Biden and Chu-Launch Home Energy Score Pilot Program

Vice President Biden Launches Home Energy Scoring Program

November 09, 2010

Vice President Biden joined U.S. Department of Energy (DOE) Secretary Steven Chu today to announce the launch of the Home Energy Score pilot program. The Home Energy Score will offer homeowners straightforward, reliable information about their homes' energy efficiency. A report provides consumers with a home energy score between 1 and 10, and shows them how their home compares to others in their region. The report also includes customized, cost-effective recommendations that will help to reduce their energy costs and improve the comfort of their homes.

DOE today also released the Workforce Guidelines for Home Energy Upgrades, a comprehensive set of guidelines for workers in the residential energy efficiency industry. The guidelines will help develop and expand the skills of the workforce, ensuring the quality of the work performed, while laying the foundation for a more robust worker certification and training program nationwide. Vice President Biden made the announcements today at a Middle Class Task Force event, highlighting the progress that has been made on implementing the recommendations of last year's Recovery through Retrofit report.

"The initiatives announced today are putting the Recovery Through Retrofit report's recommendations into action – giving American families the tools they need to invest in home energy upgrades." said Vice President Biden. "Together, these programs will grow the home retrofit industry and help middle class families save money and energy."

"The Home Energy Score will help make energy efficiency easy and accessible to America's families by providing them with straightforward and reliable information about their homes' energy performance and specific, cost-effective energy efficiency improvements that will save them money on their monthly energy bills," said Secretary Chu.

Under this voluntary program, trained and certified contractors will use a standardized assessment tool developed by DOE and Lawrence Berkeley National Laboratory to quickly evaluate a home and generate useful, actionable information for homeowners or prospective homebuyers. With only about 40 inputs required, the Home Energy Scoring Tool lets a contractor evaluate a home's energy assets, like its heating and cooling systems, insulation levels and more, in generally less than an hour. That means a homeowner can see how their home's systems score, regardless of whether a particular homeowner takes long or short showers or keeps their thermostat set high or low.

A score of "10" represents a home with excellent energy performance, while a "1" represents a home that will benefit from major energy upgrades. Along with the score, the homeowner will receive a list of recommendations for home energy upgrades and other useful tips. For each specific improvement, the estimated utility bill savings, payback period, and greenhouse gas emission reductions are included. To see a sample copy of the Home Energy Score and get more information on how it is calculated, visit the Home Energy Score Web site. View an example PDF of a score and recommendations.

The Home Energy Score initially will be tested with local government, utility, and non-profit partners in ten pilot communities across the country, located in both urban and rural areas that cover a wide range of climates. During this test phase, the Department and its partners will gauge how homeowners respond to the program, and whether the information encourages them to get energy improvements done on their homes. After the pilot tests conclude in late spring 2011, DOE expects to launch the Home Energy Score nationally later next year, based on the findings from the initial programs.

The following states and municipalities are participating in the pilot program: Charlottesville, Virginia; Allegheny County, Pennsylvania; Cape Cod and Martha's Vineyard, Massachusetts; Minnesota; Omaha and Lincoln, Nebraska; Indiana; Portland, Oregon; South Carolina; Texas; and Eagle County, Colorado. More information on each of the pilot programs and details on how to participate in the Home Energy Score program are available on the Testing Locations Web page.

In addition to launching the Home Energy Score, the Department of Energy announced the release of the new Workforce Guidelines for Home Energy Upgrades. Energy improvement programs can adopt these guidelines to increase the consistency and effectiveness of energy upgrades, and training providers can use them to improve course curricula and training materials. These guidelines were developed through a collaboration between energy efficiency contractors, building scientists, health and safety experts, technicians and trainers in the weatherization program, and other professionals in the building and home energy upgrade industry.

The Workforce Guidelines include standard work specifications required for high-quality work, a reference guide for technical standards and codes, analyses of the job tasks involved in completing various energy efficiency improvements, and the minimum qualifications workers should possess to perform high quality work. Identifying the knowledge, skills and abilities required to perform efficiency upgrades represents an important step in developing a nationwide framework for training program accreditation and worker certification. The guidelines, which can be accessed on the Weatherization Web site, will be available for public comment through January 7, 2011.

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Re: And the winner is...

On Tue, Nov 9, 2010 at 11:40 AM, Dave Boundy, Repower America <info@repoweramerica.org> wrote:

Dear Scotts Contracting, One thing is for certain: you're angry. When I tallied the votes for the 2010 Snake Oil Awards, I found myself nodding my head as I read your comments. Massey Energy, API, Koch Industries and BP America spew lies so they can pollute the air and line their pockets with profits. Each of the four nominees received a large number of votes, but now it's time to announce the "winner." It's Koch Industries -- the notorious pipeline and refinery company that pours money into groups that defend the interests of big oil. Find out more about Koch Industries here. Here are the final vote totals for our four nominees: Koch Industries: 5,552 votes (42%) BP: 5,119 votes (39%) API: 1,347 votes (10%) Massey Energy: 1,216 votes (9%) We set out to determine the worst offender so we could spread the word about this dirty energy company's history of pollution and lies. That's why we made this site: KochIndustriesFacts.com KochIndustriesFacts.com is a catalog of lies and environmental offenses by Koch Industries and its owners, the brothers Charles and David Koch. What we've listed on the site is just the beginning. Click around for a bit, and if you see something that's missing, make sure to let us know by submitting your own facts about Koch Industries. Over the years, Koch Industries has spent nearly 50 million dollars funding climate change deniers, while running a very environmentally dangerous company at a high profit. So I'm sure there are new facts for you to add based on their long history of wrongdoing. Can you help us spread the word about Koch Industries by sharing this website on Facebook and Twitter? Your help will go a long way in making sure Koch Industries is exposed to the American people. Thanks for all that you do, Dave Boundy Campaign Manager Repower America

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Power players still split on energy

	Nov 9, 2010	Politico
	Darren Samuelsohn President Barack Obama and congressional Republicans are talking the same talk when it comes to energy bill compromises. Now let's see what happens when they get into a room together. Many of the smaller energy measures like electric vehicles, renewable energy tax credits and efficiency incentives that the left refused to relinquish while it was pushing the ill-fated cap-and-trade climate bill could in theory be easy bipartisan victories. But last Tuesday's tidal wave didn't change the hard reality that energy policy historically breaks down more along regional lines than partisan ones. Come January, it will still be the same coal and Rust Belt lawmakers battling Southern oil and nuclear power interests and renewables advocates from the coasts and Great Plains. Energy policy dynamics only get trickier as both parties dig their trenches for the 2012 presidential election and Republicans add dozens of tea party-backed lawmakers with little interest in new government spending. "It's always easier for the Hill to do nothing than to do something," said Christine Tezak, senior energy and environmental policy research analyst for investment firm Robert W. Baird & Co. The House Rep. Fred Upton (R-Mich.) remains the front-runner to take over the Energy and Commerce Committee, despite the campaign from former Chairman Joe Barton (R-Texas). Upton and other Republicans, such as Barton and likely Oversight and Government Reform Committee Chairman Darrell Issa of California, are tripping over themselves to get started investigating the Obama administration. First in line is the Environmental Protection Agency's climate regulations and the role of White House energy adviser Carol Browner, Upton wrote in Human Events earlier this week. Republicans have pressed an "all of the above" energy policy while in the minority and expect no changes come January. Upton told POLITICO he supports renewables, hydroelectric, biomass, nuclear and coal, but offered few hints about specific legislative plans. "We ought to be encouraging our electricity producers, rather then penalizing the users of electricity," Upton said. At the Natural Resources Committee, Washington Rep. Doc Hastings is poised to take over and promote "domestic energy production through an all-of-the-above energy plan," he said this week. Republicans and the oil industry have bristled at what they say is the slow pace of issuing offshore drilling permits at the Interior Department, especially after this summer's Gulf of Mexico oil spill. Expect to see a push to force Interior to speed up the process, as well as renewed efforts to open up new offshore areas in Alaska and the Atlantic Ocean to drilling. And at some point over the next two years, oil drilling in Alaska's Arctic National Wildlife Refuge will have a moment in the sun. Complicating any House energy push are the 60 Republican freshmen, many of whom are coming to Washington with a mandate from their supporters to cut spending and the size of government. Those members would undoubtedly support efforts to curtail EPA's ability to regulate greenhouse gas emissions, but they may oppose spending billions of dollars on loan guarantees for new nuclear power plants or carbon sequestration technologies. Luke Popovich, a spokesman at the National Mining Association, likes what he hears from GOP leaders like Senate Minority Leader Mitch McConnell when it comes to "clean coal" technology. But he's not so sure about the freshmen in both chambers. "Some may not share our view on the importance of supporting costly advanced coal technology — either because of spending concerns or because it could be construed as a tacit acceptance of global warming," he said. The Senate Divided government won't be an obstacle for Sen. Jeff Bingaman, chairman of the Senate Energy and Natural Resources Committee. The New Mexico Democrat prides himself on passing bills with GOP support, including a 2009 committee measure that included a renewable electricity standard and increased offshore oil drilling. At the time, that bill was intended to be combined with a cap-and-trade measure, creating a giant energy omnibus. But as interest in climate legislation waned, several moderates suggested the Senate proceed with the "energy-only" measure. With Democrats controlling 53 votes in the Senate next year, down from 59, the atmosphere could be set for a deal maker like Bingaman to take charge. Bingaman is also helped by the fact his panel has jurisdiction over most of the low-hanging legislative fruit that Obama has suggested could be the centerpiece of any energy plan, such as nuclear power and "clean coal" technology. McConnell last Friday told The Wall Street Journal he believes "energy is an area where there is the potential for a bipartisan accomplishment of some consequence." "Most people on both sides of the aisle are very enthusiastic about plug-in cars," he said. "Nuclear power, more popular on my side of the aisle than on theirs, [and there is] bipartisan support, however, for that, for clean coal technology." But each of these ideas carries some baggage. For starters, environmentalists and some Democrats fret that rapid new demand for electric vehicles will lead to the construction of dozens of new coal-fired power plants that will be around for half a century and negate any reductions in greenhouse gases or fossil fuel dependence. Both parties also fought this summer over how to regulate the controversial technique of hydraulic fracturing that's used to extract onshore natural gas, with Senate Majority Leader Harry Reid trying to get the drillers to disclose the chemicals they pump into the ground. And longtime nuclear power opponents like Senate Environment and Public Works Committee Chairman Barbara Boxer (D-Calif.) offered tempered support this year for more nuclear plants, but her shift came as part of the price of admission to a sweeping climate bill. The White House Obama floated some possible areas ripe for deal making during his postelection news conference at the White House. He suggested there is "broad agreement that we've got terrific natural gas resources in this country. Are we doing everything we can to develop those?" On electric cars: "There's a lot of agreement around the need to make sure that electric cars are developed here in the United States, that we don't fall behind other countries. Are there things that we can do to encourage that?" And nuclear power: "There's been discussion about how we can restart our nuclear industry as a means of reducing our dependence on foreign oil and reducing greenhouse gases. Is that an area where we can move forward?" But as with the climate debate over the past two years, it's unclear whether the White House will step forward with specific legislative proposals or take a more passive approach and let Congress write the bill. The new Congress also has environmentalists in an awkward spot. They enter this new phase of Obama's term without the type of coherent message they had in January 2009, when the president was expected to make good on a campaign promise of implementing carbon caps. "Our goals remain the same, but we've got to have an open mind about how to achieve those goals and take into account the new folks, what their perspectives are and listen to their ideas," said Fred Krupp, president of the Environmental Defense Fund. "We need to be open to new ideas, and we certainly are." The Sierra Club is pouring a record amount of resources into shutting down coal plants and preventing the construction of new ones. Several other green groups have pledged to play defense against Republicans and moderate Democrats who want to strip EPA of its authority to regulate for greenhouse gas emissions.

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Webinar Invitation: Can Companies Do Well by Doing Good?

ROI & The Triple Bottom Line: Can Companies Do Well by Doing Good?
November 10, 1 PM ET / 10 AM PT

Register Now

A triple bottom line company is usually defined as one that makes an effort to consider the social and ecological consequences of its actions, in addition to the financial ones, establishing people, planet, and profit as the three criteria for measuring success. Nowadays, most companies claim to value social and environmental responsibility, whether or not they practice it in reality.

But these claims seem to run contrary to traditional economics. Are companies that put broader social and environmental concerns ahead of profits denying their competitive nature and dooming themselves to failure?

Actually, a growing body of evidence suggests that the triple bottom line can be a viable business strategy and not just a marketing ploy. Successful companies need talented, committed employees and loyal customers. More and more business enterprises understand that the most talented employees measure professional success in terms of meaning and significance as well as money and status. And consumers increasingly want to buy from companies that do business in a socially and environmentally sustainable manner.

At the same time, traditional "hard" performance metrics have not gone away: companies still measure success in terms of units sold, savings realized and dollars earned, and will do so for as long as capitalism endures. In this live webcast, we'll tackle the challenge of how companies can do well by doing good:

How do companies with TBL values measure success?
Can business really expect financial returns beyond good PR out of TBL investments?
How can we distinguish real CSR and environmental stewardship from greenwashing? Why should businesses choose one route over the other?
What kind of difference to consumer behavior does operating with TBL values make?

Join us!

Featuring:

Ryan Schuchard is Manager for Climate and Energy at BSR. His recent work includes starting BSR's Energy Efficiency Partnership for supply chain management, launching Walmart's global supplier energy-efficiency program based at their global procurement headquarters in Shenzhen, and leading global climate policy intelligence for a US$30 billion-plus extractives company. He has co-authored chapters in Corporate Responses to Climate Change (Greenleaf Publishing) and Carbon Trading (ICFAI Books), in addition to numerous reports and articles.

Nick Aster is founder of TriplePundit.com, and specializes in using online technology to advance conversations on sustainability. He has worked with Mother Jones magazine, as well as companies including Nike, SAP, Citibank, Gawker Media, Offermatica, and many others. Nick worked for many years on TreeHugger.com, the most popular environmental website in the world. He holds an MBA in sustainable management from the Presidio School of Management and graduated with a BA in History from Washington University in St. Louis.

Debbra A. K. Johnson is the Global Marketing Manager for Sustainable Operations and Clean Technologies - two DuPont Sustainable Solutions practices that work to help clients achieve triple bottom line results. With hands-on experience in Life Cycle Assessments, Debbra has completed package printing and platemaking LCA's for DuPont Packaging Graphics, and went on to launch a program to recover and reuse printing plate waste – a first in the industry. She is a member of the DuPont Sustainability Network, a frequent presenter, and she serves on the Sustainable Green Printing Partnership Board of Directors.

Register for the webcast

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USA-Dept Energy Loan Guarantee Debt Program

The DOE Loan Guarantee Program: A Primer

Submitted by Michael Mendelsohn on Wed, 09/01/2010 - 8:31am

The Department of Energy (DOE) Loan Guarantee program offers significant promise to stimulate capitalization of large renewable energy (RE) projects. Through the program, the government guarantees debt associated with energy production or manufacturing facilities relevant to renewable and other energy technologies. Government guarantee on the debt lowers the risk and required yield on the funds raised and makes more capital available to the industry.

The following is a primer on some of the key information relevant to the Loan Guarantee program. For an editorial analysis of one whether the program is working and why, particularly for concentrating solar power (CSP) projects, see Will CSP Ever Fly? In July 2010, the Government Accounting Office (GAO) issued an evaluation of the Loan Guarantee program, focusing on the application review process.

Background

Title XVII of the Energy Policy Act of 2005 (EPAct 2005) created the Loan Guarantee program for innovative energy efficiency, renewable energy, and advanced transmission and distribution projects (referred to as Section 1703 or "innovative" technologies). The Recovery Act amended Title XVII by adding Section 1705, a loan guarantee offer for commercial technologies. Initially under the Recovery Act, Congress appropriated $6 billion to the 1705 program. In August 2009, $2 billion was redirected to the Cash for Clunkers program. In August, 2010, an additional $1.5 billion was removed from the Loan Guarantee allocation to pay for extended unemployment benefits and other initiatives, reducing the total program size to $2.5 billion (Bartlett et. al. 2010).

The loan guarantees are awarded in the form of credit subsidies (Jaffe 2009). A credit subsidy is a similar structure to a loan loss reserve, in which banks set aside money for their loan portfolio. For each loan guarantee award, the federal government sets aside a sum (the credit subsidy) in the project's name, which acts as insurance in the case of project failure (Ibid). Due to the higher risk nature of the projects, most observers expect a loan guarantee program to establish a 6% to 10% credit subsidy ratio for renewable energy projects to be guaranteed. In other words, each dollar of credit subsidy is expected to support $10.00 – $16.67 of debt investment. If so, the remaining $2.5 billion allocated under Section 1705 is expected to support approximately $25.0 - $41.7 billion worth of economic activity.

As of August 2010, the DOE has awarded three loan guarantees and conditionally committed to 6 others related to the manufacture of renewable energy components or the development of renewable energy generating facilities. The nine loan guarantees relevant to renewable energy manufacturing or generation are referenced in Table 1.

Table 1. Renewable Energy Loan Guarantees Awarded/Conditionally Committed

Loan Guarantee Awardee	Award Announce Date	Loan Amount ($millions)	Awarded or Conditional Commitment	Description
Solyndra, Inc.	9/4/09	$535	Awarded	For manufacture of cylindrical solar PV panels
Nordic Windpower, USA	7/02/09	$16	Conditional Commitment	For manufacture of two-bladed wind turbines
BrightSource Energy	2/22/10	$1,370	Conditional Commitment	3 utility-scale solar CSP plants at Ivanpah (400 MW total)
First Wind - Kahuku Wind Power, LLC	3/5/10	$117	Awarded	30 MW wind generation facility and battery storage system
U.S. Geothermal	6/10/10	$102	Conditional Commitment	22 MW geothermal generation facility
Nevada Geothermal Power	6/15/10	$98.5	Awarded	49.5 MW geothermal generation facility at Blue Mountain - first FIPP award
Abengoa Solar	7/3/10	$1,450	Conditional Commitment	250 MW Solana CSP solar facility (+ 6 hours thermal storage)
Abound Solar	7/3/10	$400	Conditional Commitment	For manufacture of CdTe thin-film solar panels in Longmont, CO and Tipton, IN
Caithness	10/10/10	$1,300	Conditional Commitment	For 845 MW Shepherd Flats, OR generation facility
Total	As of 11/04/10	$5,389

Source: DOE (2010).

Two additional guarantees, representing $60 million, have been awarded or conditionally committed to support electric storage facilities in New York and Massachusetts. These projects are expected to provide ancillary and transmission services competitively in their respective wholesale markets, which will enable renewable energy production. One loan guarantee (the most recently announced) was conditionally committed to a transmission facility in Nevada. Other Loan Guarantees have been made by the DOE for development of advanced vehicle manufacturing facilities, nuclear facilities, and other projects. In total, the DOE estimates, the Loan Guarantee program has supported $24.75 billion in project financing. Since the passage of EPAct 2005, eight unique solicitations under the Loan Guarantee program have been issued by the Department of Energy for relevant projects, including:

1) August 6, 2006 Innovative Technologies

• October 4, 2007 – DOE Invites 16 Pre-Applicants to Submit Applications for Federal Support
• Included Solyndra, Tesla, Beacon Power which were recently approved

2 – 4) June 30, 2008 - Three Solicitations

• 2) Innovative Energy Efficiency (EE), Renewable Energy (RE), and Advanced Transmission & Distribution (T&D)
• 3) Nuclear
• 4) "Front-end" nuclear

5) September 22, 2008 – Innovative Clean Coal

6 – 7) July 29, 2009 – Two Solicitations

• 6) Innovative EE, RE, and Advanced T&D
• 7) Transmission
• 8) October 7, 2009 Financial Institution Partnership Program (FIPP)

Source: DOE (2010).

Currently Open Solicitations

Two solicitations currently open are directly relevant to renewable energy – the July 29th 2009 Innovative Technologies (#6) and the October 7th, 2009 FIPP (#8) solicitations.

The July 29th solicitation is for "innovative" technologies, that either (i) have not been installed in and used in three or more projects in the U.S., or (ii) involve meaningful and important improvements in productivity or value in comparison to commercial technologies (Klepper 2009). Loans are available from the Federal Financing Bank – which can provide very low-cost debt - if applicant seeks a 100% guarantee from DOE (WSGR 2009).

The FIPP program is designed for technologies deemed commercial, i.e., has been installed in and is being used in three or more commercial projects anywhere in the world for two or more years and has been in operation for at least two years (Martin, 2009). The solicitations also differ in that the FIPP program relies on the private market to conduct the bulk of due diligence including the evaluation of project and developer risk, review of contracts, and negotiating loan documentation. Projects must also obtain a near-investment grade credit rating from one of the nationally-recognized rating agencies. Minimal project ratings start at "BB" from either S&P or Fitch, or "Ba2" from Moody's (WSGR 2009). The FIPP program was designed for simple "plain vanilla" project finance structures without complex tax equity arrangements (Klepper 2009).

Under FIPP program, debt cannot exceed 80% of total capital, and DOE will guarantee 80% of loan, up to 64% of total capital (Martin 2009). The July 29th solicitation allows DOE to guarantee 100% of the debt. The loan term can be up to 30 years or 90% of projected useful life. Table 2 breaks down some of the key parameters of the two solicitations.

Table 2. Comparison of 1703 and 1705 Loan Guarantee Solicitations

Solicitation	July 29 Innovative Technologies	October 7 Financial Institution Partnership Program
Technology	Innovative	Commercial
Lender	Federal Financing Bank	Private Commercial Lenders
Applicant	Project developers	Lenders - FIPP
Conducts Due Diligence	DOE	Lender
Pays Credit Support Charge	Applicant	DOE
Refinance Allowed	No	No
Avail. Credit Subsidy	$2.5 billion	$750 million

Sources: Klepper (2009), WSGR (2009), DOE (2010).

The two solicitations are expected to produce very different interest rates for respective borrowers. Because approved applications to the Innovative Technologies program borrow from the Federal Finance Bank, associated interest rates are projected at 25 basis points (b.p.) over treasuries, or approximately 4.65% at current rates for 20 year treasuries currently (prior to consideration of issuance fees) (Martin, 2009). Under the FIPP program, although guaranteed by the DOE, the debt starts with private lenders. Experts predict the debt yields will range from 150 over treasuries (for insurance companies and other buyers of debt that can accept a longer tenor) to approximately 200 b.p. over treasuries (at today's LIBOR-treasury spreads) for banks and other entities seeking a shorter tenor.  

Both solicitations require projects to commence construction by September 30, 2011 meaning the borrower has completed all pre-construction design and testing, received all necessary licenses, and environmental permits, and engaged all required contractors and ordered all equipment. A minimum level of physical construction including site preparation must have begun by that date as well (Klepper 2009).

As the FIPP program requires a private lender and covers a maximum of 80% of the project debt, special rules guide the allocation of risk and reward. Lender-applicants can be domestic or foreign banks, insurance companies, or other companies in the business of lending money. The rights of the lender and DOE must be pari passu and the separate loans paid on a pro rata basis with equal amortization schedules (i.e., on equal terms) (Klepper 2009). Lenders can transfer the economic interest but not the ownership of the loan.

On December 7th, 2009, the DOE issued a rule change to the Loan Guarantee program whereby the DOE will be able to consider financing projects together with other lenders and will be able to provide loan guarantees to projects with multiple participants (who may hold undivided interests in a project). As an example, export credit agencies and other financial institutions will now be able to provide financing to complement Title XVII loans and loan guarantees (DOE 2010). The rule change also eliminates the requirement that the Secretary receive a first priority lien on all project assets as a condition for obtaining the loan guarantee (Stoel Rives 2009).

Process

Both the Innovative Technologies and FIPP solicitations require a two-part application process. Part I applications to the FIPP are intended to provide DOE "with a summary level description of the project and its creditworthiness, project eligibility, financing strategy, and compliance of the proposed funding plan[...]" (DOE 2010). Under the FIPP program, Part I applications also include information regarding the lender-applicant, including its capability to conduct the primary due diligence and negotiate the terms of the loan. Part I and Part II applications are accepted on a rolling basis although seven application round due dates – starting September 13, 2009 for Part I and November 13 for Part II and continuing approximately every six weeks – allow projects submitted in the same timeframes to be evaluated against other filings. Earlier-round applicants will have priority of review (WSGR 2009)

Under the Innovative Technologies program, DOE scoring will be based on six criteria (weights in parentheses):

• • Creditworthiness (30%)
• • Construction plan (10%)
• • Legal and regulatory risk (10%)
• • Technical merit (15%)
• • Technical approach (20%)
• • Environmental benefits (15%)

DOE scoring of projects will be based on three primary criteria:

• • Programmatic - 35% - project readiness
• • Creditworthiness – 45% - financial strength of project
• • Financing Plan – 20% - Ability of lenders to execute  

The DOE offers potential applicants advice for a swift loan guarantee application process (DOE 2010). Among other things, DOE references specific attributes to facilitate financial evaluation of an application, including:

• • "Strong" engineering, procurement and construction (EPC) contract with a large, established creditworthy counterparty. The EPC contract should specify performance guarantees with liquidated damages for non-compliance
• • Clear rights to the Intellectual Property (IP) necessary to implement the project (especially for innovative projects) and "a willingness to assign those intellectual property rights to the DOE as collateral in the event of a default"
• • Source of equity capital "provided directly by the project sponsor or a combination of the sponsor and committed, creditworthy joint venture partners."

Fees

Applying for and obtaining a Loan Guarantee can be expensive. There are three types of fees payable to DOE which add up to roughly 1% of the loan amount: the application, facility, and maintenance fees. The fees ranges based on the size of the loan. Table 3 compares these fees under each program. The bottom line of the table provides an example of the combined fees in the first year of the loan.

Table 3. Fees by Loan Size under the Loan Guarantee Program

Loan Size	$0 - $150 mm	$151 - $500 mm	$501 + mm
Application Fee	$75,000	$100,000	$125,000
Facility Fee	1% of guar. amount	$375k + 0.75% of guar. amount	$1.625 mm + 0.5% of guar. amount
Maintenance Fee	$50 - $100k	$50 - $100k	$50 - $100k
Year 1 example: Loan Size / Combined Fees	$100 mm / $1.125 million	$300 mm / $2.8 million	$750 mm / $5.6 million

Source: WSGR (2009), NREL (2009).

Importantly, these fees are only the costs payable to DOE. Any project developer will also incur millions of dollars conducting its own due diligence, including the procurement of engineering, legal, geologic and other consultants and advisors.

Conclusion

The loan guarantee program offers substantial promise to capitalize evolving technologies at lower costs and greater project size that the private market is currently capable of. The FIPP program leverages the due diligence capabilities of the private sector to improve the speed and accessibility of the program.

But significant hurdles – including complex environmental regulations, access to available transmission capacity, and cost – remain. Can the DOE and the private sector ramp up the program to provide the massive quantity of capital the renewable energy industry needs to meet the goals of developers, state regulators, and Federal policymakers? Lets just say the jury is still out.

References

Bartlett, J., Goldstein, A. (19 August 2010), Q2 2010 Solar Industry Update, DOE.

Department of Energy Loan Guarantee Program, 2010 http://www.energy.gov/recovery/lgprogram.htm

Jaffe, S. (4 August 2009). "Robbing Renewable Energy to Pay for Clunkers." Greentech Media. http://www.greentechmedia.com/articles/read/robbing-renewable-energy-to-...  Accessed March 17, 2010.

Klepper, 2009, Financing Opportunities Under the Department of Energy's Loan Guarantee Program, Solar Power International Conference, October 27, 2009

Martin, et. al., 2009, Keith Martin (Chadbourne & Parke), Steve Greenwald, Kenneth Hansen, Walter Howes, DOE Loan Guarantee Webinar, March 2009

Stoel Rives, 2009, Show Me the Money: The Law Of The Stimulus Package, 2nd edition, August, 2009.

Wilson, Sonsini, Goodrich & Rosati (WSGR). 2009. FIPP, FIPP, Hooray…? Analysis of and Commentary on DOE's Financial Institutional Partnership Program, http://www.wsgr.com/publications/pdfsearch/wsgralert_fipp.pdf

• All Audiences
• Business
• DOE Loan Guarantee Program
• Loan/debt financing
• Utility-scale

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Recovery Act Funds-Low-Interest Revolving Loan Funds

You Spin Me Right Round Baby: A Look at Low-Interest Revolving Loan Funds

Some state and local governments are getting creative by recycling funds and spinning them off into multiple clean energy projects. How are they getting this groove on? Through low-interest revolving loan funds: as the loans are repaid, additional loans can be made over time. While it may require a lot of up-front capital, the money can come from a variety of resources (e.g., state coffers and bonds). And, a revolving loan fund can provide a particularly good alternative for using Recovery Act funds (perhaps to replace stalled PACE programs) since they are not subject to the law's expiration and there are limited program administration and staffing requirements.

Detailed below are the major advantages, challenges, and design considerations of low-interest revolving loan funds, based on recent research about this funding mechanism.

Revolving Loan Fund Advantages

• • Encourages clean energy investment. Additional energy efficiency and renewable energy projects can be encouraged using low-interest loan funds, which can reduce energy consumption and provide environmental benefits.
• • Addresses the biggest major barrier to renewable energy deployment: up-front costs. Many consumers lack enough disposable income to pay for clean energy equipment up front-this is true even if the cost is totally recovered over time and/or the initial price is reduced by a tax credit or rebate. Through the revolving loan, the consumer is provided with a large amount of money in the first year to pay for the system and its installation. This consideration is important and can encourage widespread use of the program.
• • Provides access to capital at low interest rates. Consumer's access to capital can be severely limited during tough economic times, especially for smaller borrowers. Providing access to capital, in addition to offering interest rates typically lower than those that can be secured in the market could help motivate consumers to purchase clean energy technologies.
• • Limits impact on taxpayers and/or ratepayers. The total cost of these programs is lower than that of rebate or tax credit programs, as it allows for leveraging of private capital. However, if the program is not well structured and other barriers are not addressed (i.e., there is low effectiveness), there may not be a demand for this low-cost capital.

Revolving Loan Fund Challenges

• • Requires substantial up-front capitalization. Funding is needed up front to provide capital to entities seeking loans. The wider the eligibility, the more capital is needed. This may be less of an issue for states and local governments with access to Recovery Act funds.
• • Needs additional project support. A May 2010 NREL report reveals "that technology installed under loan programs rarely supports clean energy production at levels that have a significant impact on the broader energy sector. As a result, loan programs are having only a marginal impact on the broad clean energy goals noted above. However, these findings should not be interpreted to suggest that loan programs are ineffective or unnecessary. Rather, they suggest that, while high initial costs are a barrier to clean energy technology, additional market barriers likely require attention."
• • May not reach folks with need for capital. If an end-user already has access to capital, then a revolving loan fund may not be the best option to effect change (it is only one of many sources of capital available). In other words, participants might take advantage of this program, even if they would have done the project anyway (e.g., free riders). This depends on the rate offered- many revolving loan funds do have rates that are below market (which provides some benefit over other options available to end-users). Therefore, it is important to make sure borrowers are aware of other funding sources for which they are eligible.
• • May not be self-sustaining. The subsidy provided through the loan will likely not be returned through repayment of the loan's principal and interest. In other words, the fund could be depleted because it will earn lower returns than other market investments, and it may not keep up with inflation (which increases the future cost of capital for new projects). Depending on where the interest rate is set, the fund may be fully replenished (if at a higher interest rate), or it could erode the capital base of the fund (if at a lower interest rate). If the capital base decreases, the capital base can either be replenished (i.e., through new appropriations) or additional fees and rates can be included (but that defeats the purpose of a low-interest loan).

Revolving Loan Policy Design Considerations

My research has shown that successful programs:

• • Address risk of default. A process must be established for loan default: how will the risks be allocated and who will bear them? Borrower education through in-house technical assistance (for development groups) and homebuyer education and counseling (for individuals) can help prevent delinquencies.
• • Provide information to increase participation. A targeted marketing program will be required to encourage participation in the program (including knowledge that the program exists and the relative advantages to participation). Education efforts should include information about the cost-effectiveness of the eligible technologies as well as information about the contractors that register for program implementation. The program may need to subsidize whole home audits so that the best combination of clean energy technologies can be identified (particularly important for implementing higher cost technologies like solar).
• • Minimize overall cost of program. Revolving loan funds tend to have low administrative costs as long as the program size is relatively large. Smaller programs have high overhead costs because there is a base cost to setting up a program that does not vary with program size. Standardization (i.e., borrowing good ideas from other programs) helps to simplify loan tracking and reduce transaction costs.

If you are looking for more detail about how to design or set up a revolving loan fund, be sure to listen to a Webinar presented from DOE's Technical Assistance Project's Webinar series. PowerPoint presentations from the Webinars are available from Sam Booth of NREL, and state-specific presentations are available on Texas and Montana.

In summary, state and local governments that have a chunk of money from the Recovery Act can develop revolving loan funds to target clean energy deployment well beyond 2010. While these programs address critical renewable energy development barriers and allow for recycling funds, there are important design considerations that are critical for program success. NREL would love to hear about examples of revolving loan funds- both successful ones and ones that face challenges- so that we can facilitate communication of lessons learned throughout the policymaker community.

Submitted by Karlynn Cory on Mon, 09/27/2010 - 12:43pm

• Karlynn Cory's blog

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New National Model Energy Code Boosts New Home and Commercial Building Energy Efficiency by Historic 30% Levels

New National Model Energy Code Boosts New Home and Commercial Building Energy Efficiency by Historic 30% Levels

on Nov 01, 2010 Home & Commercial Building Owners Are Beneficiaries as Code, Other Governmental Officials Substantially Improve International Energy Conservation Code (IECC) The efficiency of the next edition of America's model energy code governing home and commercial building construction, additions and renovations will most likely achieve the 30% boost sought by the U.S. Department of Energy, the U.S. Conference of Mayors, the National Association of State Energy Officials, governors, lawmakers and the broad-based Energy Efficient Codes Coalition (EECC). After two decades of modest efficiency gains, it's clear by their overwhelming votes that building officials across the U.S. recognize that we can lock in significant energy savings for generations to come by making efficiency improvements at construction or renovation, when they're cheapest and easiest. "It is notable that the votes that will have the most profound impact on national energy and environmental policy this year were not held in Washington or a state capital, but by governmental officials assembled by the International Code Council (ICC) in Charlotte, NC," said EECC Executive Director William Fay. "Reducing wasted energy from the nation's largest single user - our homes and commercial buildings, which consume nearly half of our energy - was the byword of the nearly 500 state and local government representatives who spent five days of rigorous hearings to evaluate and pass judgment on hundreds of proposals to improve (or weaken) the IECC's residential and commercial chapters. The ICC is to be congratulated for the tremendous efforts of its members to finish this code and achieve substantial energy efficiency." An Integrated, "Whole Building" Approach to Improving Efficiency in Homes and Commercial Building Construction Comprehensive proposals offered by the US Department of Energy, working with many other stakeholders, addressed all aspects of residential and commercial building construction, laying a strong foundation for residential efficiency gains and leading commercial building efficiency improvements. To meet the 30% goal in the residential code, voting delegates added a number of improvements from EECC's comprehensive package, "The 30% Solution 2012" and other stakeholder proposals to DOE's foundation. The resulting residential improvements will: Ensure that new homes are better sealed to reduce heating and cooling losses, Improve the efficiency of windows and skylights, Increase insulation in ceilings, walls, and foundations, Reduce wasted energy from leaky heating and cooling ducts, Improve hot-water distribution systems to reduce wasted energy and water in piping, and Boost lighting efficiency. Commercial Gains Should Match Residential Officials adopted the joint DOE/New Buildings Institute/ American Institute of Architects package for commercial buildings which, along with many of the features cited above, includes continuous air barriers; daylighting controls; increasing the number of climate zones where economizers are required; and a choice of three paths for designers and developers to increase efficiency: using renewable energy or installing more efficient HVAC equipment or lighting systems. It also requires the "commissioning" of new buildings, integrally linking efficiency building designs with lifelong building performance by applying a systematic approach to building quality assurance that monitors, identifies and makes corrections when energy savings aren't living up to expectations. A number of additional IECC improvements supported by EECC and other stakeholders were adopted on top of the commercial package. Rejecting Proposals That Weaken Efficiency Government voting representatives also rejected several proposals to weaken the IECC. Key among them were proposals to reinstate a provision of the 2009 IECC's that eliminated "tradeoffs," under which builders installed less efficient insulation and windows in exchange for more efficient heating & cooling (HVAC) equipment that would have been installed anyway. "Efficiency shouldn't be an either/or proposition," Fay said. "We need to both improve building envelopes and install high-efficiency HVAC systems. It makes no sense to 'trade away' the long-lasting energy savings from tighter buildings." The delegates also voted almost unanimously to adopt a proposal offered by Virginia code officials to replace the weaker provisions of the energy chapter of the International Residential Code with a reference requiring that all residential buildings comply with the IECC. As a result, the IECC will be the sole source for energy efficiency provisions for residential and commercial buildings. While All Americans Will Share the Energy Security and Environmental Benefits of More Efficient Buildings, Home/Building Owners and Occupants Top List of Beneficiaries By reducing monthly energy bills, efficiency improvements generate positive cash flow that rapidly recoups the cost of these measures (efficiency buildings are also more comfortable for their occupants). Because of long building lives and the higher cost of retrofits, many of the efficiency improvements made today will benefit current and future home and building owners for generations to come.  The efficiency improvements adopted by the ICC incorporate readily available technologies. As one homebuilder testified, a 30 percent boost in new home efficiency is now a modest target, with a growing number of green builders across the nation delivering new homes well beyond that threshold. Because the inability to pay utility bills is the second leading cause of foreclosures and evictions, currently at record highs, low income housing advocates argue that the efficiency improvements will make it more likely that low income families will be able to afford to keep their homes. Finally, a study by U.S. DOE's National Renewable Energy Laboratory found that an average home that's 30 percent more energy-efficient returns $511 a year in energy savings to homeowners after taking into account the small mortgage payment increase needed to pay for the efficiency improvements. From the national economic perspective, efficient buildings will demonstrably reduce US energy consumption, which will help stabilize energy costs to businesses and manufacturers, defer the need for new power plant construction and, by reducing energy demand, improve national energy security. "The 'winners' run the gamut from homeowners to businesses operating in areas of the country with high energy costs and insufficient energy supplies to manufacturers to cities trying to reduce their carbon footprint to a nation struggling to reduce energy imports," Fay added. What's Next  State Adoption & Code Compliance "The next goal will be for states and localities to adopt the 2012 IECC so that all new homebuyers and commercial buildings owners can begin to benefit from improved efficiency," Fay added. "And because states have committed to show 90% compliance with the IECC by 2017, we want to work to support collaboration at all levels of government to ensure adequate training and other support for the code officials who must meet this ambitious compliance target." Future Improvements in America's Model Code "A number of energy saving proposals offered by the EECC and other stakeholders received majority support but not the 2/3 majority needed for adoption," Fay observed. "While this is unfortunate, we know that the governmental officials present in Charlotte used their best judgment to guide their vote on the 2012 code. But because states and local jurisdictions are free to consider these energy saving improvements individually, EECC will work with them, while refining the proposals for inclusion in the ICC's next round of hearings to develop the 2015 IECC."

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