LPO is a critical partner for the energy industry, and the financing it provides is crucial to supporting projects that help the United States meet its ambitious clean energy deployment and climate goals.
February 8, 2024
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The DOE Loan Programs Office (LPO) provides high-impact project financing for early adoption of energy technologies. To successfully execute this mission, the office must take on risk while ensuring borrowers meet a reasonable prospect of repayment in order to protect taxpayer dollars. LPO partners with energy industry entrepreneurs and founders who face traditional barriers to obtaining commercial financing, including but not limited to uncertainty around construction and schedule, operations and maintenance, supply chain and feedstock, offtake, and counterparty credit risk. LPO is a critical partner for the energy industry, and the financing it provides is crucial to supporting projects that help the United States meet its ambitious clean energy deployment and climate goals.
LPO partners with the private sector in order to:
- Provide a bridge to bankability to large-scale, high-impact clean energy and supply chain projects that help energy technologies deploy at scale and advance America’s energy and economic future.
- Enable expansion of America’s domestic energy manufacturing by meaningfully advancing energy and supply chain projects that support, onshore, or reshore supply chain projects; build a domestic energy workforce; and bolster American supply chain competitiveness.
- Make the clean energy transformation affordable and achievable for workers, consumers, and communities by creating quality jobs in domestic clean energy industries, promoting energy affordability, and ensuring every community benefits from the nation’s historic transition to a clean energy future.
Understanding and Taking Informed Risks
LPO takes seriously its responsibility to protect taxpayer resources. Ever since its first loan programs were authorized by Congress in the Energy Policy Act of 2005, LPO has been evolving and making improvements to the office that have increased both internal and interagency oversight, clarified its management responsibilities, institutionalized proactive risk management practices, and put in place portfolio-wide safeguards and monitoring of all LPO projects, among other enhancements.
Before issuing a loan, LPO evaluates the possibility that projects might not be repaid or recovered in full, as well as the possibility that they default. LPO has long taken on this consideration and ensured that—these risks notwithstanding—each project proposed to be financed possesses a reasonable prospect of repayment.
LPO’s organizational structure is fundamentally designed to take on and manage risk. It has its own Risk Management Division and a cadre of dedicated staff that embed with deal teams during the due diligence phase and, prior to applications moving into the interagency process for consideration, validate risk ratings and affirm the appropriateness of the due diligence efforts undertaken. As the “second set of eyes” within LPO, the Risk Management Division stays with transactions as they move into the portfolio, where they are carefully managed by the Portfolio Management Division.
In the assessment of risk, LPO leverages deep federal, contractor, and third-party adviser expertise across LPO, the Department, and our national laboratories—key technical, financial, project management, and legal expertise not often available to early adopters of new energy technologies in the commercial sector. LPO also evaluates portfolio risk in aggregate across LPO projects; and it evaluates portfolio credit risk based on various project characteristics, concentrations of types of projects, and other factors across the portfolio. The result is a thorough understanding of the risk LPO takes on as a program to ensure it is meeting its mission while stewarding taxpayer resources responsibly.
It remains a challenge for even the best, most well-funded loan program to completely steer clear of potential losses or defaults. However, LPO's exemplary good governance and robust risk management practices ensure a thorough and effective approach to the administration of loans and safeguard against potential risk. Because of the office’s mission, LPO measures its performance not by whether all loans outperform expectations or whether some underperform, but rather whether LPO sees losses in the portfolio at or under reasonable budgeted estimates for the risk we are taking to advance innovative or high-impact technologies and supply chain projects in the United States.
With Congress’s support, and in consultation with the Office of Management and Budget through the annual budget process, appropriated funds are identified and reserved to account for a project’s risk, allowing LPO to budget for expected losses and cash flows from the project.
Continuum of Proactive Credit Risk Management
LPO provides patient capital to borrowers over the long term. Borrowers are also held accountable throughout the life of the loan to ensure the portfolio meets expectations and delivers benefits to communities, as industry volatility may arise or project conditions change. LPO leverages the risk management expertise of its professional staff to ensure it supports projects that take on an acceptable amount of risk and ensure a reasonable prospect of repayment.
LPO’s best-in-class risk management and portfolio monitoring policies and procedures identify and manage risk over the life of the project. Risk management occurs throughout the process of:
- Application evaluation
- Due diligence
- Working with the borrower to reach milestones needed to close
- Funding the loan
- And beyond
This continuum of proactive credit risk management across LPO’s workforce is central to the office’s ability to lean in to take measured risks, meet its mission, and responsibly steward taxpayer resources.
LPO’s Impact
LPO is a proven financial platform with a strong track record of success in helping to de-risk clean energy technologies including utility-scale wind and solar power and electric vehicles, moving them along the bridge to bankability so that these technologies can achieve full commercialization. LPO has issued $42+ billion in loans and loan guarantees, including ten of the first utility-scale solar projects in the United States, underwrote the largest wind farm in the U.S., and financed the first nuclear power plant to be built in this country in the last 25 years. LPO has maintained strong financial performance—even when compared with private financing of conventional energy projects in the United States. As of September 2023, LPO’s actual and estimated losses as % of total disbursement sits at 3.1%.
Commercial lenders know that LPO loan recipients have been rigorously vetted and earned LPO’s seal of confidence when they’ve secured a loan. They’ve also had access to the guidance, vision, and expertise of DOE’s best-in-class scientists, engineers, and experts along the way. For example, since LPO made its first investments in utility-scale wind and solar in 2010, more than $1T in private investments have subsequently flowed into the space. LPO has been successful in its mission to drive decarbonization of the U.S. economy. A decade since its inception, as of 12/31/2023, LPO’s portfolio projects have:
- Directly created over 46,800 permanent jobs.
- Generated over 109 million MWh of clean electricity cumulatively, which is equivalent to over 48 million tons of CO2 emissions.
- Displaced approximately 2.9 billion gallons of gasoline, which is equivalent to displacing equivalent of 26 million tonnes of CO2.
Additionally, since President Biden signed the Inflation Reduction Act of 2022 into law, LPO has offered conditional commitments to several ATVM borrowers for nearly $13.65 billion. These deals span the electric vehicle and stationary storage supply chain; and they mark an important step toward onshoring and reshoring manufacturing of the next generation of zero emissions vehicles, storage technologies, and critical materials production. If finalized, these projects will create tens of thousands of good-paying construction and operations jobs and displace more than 1 billion gallons of gasoline annually once fully operational.
Learn more about the technological innovations and projects within LPO’s portfolio and pipeline.
Sheila Moynihan
Sheila Moynihan is the Chief Operating Officer to the Loan Programs Office (LPO) at the U.S. Department of Energy (DOE). She has over a decade of experience working in the U.S. Department of Energy advancing domestic and international clean energy goals. Most recently, she served as the Operations Supervisor in the Solar Energy Technologies Office (SETO). In this capacity, she lead SETO’s budget and finance, strategic support, and operations support teams.
Previously, Ms. Moynihan served as the Deputy Director of the Office of American Affairs within DOE’s Office of International Affairs, where she provided strategic vision and direction to advance energy objectives in the Americas through bilateral and multilateral engagements. From 2009 to 2017, she worked in the Office of Energy Efficiency and Renewable Energy (EERE), including on the international and stakeholder engagement teams of the Strategic Programs Office, as an Advisor to the EERE acting Assistant Secretary, and as Presidential Management Fellow in the Bioenergy Technologies Office. Prior to joining DOE, she worked for a small consulting firm that specialized in geopolitical risk in the energy sector.
Ms. Moynihan received a BA in Political Science from Villanova University and a Masters in International Policy from Johns Hopkins University’s School of Advanced International Studies.
Andrew McCabe
Mr. Andrew McCabe is the Director of the Risk Management Division (RMD) for the Department of Energy’s Loans Programs Office (LPO). To the task of transaction risk management, Mr. McCabe brings his over twenty years of corporate and project finance experience, achieved in both private sector and government agency environments.
Mr. McCabe reviews the work of Portfolio Management Division (PMD) in its management of a $30 billion portfolio of loans supporting renewable energy and energy efficiency, advanced technology vehicle manufacturing, advanced fossil, nuclear, and related transmission infrastructure projects, and the risk evaluations of later-phase new loan applications under open LPO solicitations. In close collaboration with other staff, Mr. McCabe also facilitates the further development of LPO’s broader, Enterprise Risk Management-specific policies, procedures and compliance assurance plans.
Prior to joining LPO as its Director of Risk Management, Mr. McCabe was the Deputy Vice President of Asset Management at the Export-Import Bank of the United States, where he led teams responsible for major project and corporate loan restructurings and recoveries. Prior to that, Mr. McCabe was a senior portfolio manager within PMD. Mr. McCabe has also held previous positions with ABN AMRO Bank, the Overseas Private Investment Corporation and Friedman, Billings, Ramsey Group, Inc., financing and managing a diversity of financial assets in the real estate, power and high tech sectors in the United States and abroad.
Mr. McCabe earned an MBA from University of South Carolina’s MIBS Program, a MA in Russian and East European Studies from George Washington University and a BA from Kenyon College.