Income of the Future
One of the hottest up-and-coming job sectors is in the realm of renewable energy. Those brave enough to start an energy-related business will have a niche market that will likely continue to grow for the next decade or longer.
To boost the industry, the U.S. Department of Energy (DOE) created the Financial Institution Partnership Program (FIPP). The FIPP is a private sector partnership intended to speed up the issuance of loan guarantees for eligible renewable energy projects.
Under the American Recovery and Reinvestment Act, up to $750 million in stimulus funding could be used to pay the credit subsidy costs of loan guarantees. Potentially the loan guarantees could support as much as $8 billion in loans.
Instead of applying to the DOE directly for funding, potential borrows and project sponsors work with eligible lenders. The lenders then apply for a loan guarantee from the DOE.
Lenders will be expected to have a lead role in developing the financial structure of proposed projects and will have continuing obligations to the DOE such as servicing oversight and loan monitoring.
Due to the fact that the financial institutions will share in a significant amount of financial risk, project debt must have a credit rating of at least “BB” or an equivalent with a nationally-recognized credit agency and their program, financing and funding plans will be scrutinized.
Applications are now being accepted for hydro power, solar, wind, biomass, geothermal, landfill gas and waste-to-energy projects that comply with basic threshold requirements including those in the National Environmental Policy Act. Chosen projects must start construction no later than September 30, 2011.
FIPP funding is not available for biofuel, transmission and manufacturing at this time, however, the DOE has indicated it may be available in the future.
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More on the web:
- FedConnect - Opportunity: Commercial Renewable Power Generation Solicitation
- DOE Suggestions for Strong Loan Guarantee Applications
WilmerHale's Energy and Clean Technology practice group has extensive experience in the areas of public policy, government contracting, project finance and development, and energy regulation.
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