There was some concern over the last several weeks that the Department of Energy’s loan program would fall victim to cuts as Congress battled over the federal budget. But at GigaOM’s Green:Net conference Thursday, Jonathan Silver, head of the Department of Energy’s Loan Programs Office, said that despite those fears, changes in the new budget have actually been somewhat favorable to the program.
That includes more actual money to put up in loan guarantees. While the new budget reduces the amount that the loan program is authorized to spend, it increases the appropriations, which Silver explained was the money that the program actually has to spend.
“There were some changes made to the 1703 program, but they were in many ways advantageous to the program… In the 1703 program, some of the authorization cap was removed, but it was replaced by an actual credit subsidy, which is Washington’s way of describing a loan loss reserve. It means that we actually have new funds in the 1703 program to provide funds for applicants that we never had before,” Silver said.
The budget also includes a condition that allows project applications in Section 1705 section of the loan program to be able to transfer those applications to Sec. 1703. As a result, the program is trying to strike conditional commitments for a number of applicants that will be able to transfer into the 1703 program once the Section 1705 money sunsets at the end of this fiscal year in September.
“We are racing to close a number of very important transactions, and the reason we’re racing is because the 1705 Recovery Act monies sunset at the end of September of this fiscal year… The new CR provides a landing pad in 1703 along with this credit subsidy, which says ‘For those applications which have conditional commitments but which cannot close by that date, they can in fact move over to the 1703 program. And the reason that’s important is that 1703 is what’s referred to as “no year money” — it never sunsets,” Silver said.
So how close is the program to doing that? Silver said that the DOE loan program has closed on deals that represent about 35 to 40 percent of the budget, with conditional commitments to about 70 percent of the available budget. The DOE is now working on term sheets that would total slightly more than the total budget, Silver said, since deals sometimes don’t close. “We expect we will use all our available funding by the sunset date,” Silver said.