Yesterday, the DOE announced that it plans to offer up to $30 billion in loan guarantees for renewable energy projects and $750 million for grid projects (presumably for Smart Grid efforts, although the DOE conspicuously didn’t use that term).
Secretary Chu said in a DOE news release, “This administration has set a goal of doubling renewable electricity generation over the next three years. To achieve that goal, we need to accelerate renewable project development by ensuring access to capital for advanced technology projects.”
The guarantees are being funded with a combination of American Recovery & Reinvestment Act and 2009 appropriations.
It’s a little unclear exactly how this will work. The DOE release hedges these numbers a bit, saying the $30 billion depends “on the applications and market conditions.” Regardless, here is how the propose divvying up the loans:
|$8.5 billion||Direct loans for renewable energy||2009 appropriations|
|$2 billion||Loan subsidies for renewable energy and electric power
|$500 million||Loan subsidies for “cutting edge” biofuel projects||ARRA|
Loan subsidies for large U.S. transmission infrastructure using commercial technologies; must begin construction by Sept. 30, 2011.
How does the DOE reached the $30 billion total number it is using? It would appear that there is an underlying assumption that the $3.25 billion in loan subsidies will be leveraged for an additional $18.25 billion in loans, i.e., the DOE will be putting 15% down on the loan.