(iii) an investor-owned utility. 
(3) SELECTION REQUIREMENTS.—In selecting 
eligible entities to receive a loan under this section, 
the Secretary shall, to the maximum extent prac-
ticable, ensure— 
(A) regional diversity among eligible enti-
ties that receive the loans, including participa-
tion by rural States and small States; and 
(B) that specific projects selected for 
loans— 
(i) expand on the existing technology 
demonstration and deployment programs 
of the Department of Energy; and 
(ii) are designed to achieve 1 or more 
of the objectives described in paragraph 
(4). 
(4) OBJECTIVES.—Each demonstration and de-
ployment project selected for a loan under paragraph 
(1) shall include 1 or more of the following objec-
tives: 
(A) With respect to energy storage sys-
tems, the improvement of— 
(i) the feasibility of microgrids or 
islanding; or 
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(ii) the transmission and distribution 
capability to improve reliability in rural 
areas, including high energy cost rural 
areas. 
(B) Use of energy storage systems to im-
prove the security of emergency response infra-
structure. 
(C) Integration of energy storage systems 
with a renewable energy resource production 
source, at the source or away from the source. 
(D) Use of energy storage systems to pro-
vide ancillary services for grid management. 
(E) Advancement of power conversion sys-
tems to make the systems smarter, more effi-
cient, able to communicate with other inverters, 
and able to control voltage. 
(F) Use of energy storage systems to opti-
mize transmission and distribution operation 
and power quality to address overloaded lines 
and maintenance of transformers and sub-
stations. 
(G) Use of energy storage systems for 
peak load management of homes, businesses, 
and the grid, particularly to offset investments 
in new grid capacity. 
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(H) Use of energy storage system devices 
to meet electricity demand during nonpeak gen-
eration periods to make better use of existing 
grid assets. 
(5) RESTRICTION ON USE OF FUNDS.—Any eli-
gible entity that receives a loan under paragraph (1) 
may only use the loan to fund programs relating to 
the demonstration and deployment of energy storage 
systems in households, businesses, and communities. 
(b) LOAN TERMS AND CONDITIONS.— 
(1) TERMS AND CONDITIONS.—Notwithstanding 
any other provision of law, in providing a loan under 
this section, the Secretary shall provide the loan on 
such terms and conditions as the Secretary deter-
mines, after consultation with the Secretary of the 
Treasury, in accordance with this section. 
(2) SPECIFIC APPROPRIATION.—No loan shall 
be made unless an appropriation for the full amount 
of the loan has been specifically provided for that 
purpose. 
(3) REPAYMENT.—No loan shall be made un-
less the Secretary determines that there is reason-
able prospect of repayment of the principal and in-
terest by the borrower of the loan. 
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(4) INTEREST RATE.—A loan provided under 
this section shall bear interest at a fixed rate that 
is equal or approximately equal, in the determination 
of the Secretary, to the interest rate for Treasury 
securities of comparable maturity. 
(5) TERM.—The term of the loan shall require 
full repayment over a period not to exceed the lesser 
of— 
(A) 20 years; or 
(B) 90 percent of the projected useful life 
of the physical asset to be financed by the loan 
(as determined by the Secretary). 
(6) USE OF PAYMENTS.—Payments of principal 
and interest on the loan shall— 
(A) be retained by the Secretary to support 
energy research and development activities; and 
(B) remain available until expended, sub-
ject to such conditions as are contained in an-
nual appropriations Acts. 
(7) NO PENALTY ON EARLY REPAYMENT.—The 
Secretary may not assess any penalty for early re-
payment of a loan provided under this section. 
(8) RETURN OF UNUSED PORTION.—In order to 
receive a loan under this section, an eligible entity 
shall agree to return to the general fund of the 
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Treasury any portion of the loan amount that is un-
used by the eligible entity within a reasonable period 
of time after the date of the disbursement of the 
loan, as determined by the Secretary. 
(9) COMPARABLE WAGE RATES.—Each laborer 
and mechanic employed by a contractor or subcon-
tractor in performance of construction work fi-
nanced, in whole or in part, by the loan shall be paid 
wages at rates not less than the rates prevailing on 
similar construction in the locality as determined by 
the Secretary of Labor in accordance with sub-
chapter IV of chapter 31 of title 40, United States 
Code. 
(c) RULES AND PROCEDURES; DISBURSEMENT OF 
LOANS.— 
(1) RULES AND PROCEDURES.—Not later than 
180 days after the date of enactment of this Act, the 
Secretary shall adopt rules and procedures for car-
rying out the loan program under subsection (a). 
(2) DISBURSEMENT OF LOANS.—Not later than 
1 year after the date on which the rules and proce-
dures under paragraph (1) are established, the Sec-
retary shall disburse the initial loans provided under 
this section. 
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