In Defense of the U.S. Department of Energy’s Transformative Loan & Grant Programs Parts 1 and 2

April 02, 2025

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by CJ Evans (American Diversified Enterprises/Alternative Fuels & Chemicals Coalition/Biofuels Digest) ... At whatever point on the path to commercialization that an innovation or emerging technology might be, federal assistance in the form of grants, loans, loan guarantees, and incentives are often not only helpful … but often essential … in advancing these initiatives so they can bring their benefits to the American people … and the world.

The U.S. Department of Energy’s (DOE’s) Title 17 Innovative Technology Loan Program and Advanced Technology Vehicle Manufacturing (ATVM) Loan Program are two of the most important funding programs in the federal government.

They not only advance innovations, emerging technologies, and transformative projects from promising concepts to commercial realization, but benefit the federal government and American taxpayers in multiple ways.

They:

Generate revenues for the U.S. Treasury far in excess of their costs.
Have a loss rate of only 3.1%, which is comparable to that of major banks and financial institutions.
Are able to finance first-of-a-kind projects, which carry a high degree of risk. The typical loss rate for venture capital firms that support startups and first-of-a-kind ventures, by comparison, ranges between 25% and 40%[1]. DOE’s Loan Programs Office (LPO) is able keep its loss rates low by thoroughly vetting projects during its rigorous application and due diligence processes. Borrowers also are charged a credit subsidy cost[2] which is paid at financial close as a risk premium to offset any expected losses to the government from making a loan or issuing a loan guarantee.
Are one of the few ways in which first-of-a-kind projects can be financed, which, due to their high degree of risk, very few private sector financial institutions will consider.
Were created for this very reason.

These are the programs that:

Gave Tesla its start, by financing the acquisition of its Fremont California manufacturing facility (which had been idled by GM) along with the development and production of the Tesla Model S
Financed the development and manufacture of Ford’s EcoBoost motor, which is now available in all Ford vehicles,
Financed the first utility-scale wind and solar projects, which primed the pump for the private sector investments that have led to the massive growth of the wind and solar industries and the dramatic reduction in their costs
Financed the four-unit 4,563 MWe Vogel Nuclear Electric Power Generating Plant in Waynesboro, Georgina, the largest generator of clean energy in the U.S.

The Title 17 and ATVM programs do what private sector lenders won’t do: lend to high-risk, first-of-a-kind projects.

Because of this, these programs are the nation’s most effective pathways to deploy new technologies, advanced manufacturing processes, and sustain an ongoing conduit of job-creating, local-economy-growing, local-tax-generating, and global-market-capturing projects.

These programs:

Allow U.S. entrepreneurs and entities to take advantage of and benefit from global market trends.

As Will Rogers famously said, “Even if you are on the right track, you’ll get run over if you just sit there.”

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2. Allow the U.S. to be energy dominant in competing with China as well as other countries in dominating global markets.

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Anywhere that U.S. companies do not or cannot go, China will.

Make money for the U.S. Treasury. The Title 17 and ATVM programs have generated $4.9 billion in earnings for the U.S. Treasury from interest payments on the Title 17 and ATVM loan obligations, as of the end of 2023.

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If an average of 30 active loans have generated $350 million per year for the U.S. Treasury in the 14-year period between 2009 and 2023, it is fairly easy to see how much the U.S. Treasury will make from:

The current group of active loans: $525 million per year,
The 15 conditional commitments: an additional $175 million per year, and
The 160 projects in the LPO pipeline: an additional $1.87 billion per year.

At a time when budgets are being cut and savings are being sought in federal government expenditures, it does not make sense to eliminate, or even cut back, a program that is on track to earn, within a few years, more than $2 billion per year for the U.S. Treasury … and that is from just the projects that the LPO currently has in place and under review.

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Virtually every one of the projects that has been financed by the Title 17 and ATVM programs almost certainly would not have been financed by the private sector and, thus, would not exist today without the LPO’s loan programs.

This means that the nearly 50,000 jobs that were created by the 30 projects that were active at the end of 2023, and the economic stimulus and tax dollars that these projects have brought to the 90 local communities in which their operations were located, would not have occurred had the Title 17 and ATVM financing had not been available. READ MORE

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In Defense of the USDOE’s Transformative Loan & Grant Programs: Advancing Innovations from Early-Stage Promise to the Threshold of Commercialization (American Diversified Enterprises/Alternative Fuels & Chemicals Coalition/Biofuels Digest)

Excerpt from American Diversified Enterprises/Alternative Fuels & Chemicals Coalition/Biofuels Digest: It requires nine development steps, known as Technology Readiness Levels, or TRLs, and often as many as 10 to 15 years or more, for an innovation to advance from a promising concept to commercial realization.

The Department of Energy’s (DOE’s) grant and loan programs – administered by the Advanced Research Projects Agency-Energy (ARPA-E), the Office of Energy Efficiency and Renewable Energy (EERE), the Office of Clean Energy Deployment (OCED), and the Loan Programs Office (LPO) – provide the essential building blocks to turn innovations and emerging technologies into job-creating, local-economy-growing, local-tax-generating, and global-market-leading projects that will sustain local communities and improve the well-being of their residents for decades to come.

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ARPA-E

The Advanced Research Projects Agency – Energy (ARPA-E) is the first of DOE’s essential building blocks for advancing innovations. It plays a significant role in incubating and accelerating highly promising initiatives by identifying and supporting revolutionary inventions and transformational advances in high-potential areas, moving them through the first Technology Readiness Levels, TRLs 1-3, from concept to the initiation of active research and the development and proof of concept validation,

ARPA-E’s focus is on nurturing the projects, economic drivers, and global dominating technologies of tomorrow.

It does this through dynamic technical programs, each of which addresses different parts of the energy technology space. It also accepts open solicitations on a periodic basis which seek to find and advance the most innovative new ideas in energy technology across the full spectrum of energy applications, thus allowing the agency to support the development of important technologies that fall outside the scope of its focused programs.

ARPA-E has demonstrated significant success in accelerating high-potential, novel technical approaches to existing and emerging U.S. energy challenges, as well as in accelerating the economic impact of U.S. investments in energy research and development and advancing the commercialization readiness of successful projects.

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EERE

The Office of Energy Efficiency and Renewable Energy (EERE) administers multiple funding programs that are the second essential building block for advancing promising early-stage innovations and technologies, including innovations in transportation, fuels, renewable chemicals, advanced building materials and manufacturing technologies, and energy production.

It moves early-stage innovations and technologies through the next stages of development: TRL 4, the integration of basic components for bench scale testing and prototype and pilot scale modelling ; TRL 5, the validation of operational integrity; and TRL 6, model, prototype, and pilot testing and field demonstration.

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Clean energy employs of 50% of total energy workers, not just in the U.S., but globally, owing to the substantial growth of new projects coming online.
The construction of new projects, including the manufacture of their components, is the largest driver of energy employment across the value chain.
Around 45% of energy workers today are in high-skilled occupations, compared to only one-quarter across the economy. This share is even higher for jobs in research and development for new energy innovations, many of which are set to grow rapidly to 2030.

EERE is a key propellant for this growth,which is done through its funding programs that accelerate the research, development, demonstration, and deployment of technologies and solutions to meet the nation’s growing energy demands (which are projected to increase by 50% or more, per the March 17, 2025 New York Times article cited below) due to the expanding use of AI and the mushrooming need for data centers.

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As noted in a February 27,2023 New York Times article, “As Oil Companies Stay Lean, Workers Move to Renewable Energy”:

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“‘Our message to the administration is, let’s be realistic about this,’ John Ketchum, the chief executive of NextEra Energy, one of the country’s largest power producers, said in an interview. ‘If you take renewables and storage off the table, we’re going to force electricity prices to the moon’”.

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“’By contrast,” he continues, “’many wind and solar projects can be built within 12 to 18 months,’ adding ‘the cost of building new gas power plants has also nearly tripled since the inflation shock of 2022 … while wind and solar prices have increased only modestly’”

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OCED

The Office of Clean Energy Demonstrations (OCED) OCED invests in demonstration projects that will catalyze private sector capital in the coming decade to achieve commercial liftoff across a range of technology areas and set the nation on a course to a modernized, advanced, and more resilient clean energy infrastructure.

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What may seem like an insignificant or hardly noticeable issue at the prototype, model, or pilot scale can (and has, many times) become a fatal flaw at commercial scale.

This is why private sector lenders and investors are wary of first-of-a-kind projects. They are more than happy to fund the second, third, and subsequent projects, once the first project has been proven.

Hence, it takes all four of DOE’s building blocks – ARPA-E, EERE, OCED, and the Title 17 and ATVM programs – to advance innovations through each Technology Readiness Level so they can be transformed into job-creating, local-economy-growing, local-tax-generating, and global-market-capturing projects that will sustain and improve the well-being of local communities. READ MORE