Ceraweek: Energy Dept loan office says some applicants need 'mentorship'

Ioneer

07/03/2023 23:02

By Ernest Scheyder and Richard Valdmanis
       HOUSTON, March 7 (Reuters) - 
    Less than a third of companies applying to a U.S. green
energy loan program are able to navigate a complex credit review
process, with the rest requiring help that slows down approval,
a senior administration official told Reuters.
    The Department of Energy's Loan Program Office aims to speed
development of the clean energy sector with loans to automakers,
miners, recyclers and others, many of which would struggle to
obtain private financing given their large capital needs. 
    Lithium Americas Corp  LAC.TO  and Piedmont Lithium Inc
 PLL.O  are among the 135 companies that have open applications
for a total of $124.1 billion in LPO funding. 
    For 100 of those applicants, the Energy Department has hired
staff to provide business development advice and "intense
mentorship," Jigar Shah, head of the Energy Department's Loan
Programs Office, told Reuters on the sidelines of the CERAWeek
energy conference in Houston.    
    "They require more hand holding," Shah said. "They're
equally innovative. They're amazing. We love all of them
equally. But we have a certain bar that Congress has set around
the reasonable prospect of repayment. And so everyone has to
reach that bar." 
    Shah declined to provide specifics on applicants, citing
U.S. privacy laws.    
    Given the rapidly evolving technologies in the clean energy
space, Shah said the department might shorten loan terms. A
project might have to repay a loan in five years as opposed to
20 years, for example. 
    "We're not supposed to have an opinion that says, 'You know,
you cannot get that from us because we think you're going to be
superseded by another technology.' If we think that that's a
risk, then we just change the terms of the loan," Shah said.
    The LPO office would like more applications from electric
utilities and oil and gas companies for projects designed to
reduce emissions, as well as geothermal companies, Shah said.
    "There's a lot of people with existing infrastructure that
have published plans for the next 10 years on how they're going
to reduce carbon emissions and we can, you know, bring them
forward and accelerate those efforts," he said.
    Utilities and oil and gas companies can cut emissions with
carbon capture and sequestration technologies, by replacing or
adding equipment, or by finding and fixing methane leaks.
    Shah said his office had recently seen an increase in
interest from the offshore wind industry, a sector President Joe
Biden's administration hopes to expand as part of its climate
strategy but which commercial lenders have been reluctant to
engage. 
    Commercial debt markets are "less interested in the more
innovative approaches that (wind companies) are taking. And so
we would step in," Shah said.    
    Li-Cycle Holdings Corp  LICY.N , ioneer Ltd  INR.AX  and
Syrah Resources Ltd  SYR.AX  have received loans from Shah's
office in the past year.  
    Ioneer  INR.AX , which is building the Rhyolite Ridge
lithium project in Nevada, said less than a month after it
received its loan that one of its vendors had violated a minor
exploration permit. Shah said given the complexities of many
projects his office supports, such minor violations are not deal
killers.    
    "We expect everyone to meet all applicable rules and
regulations and whatnot," Shah said. "But at the same time, I'm
not going to beat them up for not getting everything exactly
right all the time."

 (Reporting by Ernest Scheyder; Editing by David Gregorio)
 ((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder;
+1-713-210-8512; Reuters Messaging:
ernest.scheyder.thomsonreuters.com@reuters.net))