The Energy Futures Initiative, Inc. (EFI), a not-for-profit dedicated to driving innovation in energy technology, policy and business models, today issued “Leveraging the DOE Loan Programs,” a report on how the Department of Energy’s Loan Programs Office could deploy nearly $40 billion in available credit authority to help rebuild critical U.S. energy infrastructure.
The report team, led by former Secretary of Energy Ernest J. Moniz, notes the Department’s Loan Programs Office (LPO), authorized by Congress in 2005 with broad bipartisan backing, has so far leveraged $50 billion in investments in commercial projects that deploy innovative energy technologies. The report notes that with appropriate partnership arrangements, the $39 billion of remaining credit support authority could attract as much as $100 billion in innovative energy infrastructure improvements.
The LPO portfolio has a default rate of just over two percent and a record of accelerated repayments, providing the impetus for utility-scale solar generation and for re-tooling and reviving advanced auto manufacturing plants in eight states from Tennessee and Kentucky to the upper Midwest and California. “This success rate translates into new businesses, good jobs and a more competitive economy,” said Melanie Kenderdine, former Director of the Department of Energy’s Office of Energy Policy and Systems Analysis.
Despite these achievements and potential further investment opportunities, the Trump Administration has proposed discontinuing the programs, contending that only “early stage” R&D should be federally supported. Yet, as the report notes, initial deployment of energy technology at scale has significant market barriers and that private-public partnerships such as those in the LPO portfolio are important to the overall innovation system, providing critical performance data to companies, investors, and policymakers.
EFI’s analysis notes that loan programs could be an important vehicle for supporting the Administration’s proposed Transformative Projects Program (TPP), which aims to provide backing for projects that can dramatically improve the Nation’s infrastructure.
“As a grant program, the TPP would require funding outlays that could increase the deficit,’’ said Joseph S. Hezir, a principal at EFI and the former CFO of the Department of Energy from 2013 to 2017. “Pairing the objectives of the Trump Administration with the existing authorities of the LPO could significantly reduce the costs of critical infrastructure projects.”