Department of Energy Loan Programs: Title XVII Innovative Technology Loan Guarantees

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Department of Energy Loan Programs: Title
XVII Innovative Technology Loan Guarantees

Updated July 9, 2020
The Department of Energy’s (DOE’s) Loan Programs Office (LPO) manages the Title XVII Innovative
Technology Loan Guarantee Program, the focus of this Insight, and the Tribal Energy Loan Guarantee
(TELGP), the focus of a companion CRS Insight. Table 1 provides a high-level comparison of
these programs. LPO also manages the Advanced Technology Vehicles Manufacturing (ATVM) direct
loan program.
Established by the Energy Policy Act of 2005 (EPACT05 Title XVII, P.L. 109-58), as amended in 2009
(Sec 406, P.L. 111-5), the Title XVII program has supported projects under two separate loan guarantee
authorities with different characteristics (see Table 1).
1. Section 1703 authority is currently active and to date has committed funds to one project,
2. Section 1705 authority expired in September 2011 and committed funds to 28 projects.
As with all federal credit programs, Title XVII requires that a subsidy cost be paid—through
appropriations and/or payment by the borrower—prior to finalizing a loan guarantee agreement. The
Federal Credit Reform Act of 1990 (FCRA; Section 13201 of P.L. 101-508) requires that estimated
lifetime net costs of new loans and loan guarantees be recorded in the budget year in which the loans are
disbursed (2 U.S.C §661c). The costs of these credit programs, referred to as subsidy costs, are measured
on a net present value (NPV) basis—which is the combined value of expected future cash receipts, less
expenditures adjusted or discounted, calculated using an interest rate based on Treasury securities.
Table 1. Department of Energy Loan Guarantee Programs
Innovative Technology Loan Guarantee Program
Tribal Energy Program

(Title XVII)
(Title XXVI)

Section 1703
Section 1705
Section 503a
Establishment Year
Program Authority
Expired September 30, 2011
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Innovative Technology Loan Guarantee Program
Tribal Energy Program

(Title XVII)
(Title XXVI)
Existing Loan
$23.9 Bil ion
$2 Bil ion
Guarantee Authority
Eligibility Criteria
Projects must: (1) avoid, reduce, Projects were limited to: (1)
Projects must be for energy
or sequester air pol utants or
renewable energy systems;
development by a federally
anthropogenic greenhouse gas
(2) electricity transmission;
recognized Indian tribe or
emissions; and (2) employ new
and (3) leading edge biofuel
Alaska Native Corporation
or significantly improved
projects, but could employ
commercial technology
Appropriations for
$161 mil ion, available until
$2.5 bil ion (no longer
$8.5 mil ion available until
Subsidy Costs
expended, for a portion of
subsidy costs for Renewable
Energy and Efficient Energy
Loan Guarantee
One project commitment
28 project commitments
Source: CRS.
Notes: Section 1703 also includes eligible project types (42 USC §16513). Generally, the borrower pays §1703 subsidy
costs. Under §1705, appropriations covered these costs.
a. P.L. 102-486, Title XXVI, §2602, as amended by P.L. 109-58, Title V, § 503(a); 25 U.S.C. §3501 et seq.
Innovative Technology Loan Guarantees
Title XVII of EPACT05 (42 U.S.C. §16511 et seq.) established a program that authorizes the Department
of Energy to enter into loan guarantee agreements for projects that meet certain criteria. The Section 1703
and Section 1705 loan guarantee authorities each have unique characteristics, including availability, loan
authority levels, eligibility criteria, credit subsidy appropriations, and project awards.
Section 1703 Loan Guarantees
Section 1703 of EPACT05 provides the original and ongoing authority for the Title XVII loan guarantee
program. Eligible projects must (1) avoid, reduce, or sequester air pollutants or anthropogenic greenhouse
gas emissions, and (2) employ new or significantly improved technologies. These eligibility criteria are
the basis for Advanced Fossil Energy, Advanced Nuclear Energy, and Renewable Energy and Efficient
(RE&EE) loan guarantee open solicitations that are currently available. Because of limited
appropriations—$161 million for RE&EE subsidy costs—most borrowers pay for all, or a portion of, the
subsidy cost prior to finalizing a loan guarantee agreement. Since establishment of the Title XVII program
in 2005, one project has received loan guarantees under Section 1703 authority: the Vogtle nuclear power
(units 3 and 4) in Georgia.
Section 1705 Loan Guarantees
The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5), amending EPACT05,
created the Section 1705 temporary loan guarantee authority. This loan guarantee authority, specifically
intended to support rapid deployment of renewable energy, electricity transmission, and leading edge
biofuel projects, expired on September 30, 2011. Eligible projects were not required to employ new or
significantly improved technology. Furthermore, approximately $2.5 billion—after rescissions and
transfers—were appropriated for subsidy costs. These two characteristics—credit subsidy appropriations
and commercial technology eligibility—resulted in this program being attractive to borrowers and may

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explain why more projects have received assistance under Section 1705 than under Section 1703
authority. Twenty-eight projects received loan guarantee commitments including more than $14 billion of
financial support provided under this temporary authority.
Considerations for Congress
Limited Section 1703 utilization is likely due to the combined effects of (1) requiring projects to employ
new/significantly improved technologies, and (2) requiring borrowers—due to limited appropriations—to
pay either the entire subsidy cost or a portion thereof. Incorporating new technologies increases project
financial and default risk. These risks directly affect the project’s credit rating, which in turn has an effect
on the subsidy cost. Generally, the higher the finance and default risks the larger the subsidy cost. As a
result, lower interest rate benefits provided by federal loan guarantees could be offset by the requirement
for borrowers to pay the subsidy cost.
Proposals to amend Title XVII generally range from eliminating the remaining loan authority and
rescinding some appropriations—this option is part of the Trump Administration’s FY2021 budget
proposal—to expanding program eligibility, easing the new/improved technology requirement, and
paying for subsidy costs—as in draft text for the Climate Leadership and Environmental Action for our
Nation’s (CLEAN) Future Act. Other proposals in the 116th Congress would modify Title XVII to make
the program more attractive to borrowers. For example, the substitute amendment to the American Energy
Innovation Act (S. 2657) would not require qualifying projects that receive support from a “State Energy
Financing Institution” to employ new/improved technologies. If enacted, this Title XVII amendment
could make the program more attractive for certain projects.

Author Information

Phillip Brown
Corrie E. Clark
Specialist in Energy Policy
Analyst in Energy Policy

Mark Holt
Raj Gnanarajah
Specialist in Energy Policy
Analyst in Financial Economics

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