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We’re leading an all-out national mobilization to defeat the climate crisis.

Join our work today to help us build a thriving and just clean energy future. 

A Transformational Clean Energy Opportunity for States

State Energy Financing Institutions and the Energy Department Loan Programs Office

An illustrated poster from the Loan Programs Office, inspired by the New Deal era, depicting people working to manufacture solar panels.
An illustrated poster from the Loan Programs Office, inspired by the New Deal era.

As states assess the wide range of federal support available to accelerate the clean energy transition, they should seize upon a major new opportunity: loans and loan guarantees from the US Department of Energy’s (DOE) Loan Programs Office, also known as Title 17 loans. This memo explains what this opportunity is and how states can take advantage of it.

Much attention has rightfully been paid to the ample federal grants made available to states for the clean energy transition by the 2021 Infrastructure Investment and Jobs Act (IIJA) and to the substantial federal tax credits and grants for clean energy investment in the 2022 Inflation Reduction Act (IRA). As has been documented repeatedly over the last year, these funds provide an extraordinary opportunity to create jobs, create companies, and increase revenues supporting public services. The fact that tens of billions are available to states to double down on grants with loan financing has the potential to greatly benefit communities and transform key economic sectors.

These powerful complementary tools in the form of loans and loan guarantees from the DOE’s Loan Programs Office (LPO) are available to states and to clean energy project developers to serve as force multipliers. LPO has $412 billion in lending capacity available to lend to projects that reduce greenhouse gas emissions and air pollution, including $62 billion for Title 17 loans. With these tools, states can enter markets previously dominated by private capital, using their unique public-facing perspectives to ensure loan programs directly serve the public, and extend state policy goals with significant financial power.

This is possible because, in the IIJA, Congress modified the Title 17 program to reduce barriers to financing for projects receiving meaningful support from state institutions. Specifically, there are significant new opportunities for LPO to provide financing for clean energy projects supported by State Energy Financing Institutions (SEFIs). State leaders should leverage these resources to support projects that create quality jobs, lower household energy costs, and reduce air pollution in their states.

Already, some states are seizing on this opportunity: New York was the first state to publicly announce its plans to offer financing for clean energy projects through its new $20 million State Energy Financing Fund, paid for with auction proceeds from the Regional Greenhouse Gas Initiative (RGGI). New York is prioritizing projects that decarbonize the built environment, reduce energy bills and pollution, and improve building comfort in disadvantaged communities. This is a model other states should emulate to remedy historic disinvestment and advance equitable economic growth, particularly in communities of color. Its efforts can be replicated by leading states nationwide.

The time for action is now. The more quickly LPO funds can be deployed, the more quickly states can stack those funds with private capital, state funding, and IRA tax incentives to further expand economic benefits. As the Biden administration finalizes a slate of important climate and public health rules and state leaders advance ambitious agendas, unlocking significant loan funds can help drive major investments to underwrite those programs. States interested in exploring financing opportunities through LPO should reach out to LPO staff directly for a pre-application consultation to discuss specific project ideas or a portfolio review and to discuss how, by partnering with LPO, states can achieve ambitious clean energy and economic development goals.


Title 17 Financing is a Major Opportunity for States and the Private Sector

States need to decarbonize their energy systems quickly to reduce greenhouse gas pollution and secure a safe climate, remain competitive in fast-growing 21st century clean energy industries, and comply with forthcoming decarbonization rules from the federal government. The U.S. Environmental Protection Agency (EPA) has proposed greenhouse gas standards for heavy duty vehicles and fossil fuel-fired power plants and intends to act in coming years to reduce emissions in the industrial sector. These rules can send significant investment signals to the private sector that loan funds can help further unlock. As companies look a few years into the future and see the need for significant grid expansions, charger networks, electrified buildings and industries, and other major capital projects, states should be ready to offer low-cost loan capital to make sure they can draw in the investments the regulatory regime sets up. LPO’s Title 17 loans can complement these critical proposals and help states advance decarbonization projects in the transportation, electricity, industrial, and buildings sectors. 

Title 17 financing can be a critical component of capital stacks for clean energy projects, and the new LPO opportunities available for SEFIs mean that states can play a leading and creative role financing ambitious and equitable clean energy deployment. While states may not use federal grants to pay for the state share of state-supported Title 17 projects, projects can assemble significant public dollars to invest in new clean energy projects by leveraging direct state financial support, new and more accessible federal clean energy tax credits (especially with direct pay making these incentives available to states and local governments and non-profit institutions), and Title 17 loans. 

Title 17 loans provide an opportunity to reduce greenhouse gas and air pollution, and grow the clean energy economy. They are, therefore, also an important tool to undo some of the harms caused by the fossil fuel economy, which fall disproportionately on Black and Brown communities and the working class. These same groups have also historically lacked access to ready loan capital via deliberate government decisions to redline them out of eligibility. 

States can address these injustices by prioritizing loan opportunities that generate quality jobs in underserved communities, particularly in those that have been historically left behind. In 2022, the US Departments of Labor and Commerce adopted a Good Jobs Principles Framework that can serve as one potential model for states. The principles include fair and predictable pay, benefits, career advancement opportunities, and the right to form and join a union without fear of retaliation. 

As states’ clean energy economies grow due to increased demand and federal clean energy investments funded by IRA and IIJA, it is critical that states ensure that workers and overburdened communities benefit from and are prioritized in this growth. This includes the opportunity to stack LPO financing alongside use of the IRA’s expanded and targeted clean energy tax incentives, such as expanded clean electricity tax credits for projects in energy communities and low-income communities, and the Section 48C Advanced Energy Project Tax Credit—a portion of which is reserved for former coal mining and power plant communities.

Furthermore, Title 17 loans aren’t the only transformational new federal financing program available to SEFIs, states, and their communities. LPO’s Energy Infrastructure Reinvestment program, the EPA’s Greenhouse Gas Reduction Fund (GGRF), and the U.S. Department of Agriculture’s (USDA) New Empowering Rural America (New ERA) and Powering Affordable Clean Energy (PACE) programs together comprise hundreds of billions in financing for America’s clean energy transformation.


What's Special for States in the Revised Title 17 Loans?

In the past, Title 17 loans have only been available to projects deploying “new or significantly improved technology.” In Section 40401 of the IIJA, Congress waived this requirement for projects receiving financial support or credit enhancements from a State Energy Financing Institution (SEFI). Congress recognized that established technologies can also benefit from improved access to credit, but limited this expansion to projects receiving support from a SEFI and to 13 eligible (though broadly defined and well-established) technology categories, including (but not limited to) renewable energy systems, energy storage, advanced nuclear energy, electrical transmission and distribution, energy efficiency, pollution control equipment, and supply or critical minerals.

Originally enacted in the bipartisan Energy Act of 2005, LPO continues to offer loan guarantees for clean energy projects that are challenged in obtaining adequate, flexible debt financing on competitive terms from private lenders. Title 17 loans typically bear a fixed interest rate pegged to U.S. Treasury rates, plus three-eighths (0.375 percent) and a risk-based charge—a much lower interest rate than project developers could access through private financing alone.

In order to access this financing, a SEFI can provide a share of the total project cost and work with the private sector project owner to apply to LPO. Or it can develop or aggregate a series of projects and apply to LPO as a project sponsor.


What is a SEFI?

A SEFI can be any state public or quasi-public institution that is able to pair together state and federal capital to make loans and draw in further private investments to support LPO’s policy goals. Because smaller businesses, under-served communities, and newer technologies may struggle to secure private financing, SEFIs can help accelerate the green future in the communities that need it most with technologies that are central to progress. 

This could include: state green banks, clean energy funds, infrastructure banks, state economic development authorities, state energy offices, state housing finance agencies, and Indian Tribal entities or Alaska Native corporations. Loans for tribal governments or entities are also available through the Tribal Energy Loan Guarantee Program. Local government agencies, such as those sponsored by a city, county, or port authority, cannot be SEFIs. However, local governments could play a key role in developing projects alongside a SEFI. States may have multiple entities that can qualify as SEFIs. For instance, as of October 2023, California and Maryland have certified two each. State institutions interested in having their qualifications reviewed to be certified as a SEFI should contact LPO’s State Outreach and Business Development team. Some of the first SEFIs to be certified by DOE as of this memo’s publication are:


What Qualifies a Project to Receive Title 17 Loans and How can Projects Advance the Green Economy?

Fundamentally, projects financed by SEFIs have to reduce carbon and air pollution, be able to repay their loans, be connected to clean energy, benefit communities, and draw key raw materials from the U.S. The idea is that projects, individually and cumulatively, help advance state and national energy policy as we move towards a decarbonized economy. As we have discussed, a wide range of projects fit the bill.

That said, states looking to move forward rapidly into the green economy the IIJA and IRA are creating might consider a few specific opportunities. The key point is that decarbonizing our economy will require significantly more electricity from clean energy. That means that projects that help states expand renewable power facilities, create the transmission and distribution needed to use this power, and begin to electrify new sectors are particularly well-placed to help states take advantage of an upward spiral as decarbonizing sectors demand more clean power and, along the way, create good jobs and economic growth. There is room here to be creative. 

One key opportunity is “virtual power plants” (VPPs), which can be made out of electrified trucks and cars that can balance the grid, or with electrified appliances and buildings. VPPs are critical because they support reliable grids with intermittent renewable power, while also  producing a great deal of power and revenue. As the Biden administration finalizes key rules for the power and transportation sectors, leading states can turn those rules into opportunities by setting up VPPs in key sectors with LPO funds. And  VPPs can serve key public health and environmental justice goals by using energy from  electrified buildings in areas that need higher housing quality or from heavy-duty electric trucks replacing deadly combustion vehicles. The bottom line: LPO funds let states use federal and state regulatory signals to drive major new investments that can also advance social justice and serve public health, while profiting public institutions.

But the list goes on. From financing public renewable projects to upgrading transmission capacity to creating new electrified industries, states can use loan capital to create major opportunities. In order to do so, projects must:

As previously noted, states cannot use other federal funds for the state investment component. However, a project benefitting from federal tax incentives can receive support from Title 17 financing and a SEFI. Indeed, Title 17 financing can be an important tool to complement and maximize impact of a range of new and expanded federal clean energy tax incentives. In particular, SEFIs could help as bridge financiers—especially for public sector or non-profit sponsors of clean energy projects who are newly eligible for direct pay grants from the U.S. Treasury Department equivalent to the value of a clean energy tax credit traditionally claimed by private sector project sponsors. These entities, which may not be used to filing federal taxes, could lack the up-front capital necessary to deploy a project that may take months to receive a tax incentive payment. A SEFI and Title 17 financing could help fill this gap, along with providing low-cost financing in a project’s overall capital stack – extending investment opportunities to new communities and new types of projects. 


What Could States Accomplish with Title 17 Financing?

Here are examples of projects SEFIs could support to enable private borrowers to access Title 17 financing


What Steps Should a State Take to Access Title 17 Financing?

  1. Examine the state’s energy and economic development priorities for projects appropriate for significant financial backing. 
  2. If a state has a project in mind that could benefit from Title 17 loans: request a pre-application consultation with LPO.
  3. If a state is unsure where to start with utilizing Title 17 loans to support its state’s clean energy needs: schedule a portfolio review with LPO to identify which clean energy priorities it is already planning to undertake that LPO can help finance.
  4. When you’re ready, certify a state institution, or multiple institutions, as a SEFI by contacting LPO’s State Outreach and Business Development Team, and apply for a loan from LPO.

There’s an old saying that you can’t teach an old dog new tricks. However, in the case of the Energy Department’s 18-year-old Title 17 program, Congress has indeed provided some new tricks—and hundreds of billions of dollars in more accessible federal financing that states, communities, and the private sector can leverage to build a just and thriving clean energy economy.