Last week, Chairman Jeff Bingaman (D-NM) and Ranking Member Lisa Murkowski (R-AK) introduced the “21st Century Energy Technology Deployment Act.” This bipartisan bill, S. 949, is co-sponsored by Sens. Dorgan (D-ND), Voinovich (R-OH), Stabenow (D-MI), Lugar (R-IN), Shaheen (D-NH) and Burr (R-NC). The legislation seeks to improve the loan guarantee program at the Department of Energy (DOE) and to provide additional options for deploying energy technologies. The basis of the bill is to shore up the existing program at DOE, then transition to a new financially-focused agency to perform and expand upon the duties of the program.
Large-scale deployment of innovative technologies is essential to advancing a new, sustainable and affordable energy and industrial regime. Investments in the deployment of these new energy technologies have lagged far behind what will be necessary to meet the challenges of energy and climate security. A leading cause of this underinvestment is the difficulty promising technologies face in securing sufficient financing to build projects, due to the risks lenders perceive in new and unfamiliar technologies. This results in high interest rates and a prohibitively high need for equity financing.
The “21st Century Energy Technology Deployment Act” will implement a series of reforms to the existing Department of Energy loan guarantee program, including creating a new “Clean Energy Investment Fund” to allow collected costs to be used to support more technology deployment. The legislation would also create a new entity housed in DOE — the Clean Energy Deployment Administration (CEDA) — with strong financial expertise and with a specific purpose to create an attractive investment environment for the development and deployment of clean energy technologies.
CEDA would be an independent administration within DOE, like the Federal Energy Regulatory Commission. It would be governed by a board of directors and an administrator, all of whom would be appointed with the advice and consent of the Senate. CEDA will also have a permanent Technology Advisory Council to advise on the technical aspects of new technologies and to help set goals for the administration.
The agency would provide various types of credit to support deployment of clean energy technologies including loans, loan guarantees and other credit enhancements as well as secondary market support to develop products such as clean energy-backed bonds that would allow less expensive lending in the private sector. The agency would also seek to accommodate riskier debt and thus provide a mechanism for deployment of the most innovative technologies.
CEDA’s mission would be to encourage deployment of technologies that are perceived as too risky by commercial lenders; thus, the agency is encouraged to back riskier technologies with a higher potential to address our climate and energy security needs. The agency is to use a portfolio investment approach in order to mitigate risk and is to try and become self-sustaining over the long term by balancing riskier investments with revenues from other services and less risky investments.
CEDA would be an autonomous entity with strong guidance and aggressive goals for technology deployment set by an independent advisory council, in consultation with the Secretary of Energy. The bill sets out a process for goal-setting in the various areas and then mandates numerical targets for achieving the goals, against which the performance of CEDA may be judged. There would be various levels of financial oversight, including audits by the comptroller general and unfettered access to the books of CEDA by the Energy Secretary.
