Revamped DOE Loan Guarantees More Project Friendly
Last week, the Department of Energy revamped its loan guarantee program supporting clean energy projects. The funding stream has been hampered by rigid regulations ever since its inception in 2005, as part of the Energy Policy Act.
Under the new rules, the DOE says it will decide on a project basis whether its loan guarantees will have first priority if a project fails or whether to back a project on an equal basis lending.
The old rule gave the DOE first priority lien on the collateral of a failed project, which made it nearly impossible for clean energy projects to structure a financing package that included a loan guarantee, because other lenders and financial backers were pushed down the food chain.
In a client note law firm Venable wrote:
The financial structuring challenges in this market and allows the DOE to be more flexible in applying the loan program to a wider range of projects.
Upcoming deadlines for loan guarantee applications are:
December 23, 2009; February 18, 2010; April 22, 2010 and June 24, 2010.
Would love to know what banks are funding alternative fuels deals with a DOE Loan Guarantee? The banks are broke.