who submitted pre-applications last Fall, to submit full 

applications for loan guarantees. These projects include advanced technologies involving the uses of 

biomass, fossil energy, solar, industrial energy efficiency, electricity delivery and energy reliability, 

hydrogen, and alternative fuel vehicles. Projects supported by loan guarantees will help fulfill President 

Bush’s goal of reducing our reliance on imported sources of energy by diversifying our nation’s energy 

mix and increasing energy efficiency. 

“Loan guarantees aim to stimulate investment and commercialization of clean energy technologies to 

reduce our Nation’s reliance on foreign sources of energy,” Secretary Bodman said. “Finalizing this 

regulation for the Department’s Loan Guarantee program puts Americans one step closer to being able 

to use new and novel sources of energy on a mass scale to reduce emissions and allow for vigorous 

economic growth and increased energy security.” 

The final regulation provides that the Department may issue guarantees for up to 100% of the amount of 

a loan, subject to the EPAct limitation that DOE may not guarantee a debt instrument for more than 80% 

of the total cost of an eligible project. Under the final rule, if DOE issues a guarantee for 100% of a debt 

instrument, the loan must be issued and funded by the Treasury Department’s Federal Financing Bank. 

While Congress must provide authority in an appropriations act for the loan guarantees that the 

Department will issue, DOE’s intent is to only issue loan guarantees if borrowers and project sponsors 

pay the “credit subsidy cost” for any loan guarantee they receive. Therefore, DOE does not plan to use 

taxpayer funds to pay for the credit subsidy costs of these loan guarantees. 

The final regulation also provides for the following: 

z The Title XVII loan guarantee program will be implemented through a series of solicitations. The 

solicitations may target specific technology areas or be general; 

z Eligible projects must employ new or significantly improved technologies that avoid, reduce or 

sequester air pollutants or anthropogenic emissions of greenhouse gases as compared to 

commercial technologies in service in the United States at the time the loan guarantee agreement 

is executed; 

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z The guaranteed portion of a partially guaranteed loan may be separated from or "stripped" from 

the non-guaranteed portion, except in cases where the guarantee exceeds 90 % of the loan amount; 

z In the event of a loan default, DOE will have a superior lien on all project assets pledged as 

collateral for the guaranteed loan; however, the final rule allows for the possibility in a default 

situation that lenders and holders of the non-guaranteed debt could share proportionately with the 

Department in proceeds from the sale of project assets pledged as collateral. A pari passu 

structure will not be permitted to override the Department’s superior right to project assets; 

z The Secretary of Energy must determine that there is a “reasonable prospect” of repayment of the 

guaranteed debt before a loan guarantee may be issued; 

z DOE must charge and collect fees sufficient to cover applicable administrative expenses; 

z Borrower–paid Credit Subsidy Costs and administrative fees paid to DOE may not be included 

within total project costs for the purposes of determining the amount of guarantees that DOE can 

issue for a project; 

z A project’s receipt of other governmental assistance does not disqualify a project from receiving a 

Title XVII loan guarantee; however, when evaluating a project’s application for a Title XVII loan 

guarantee, DOE will consider the extent to which a project will receive other governmental 

assistance, (e.g., grants, tax credits, other loan guarantees); 

z The borrower must have a significant equity stake in a project, and proceeds from guaranteed or 

non-guaranteed debt, and the value of government grants and other assistance, will not be counted 

as “equity.” 

The final rule is the culmination of a public rulemaking process, which began with a Notice of Proposed 

Rulemaking published May 16, 2007. DOE reviewed and carefully considered all comments it received 

on the proposed rule. 

Congress currently is considering the Department’s Fiscal Year (FY) 2008 Budget request for $9 billion 

in loan guarantee authority and $8.4 million to run the Loan Guarantee office. Both of these actions are 

important for the successful execution of this program. DOE’s issuance of additional loan guarantee 

program solicitations is dependent on receiving adequate additional authorization from the Congress and 

funding for the operation of its Loan Guarantee program office. 

Today’s announcements build on months of action by DOE to implement its loan guarantee program. In 

August 2006, DOE issued a solicitation inviting pre–applications for up to $2 billion in loan guarantees. 

By the December 31, 2006 deadline for this solicitation, DOE received 143 pre–applications requesting 

more than $27 billion in loan guarantee protection (for project costs estimated at more than $51 billion). 

The 16 pre-applicants invited today to submit full loan guarantee applications for review must inform 

DOE by October 30, 2007 if they plan to submit a full application. The applications received will 

undergo disciplined and rigorous reviews, necessary to take proper account of the potential risks of a 

project. The full application review will be subject to the final regulations issued today. The decision to 

issue loan guarantees will depend on the merits and benefits of particular project proposals and their 

compliance with statutory and regulatory requirements. The pre-applicants not selected to submit full 

applications from this solicitation can reapply for future solicitations, for which their project is eligible. 

The following is a summary of the 16 projects and sponsors invited to submit full applications: 

ADVANCED FOSSIL ENERGY PROJECTS

Mesaba Energy Project (MEP-I, LLC): Integrated Gasification Combined Cycle (IGCC) Plant 

Minnesota is the proposed location for this project, which plans to build a state-of-the-art IGCC plant 

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that would allot space in its design for CO2 capture and storage. 

Mississippi Power Company: IGCC Plant 

Mississippi is the proposed location for this project, which plans to build an IGCC plant that would 

commercialize a first-of-its-kind application. 

The above two IGCC projects would allow for potential CO2 capture in the future, would provide stateof-the-art emission controls far exceeding the emission level requirements specified in Section 1703 of 

the Energy Policy Act of 2005 and would help reduce cost and increase fuel flexibility of IGCC 

technology. 

TX Energy, LLC: Coal to Synthetic Gas IGCC Plant

Texas is the proposed location for this project, which plans to commercialize a new polygeneration 

gasification facility that can isolate a significant concentrated stream of CO2 while producing large 

amounts of power and methanol. 

INDUSTRIAL ENERGY EFFICIENCY PROJECTS

GR Silicate Nano Fibers and Carbonates

Washington is the proposed location for this project, which plans a highly energy efficient process for 

manufacturing paper. 

Sage Electrochromics: Electrochromic Window Manufacturing Project 

Minnesota is the proposed location for this project, which plans to develop a manufacturing facility that 

would produce energy-efficient windows for the commercial and residential building sectors. 

SOLAR ENERGY PROJECTS

Luz II 

Nevada is the proposed location for this project, which plans to develop a highly efficient large-scale 

power project using concentrated solar-thermal technology. 

Solyndra, Inc.

California is the proposed location for this project, which plans to manufacture highly efficient thin-film 

photovoltaic modules. 

ELECTRICITY DELIVERY AND ENERGY RELIABILITY PROJECT

Beacon Power

Massachusetts is the proposed location for this project, which plans to develop a system that will 

enhance peak performance of electric generation over the power grid. 

HYDROGEN PROJECT

Bridgeport Fuel Cell Park, LLC 

Connecticut is the proposed location for this project, which plans to build the largest single-site 

installation of fuel cells in the world. 

ALTERNATIVE FUEL VEHICLES PROJECT

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Tesla Motors 

New Mexico is the proposed location for this project, which plans to build a battery-electric powered 

vehicle with enhanced range that can be produced for the consumer market. 

BIOMASS PROJECTS

Alico, Inc. 

Florida is the proposed location for this project, which plans a first-of-a-kind commercial-scale 

cellulosic ethanol plant that would use multiple feedstocks and produce multiple products. 

Blue Fire Ethanol, Inc.

California is the proposed location for this project, which plans to build a commercial-scale cellulosic 

ethanol plant using an array of low-cost feedstocks. 

Choren USA

Southeastern, U.S. is the proposed location for this project, which plans to construct an industrial-scale 

biomass gasification facility for clean synthetic diesel fuels in the United States. 

Endicott Biofuels, LLC 

Virginia is the proposed location for this project, which plans to construct a second generation biodiesel 

and bio-derived products plant that would feature a high level of feedstock flexibility allowing for the 

production of a broad range of biodiesel fuels. 

Iogen Biorefinery Partners, LLC 

Idaho is the proposed location for this project, which plans to build a biorefinery to produce ethanol 

from a wide range of cellulosic feedstocks and to produce other byproducts of value to several 

industries. 

Voyager Ethanol, LLC 

Iowa is the proposed location for this project, which plans to build a cellulosic ethanol plant that can 

accommodate multiple feedstocks in the production of ethanol and higher value byproducts. 

Following funding and authorization for the program in February 2007, DOE has established a Credit 

Review Board to make recommendations to the Secretary of Energy on loan guarantees; named an 

office director and technical and financial experts to work in the Loan Guarantee program office; and 

developed guidelines for the financial and technical review of loan guarantee applications. 

Review the final regulations and more about DOE’s loan guarantee program.

U.S. Department of Energy, Office of Public Affairs, Washington, D.C.

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