Client story

U.S. Department of Energy finances sustainability innovation

The DoE has helped prevent more than 60 million metric tons of CO2 emissions with sophisticated loan programs for clean energy

Spotlight

Financed first-of-their-kind clean energy innovations

Value

More than $35 billion in loans and loan guarantees

Sustainability

Prevented more than 60 million metric tons of C02 emissions

Solar and wind power installations are a common sight across the U.S. landscape today. That wasn’t the case a decade ago, when the U.S. Department of Energy (DoE) Loan Programs Office (LPO) financed the nation’s first five utility-scale photovoltaic (PV) solar power projects.

These landmark projects proved the feasibility of the concept and sparked development of the commercial market for utility-scale PV solar power. Over the past decade, utility-scale PV solar power has grown from a new industry primarily located in the Southwest into a mature industry providing a significant new source of clean energy across the nation.

LPO also helped Nissan North America and Tesla Motors expand the market for electric vehicles (EVs). With the support of a $1.45 billion LPO loan, Nissan launched manufacturing of its LEAF vehicle—the first all-electric model to reach 50,000 in U.S. sales. Tesla used a $465 million LPO loan to retool a manufacturing plant for EV production, and repaid the loan nine years ahead of schedule.

Altogether, LPO has closed more than $35 billion in loans and loan guarantees since inception. By financing innovations such as the utility-scale PV solar power projects and EV manufacturing, LPO catalyzed development of America’s clean energy infrastructure and created jobs—while protecting U.S. taxpayers.

The challenge of rapid scaling

LPO had to overcome many challenges to establish the financial, technical, legal and environmental experience to fulfill its mission.

With passage of the American Recovery and Reinvestment Act (ARRA), the LPO gained $16 billion in capital to lend—within a two-year deadline. LPO needed to rapidly scale up its operations to deploy its available capital.  Then, as the loan portfolio grew, the LPO also needed resources and expertise to monitor and manage its loans. Since first-of-their-kind technologies and approaches rarely follow a predictable growth path, the LPO needed proactive management of its increasingly complex portfolio.

“From the beginning, a foundation of sophisticated financial analyses and management techniques has been critical for the success of our mission.”

Robert Marcum, Chief Operating Officer, U.S. Department of Energy, Loan Programs Office
Creating a robust framework for lending

First, the LPO tapped JLL expertise to help the organization develop every aspect of its lending programs. The team invested significant resources as LPO established standard procedures for everything from financial analyses and management, loan structures and credit policies to risk rating tools, origination practices and more. Also critical, the team helped LPO establish an enterprise risk management framework.

With its portfolio rapidly expanding, JLL helped support LPO’s portfolio management operations. To streamline workflows, the team implemented a digital management system that enables the LPO to quickly access loan data and reporting.

Financing a complex nuclear power plant development

As the LPO developed its expertise in complex underwriting and lending, it took on more ambitious projects. Among the most challenging was expansion of Georgia’s Alvin W. Vogtle Electric Generating Plant (Vogtle Plant)—the first U.S. nuclear power project to begin construction in three decades.

The two new reactors will be the first in the U.S, to utilize this type of reactor technology, which involved assessing cutting-edge technologies. Additionally, the $12 billion in debt financing required assembling six different loans for three distinct types of borrowers necessitating complex underwriting and credit assessment analyses.

Advancing sustainability objectives

With its robust foundation of tested expertise, the LPO has built a strong track record in financing sustainability. The majority of LPO borrowers are retiring their debt more quickly than projected, and the LPO’s cumulative loan default rate is 3%—an outstanding track record for a portfolio of highly innovative enterprises.

Since 2010, LPO-financed projects have helped the United States avoid more than 60 million metric tons of carbon dioxide emissions. Its auto manufacturing loans have supported production of more than 20 million EVs, and its energy projects have generated 73,473 gigawatt hours of electricity.

Looking ahead, LPO now is focusing on advancing President Biden’s objectives for climate change and manufacturing. Key lending priorities include the clean energy economy, environmental justice, achieving net zero emissions by 2050 and revitalizing sustainable domestic manufacturing.

LPO also has recognized that it needs to transition to a business development approach that more closely resembles that of the private lending sector than a government agency. JLL now is helping the LPO step up its market outreach to deploy approximately $40 billion to finance more innovations as its current portfolio of loans and loan guarantees matures.