LPO Updates ? Issue 05 ? Apr 2023
IN THIS ISSUE
...and more updates below from the U.S. DOE Loan Programs Office!
In the first quarter of 2023, the Loan Programs Office has shown why it has returned to a growth portfolio. In the first three months of the year we have offered conditional commitments to?Rhyolite Ridge,?Redwood Materials, and?Li-Cycle?that, if finalized, would reshore and onshore electric vehicle and?critical materials?supply chains. These build on loans to bolster our supply chain that LPO closed last year with?Ultium Cells?and?Syrah Vidalia. And last week we announced LPO’s first virtual power plant loan ever to Sunnova’s?Project Hestia. If we want to reach our decarbonization goals, projects like these will help us get there.
Portfolio Status Report Released
The?FY 2022 Annual Portfolio Status Report was released this week, giving a fuller picture of the growth of the LPO portfolio. In FY 2022 LPO achieved four new conditional commitments for over $4B in loans, closing its first loans in both its Title 17 and ATVM programs since 2015. Every active LPO borrower in the portfolio repaid principal in FY 2022, paying $1.7 billion in principal and $523 million in interest. The portfolio remains concentrated in creditworthy assets, with 70% of exposure held by investment-grade borrowers, and it maintains a low aggregate loss rate of 3% of funds disbursed. Establishing a proactive risk management culture at LPO has been necessary given its mission to provide a bridge to bankability for innovative technologies and other projects essential to our energy future that are unable to access commercial debt markets.
Pathways to Commercial Liftoff Initiative
In March, we were pleased to help?launch?a new Department-wide initiative,?Pathways to Commercial Liftoff, to help drive public and private-sector engagement that will be critical to an effective clean energy industrial strategy. The Liftoff reports are “living documents” developed through extensive stakeholder engagement and a combination of system-level modeling and project-level financial modeling. They provide the private sector and other industry partners a valuable, engagement-driven resource on how and when certain technologies—beginning with?Clean Hydrogen,?Advanced Nuclear,?Long Duration Energy Storage, and?Carbon Management—can reach full-scale deployment.
Momentum on Virtual Power Plants
We continue to see momentum grow in support of?virtual power plant?(VPP) projects that can add demand flexibility, increase affordable clean energy access, and transform grid operations to cost effectively accommodate electrification at scale.?VPPs rely on the deployment of distributed energy resources (DERs) at scale; and it is imperative to help make affordable, resilient, and clean energy accessible to all Americans. In February, LPO joined the Smart Electric Power Alliance and National Association of Regulatory Utility Commissioners (NARUC) to?host a workshop?following the NARUC Winter Policy Summit discussing the fundamentals of VPPs, engaging leaders from across regulatory, utility, and private-sector organizations.
In March, LPO was also pleased to support Secretary of Energy Jennifer Granholm’s participation in the first in a series of VPP Listening Roundtables in Austin, TX, to discuss with the Energy Reliability Council of Texas’ Aggregate Distributed Energy Resource (ADER) Taskforce the reliability benefits of its?statewide 80 MW VPP pilot. And we capped off a quick start to the year with the announcement of a $3 billion conditional commitment to?Project Hestia, which, if finalized, would provide loans for solar and storage systems for approximately 75,000 to 115,000 homeowners throughout the United States, including targeting at least 20% of customers with credit scores of 680 FICO or less and providing up to 20% of loans to homeowners in Puerto Rico.
Notable Developments for Advanced Nuclear
The advanced nuclear sector also continues to see notable developments. In March, we saw?Unit 3 of Plant Vogtle?near Waynesboro, Georgia,?safely reach initial criticality and generate power for the first time. Once all four units are operating, Plant Vogtle will be the largest clean energy generator in the United States.?Advanced Nuclear?is poised to become an increasingly important source of safe, reliable, clean, firm power as the nation decarbonizes its energy systems. March also saw an important announcement between the United States, Poland, and Canada to complete the design of the?GE-Hitachi BWRX-300. LPO has new tools available to launch small modular reactor (SMR) projects and the supply chains needed to build them.
The Department launched the Liftoff series with Advanced Nuclear on March 20, and it provided the backdrop for industry and finance leaders at the Guggenheim Nuclear Conference a week later, where the day’s speakers honed in on the requirements for achieving liftoff, including the need to sign firm contracts for a critical mass of 5-10 reactors by design to support the buildout of supply chains. The Department of Defense, in addition to supporting developing microreactors through?Project Pele?and the Eielson Air Force Base?Request for Proposals, discussed their potential role as a significant customer for new nuclear.
Tribal Energy Finance News
The LPO Tribal Energy Finance program team?continues its active outreach efforts?to Indian tribes and tribal energy development organizations to provide access to loans and partial loan guarantees for energy development projects. LPO attended Reservation Economic Summit 2023 earlier this month, and will be attending the?NAFOA 41st?Annual Conference?on April 24-25, 2023, participating in conference panels and hosting one-on-one meetings. Through the first three months of FY 2023, over 250 outreach meetings were held, and four applications were officially submitted, totaling nearly $500 million dollars in requested financing. We look forward to issuing our first Tribal Energy Finance conditional commitment soon.
Now is the time to keep the momentum going. LPO’s?FY 2024 Budget Request, released in March, will allow the office to support its growing portfolio effectively while also effectively stewarding the taxpayer’s dollar. This is important as active applications remain high, with?130 active applications?requesting nearly $118 billion in loans as of the end of March.
Sincerely,
LPO Director Jigar Shah
Earlier this month, LPO announced a conditional commitment to?Sunnova EnergyCorporation’s Project Hestia for a partial loan guarantee of up to $3.0 billion to make distributed energy resources (DERs)—including rooftop solar, battery storage, and virtual power plant (VPP)-ready software—available to more American homeowners.
Aimed at improving grid reliability and expanding clean energy access across the United States, Project Hestia is expected to prioritize a focus on households in disadvantaged communities, including those in Puerto Rico, as well as homeowners with lower credit ratings. If finalized, the partial loan guarantee would enable Sunnova, a leading Energy as a Service provider, to provide loans for clean energy systems for approximately 75,000 to 115,000 homeowners throughout the nation, including its territories.
Over the next 25 years, the approximately 568 MW project, comprised of solar installations, battery systems, and smart software to reduce energy waste, is expected to avoid an estimated 7.1 million tonnes of carbon dioxide over the 25-year life of the project. That’s equivalent to eliminating carbon emissions from 1.5 million vehicles on the nation’s roads. If finalized, the project is estimated to create over 3,400 American jobs.
As with all conditional commitments that LPO offers, it's important to note that the expected DOE loan will only be issued pending the satisfaction of certain conditions, including final legal, contractual, technical, and financial requirements that the conditional commitment specifies.
Read the full?Project Hestia conditional commitment announcement?for more details.
LPO's Annual Portfolio Status Report (APSR) for FY 2022 in April and the findings show a growing portfolio with steady performance concentrated in creditworthy assets, with 70% of exposure held by investment-grade borrowers, and a low aggregate loss rate of 3% of funds disbursed. Every active LPO borrower remaining in the portfolio repaid principal in FY 2022, achieving $1.7 billion in principal retirement and $523 million in interest payments to the U.S. Treasury. Cumulative principal payments now exceed $13.7 billion, 43% of the $31.6 billion LPO has disbursed.
And with the passage of the?Bipartisan Infrastructure Law?and?Inflation Reduction Act (IRA)?in FY 2022, LPO's capacity to promote critical investments in clean energy and advanced transportation technologies, as well as to help upgrade critical energy infrastructure, was greatly expanded. As a result, LPO is open for business like never before, with FY 2022 marking the beginning of a new era of opportunities for federal support for low-carbon innovation and economic growth across American energy sectors.
Download this and previous APSR reports on?LPO's Annual Portfolio Status Report page.
For this month's LPO Sector Spotlight, Director Jigar Shah examines how LPO is supporting hydrogen projects across the United States as part of a larger effort by DOE's?Hydrogen Shot?goal of reducing the cost of clean hydrogen by 80% to $1 per 1 kilogram by the end of the decade.
领英推荐
As Director Shah notes, with a $504.4 million loan guarantee to the?Advanced Clean Energy Storage (ACES)?project in Delta, Utah in June 2022—LPO's first loan guarantee for a new clean energy technology project since 2014—LPO is demonstrating how it is uniquely situated to help support key parts of the clean hydrogen value chain in order to reach the nation's decarbonization goals.
Read the full Clean Hydrogen sector spotlight?for more insights into the market dynamics of hydrogen and an overview of how LPO is actively working to support scale-up of the sector.
On the heels of last month’s launch of the DOE's Pathways to Commercial Liftoff initiative and the release of its first three reports focused on?Clean Hydrogen,?Advanced Nuclear, and?Long Duration Energy Storage, the fourth report on?Carbon Management?was released in April. The report discusses the whole Carbon Management sector ecosystem, from point-source carbon capture, utilization, and storage (CCUS) to carbon dioxide removal technologies (CDR), with a special focus on addressing the real but solvable barriers to carbon management technology deployment at scale.
To learn more,?download the full Carbon Management Liftoff report.
First announced by DOE Secretary Jennifer Granholm?at CERAWeek this year, DOE's new "Pathways to Commercial Liftoff" is a department-wide initiative to strengthen engagement between the public and private sectors to accelerate the commercialization and deployment of key clean energy technologies, and the reports are meant to provide the private sector and other industry partners a valuable, engagement-driven resource on how and when certain technologies can reach full-scale deployment.
Each Liftoff report creates a common fact base and tools for ongoing dialogue with the private sector on the pathways to commercial liftoff, and is organized into the same chapters to help stakeholders engage with and use the reports as easily as possible:
Learn more at the?Pathways to Commercial Liftoff website.
See LPO's most recent?Monthly Application Activity Report?(MAAR), which tracks key metrics for active applications across?13 LPO major technology sectors?and proposed project locations across the U.S. through March 31, 2023.
The Tribal Energy Finance team was in Las Vegas in early April at the annual?Reservation Economic Summit,?meeting with Tribal communities from across the country about investing in energy sovereignty and opportunities for energy project financing. Read more about?their experience there?and learn more about?Tribal Energy Financing?from LPO.
LPO Outreach & Business Development Team Lead Offshore Wind Supply Chain Workshop at IPF 2023
In late March, LPO’s Acting Director of Outreach and Business Development Gretchen Kittel and Deputy Director of Technical and Project Management Mark Higgins led a workshop at the?2023 International Offshore Wind Partnering Forum?for companies within the offshore wind supply chain on how to engage with LPO.
If you didn't have a chance to meet with the LPO team at these or other recent outreach events, please contact us and let’s talk about your project! Call or write to schedule a no-fee, pre-application consultation:?Energy.gov/LPO/Contact-Us?and learn more about LPO and all of its financing programs:?Energy.gov/LPO?We look forward to working with you!
Major Upcoming Events
A sampling of recent third-party media and podcast mentions of LPO and the LPO Team:
Subscribe to LPO's monthly email newsletter?to stay up to date with the latest from the U.S. Department of Energy Loan Programs Office, including announcements about our financing programs, news about our portfolio projects, and ways to engage with our team about your project!
Join a larger network of clean energy financing experts by following the?U.S. Department of Energy?Loan Programs Office on LinkedIn.
LPO's Financing Programs
Learn more about LPO and all of its financing programs at:?Energy.gov/LPO
Title 17 Clean Energy Financing?(Loan Guarantees)?
Advanced Transportation Financing?(Direct Loans via the ATVM Program)
Tribal Energy Financing?(Direct Loans & Partial Loan Guarantees via the TELGP?Program)
CO2 Transportation Infrastructure Financing?(Loan Guarantees via the CIFIA?program)
Contact LPO?to see what financing options may be available for your project. Call 202-287-5900 or email?[email protected]?to schedule a no-fee, pre-application consultation.