Since issuing its first loan guarantee in 2009, DOE’s Loan Programs Office, which administers the LGP and ATVM program, has issued a total of more than $30 billion in loans and loan guarantees. The LGP was originally designed to address a fundamental impediment to innovative and advanced energy projects: securing funding. Projects that entail risks—either that new technology will not perform as expected or that the borrower or project itself will not perform as expected—can face difficulty securing enough affordable financing to survive the period between development and commercialization of innovative technologies. Because the risks that commercial lenders must assume to support new technologies can put the cost of private financing out of reach, companies may not be able to commercialize innovative technologies without the federal government’s financial support. To accurately account for the expected and actual costs of federal loan programs, agencies estimate the costs of a program in accordance with the Federal Credit Reform Act of 1990 by calculating credit subsidy costs for loans and loan guarantees, excluding administrative costs. DOE estimates the credit subsidy cost for each loan or loan guarantee by, among other things, projecting disbursements to the borrower as well as interest and principal repayments from the borrower, and adjusting these projected cash flows for the risk of default and other factors. Paying the credit subsidy cost is either the responsibility of the borrower or the program, depending on whether Congress has provided appropriations to cover such costs. For the LGP, Title XVII of the Energy Policy Act of 2005 (EPAct)— specifically section 1703—authorized DOE to guarantee loans for energy projects that (1) use new or significantly improved technologies as compared with commercial technologies already in service in the United States and (2) avoid, reduce, or sequester emissions of air pollutants or man-made greenhouse gases. Congress provided DOE $34 billion in loan guarantee authority for section 1703 loan guarantees. Initially, Congress provided no appropriation to cover the credit subsidy costs of loan guarantees under section 1703, requiring all borrowers receiving a loan guarantee to pay to offset the credit subsidy costs of their own projects. In February 2009, Congress passed the American Recovery and Reinvestment Act of 2009 (Recovery Act), which amended Title XVII by adding section 1705, under which DOE could guarantee loans for projects using existing commercial technologies. For section 1705, the Recovery Act provided $2.5 billion to cover credit subsidy costs, which DOE estimated would suffice to cover those costs for about $18 billion in loan guarantees. In April 2011, Congress appropriated $170 million to pay credit subsidy costs for a subset of projects under section 1703, specifically, energy efficiency and renewable energy projects. DOE estimated this appropriation would cover those costs for about $848 million in loan guarantees. As table 1 shows, DOE had about $28.7 billion remaining in loan guarantee authority under section 1703 as of November 2014. At that time, it also had three open solicitations for loan guarantee applications that accounted for much of that remaining authority. The ATVM loan program remains open to applications on a rolling basis and had about $16 billion remaining in loan authority as of November 2014. DOE has made efforts to improve its loan program implementation and oversight and, to date, has taken actions in response to 15 of our 24 prior recommendations. (See app. I for details on the status of each of the 24 recommendations we have made concerning the DOE loan programs). In 2007, 2008, and 2010—which covered the early stages of the LGP—we made 15 recommendations to address numerous issues where DOE had moved forward with the program before key elements were in place. DOE implemented 11 of our 15 recommendations from this period. For example: In our February 2007 report, we found that DOE’s actions had focused on expediting program implementation—such as soliciting preapplications for loan guarantees—rather than ensuring the department had in place the critical policies, procedures, and mechanisms necessary to better ensure the program’s success. We made five recommendations addressing these concerns. DOE agreed with and implemented all 5 of these recommendations by establishing key policies and procedures and issuing final program regulations, among other things. In contrast, in our July 2010 report, we found that, among other things, DOE had favored some applicants by, for example, deviating from its stated review procedures. DOE did not concur with—and has not taken actions to address—our recommendation that it take steps to ensure that its implementation of the LGP treats applicants consistently. As Congress expanded the DOE loan programs to include 1705 projects and ATVM, we issued additional reports in 2011, 2012, and 2014 highlighting our concerns about DOE making loans and disbursing funds without having sufficient expertise and performance measures, among other things. Our reports included recommendations to address these issues from February 2011 through May 2014. To date, DOE has implemented four of the nine recommendations but has not addressed the remaining five. For example: In February 2011, we found that DOE was using ATVM staff with largely financial, and not technical, expertise to evaluate the progress of projects to produce more fuel-efficient passenger vehicles and their components. We recommended that DOE accelerate efforts to engage sufficient engineering expertise to verify that borrowers are delivering projects as required by the loan agreements. DOE implemented our recommendation by changing its budgeting practices for monitoring ATVM loans to better ensure that funds would be available to engage independent engineering expertise; DOE also changed its policy for engaging technical expertise to align with the Title XVII LGP policy.  Also in our February 2011 report, we found that DOE did not have sufficient performance measures that would enable the department to fully assess whether the ATVM program had achieved its program goals, including protecting taxpayers’ financial interests. We recommended that DOE develop sufficient and quantifiable performance measures for its program goals. DOE disagreed with this recommendation and took no steps to implement it. As a result, Congress does not have important information on whether the funds DOE has spent so far are furthering the program’s goals and, consequently, whether the program warrants continued support. DOE generally agreed with most of the additional recommendations we made in our March 2012 and May 2014 reports as the programs expanded, but it has not fully implemented them. For example, in May 2014 we found that DOE adhered to its monitoring policies inconsistently or not at all because the Loan Programs Office was still developing its organizational structure, including its staffing. We recommended that DOE fully develop its organizational structure by staffing key loan monitoring positions, among other things. DOE agreed and has taken steps to identify key staffing positions but, as of February 2016, most of these positions remain unfilled. Filling these positions would help DOE carry out activities critical to monitoring these loans. In our April 2015 report, we found that DOE estimated the credit subsidy costs of the loans and loan guarantees in its portfolio to be about $2.2 billion as of November 2014, including about $807 million for five loans on which the borrowers had defaulted. At that time, the portfolio consisted of 34 loans and loan guarantees in support of 30 projects in a diverse array of technologies. We also found that administrative costs totaled about $312 million from fiscal year 2008 through fiscal year 2014. The estimated $2.2 billion in credit subsidy costs was a decrease from initial DOE estimates totaling about $4.5 billion, and we found that changes in credit subsidy cost estimates varied by loan program and the type of technology supported by the loans and loan guarantees, and by other factors, such as the availability of a steady stream of revenue for a project. Specifically, defaults on loan guarantees for two solar manufacturing projects and one energy storage project were largely responsible for an increase in the credit subsidy cost estimate for DOE’s LGP portfolio from $1.33 billion (when the loan guarantees were issued) to $1.81 billion as of November 2014. Borrowers also defaulted on two ATVM loans, but the credit subsidy cost estimate for DOE’s ATVM loan program’s portfolio decreased from initial DOE estimates totaling about $3.16 billion to $404 million as of November 2014, mainly because of a significant improvement in the credit rating of one loan. This decrease was enough to more than offset the increases from the defaults in DOE’s overall loan portfolio. See table 2 for changes in DOE’s credit subsidy cost estimates. We found in our April 2015 report that most projects in DOE’s portfolio have completed construction and are in operation—producing power or automobiles, for instance. None of the projects with loans in default had revenue streams that were provided for under long-term contracts for the sale of energy produced by the project pursuant to a power purchase agreement, offtake agreement, or similar contractual language. Power purchase agreements and offtake agreements generally guarantee a stream of revenue to the project owner for 20 or 25 years after the project begins generating electricity, effectively ensuring a buyer for the produced power. In DOE’s portfolio, 21 of the 30 projects supported by the program included power purchase or offtake agreements. Regarding administrative costs, our April 2015 report found that such costs for the programs have totaled about $312 million from fiscal year 2008 through fiscal year 2014, including approximately $251.6 million for LGP and $60.6 million for the ATVM loan program. We also found that, for the LGP, the fees DOE has collected have not been sufficient to cover all of its administrative expenses for the program, in part because the maintenance fees on the current loan guarantees were too low to cover ongoing monitoring costs. As a result, some of the administrative expenses have been paid with taxpayer funds.