Pricing for LPO Financing by Program

The cost of debt financing offered by the Department of Energy’s (DOE) Loan Programs Office (LPO) varies by loan program, project financing structure, and project. The table below summarizes interest rates and other costs associated with LPO financing for each program. The text that follows describes interest rates in greater detail.

Table 1. All-In Pricing for LPO Financing by Program

*Payable at Financial Close, regardless of date of First Advance.

** Title 17 Clean Energy Financing Program and Tribal Energy Financing Program: Additional costs potentially include credit subsidy costs should there be insufficient appropriations (please see Guidance Document (Title 17) / Solicitation (Tribal Energy)).

Interest Rate

The interest rate on LPO debt financing varies by program and financing structure.

For loans borrowed directly from the U.S. Government (via the Federal Finance Bank (FFB)), the Interest Rate is calculated as followed:

Title 17 Clean Energy Financing Program – 1703

• Interest Rate = Applicable U.S. Treasury Rate + 37.5 basis points FFB liquidity spread + Applicable Risk-Based Charge*

Title 17 Clean Energy Financing Program – 1706

• Interest Rate = Applicable U.S. Treasury Rate + 37.5 basis points FFB liquidity spread

Tribal Energy Financing Program

• Interest Rate = Applicable U.S. Treasury Rate + 37.5 basis points FFB liquidity spread + Applicable Risk-Based Charge*

Advanced Technology Vehicle Manufacturing Program

• Interest Rate = Applicable U.S. Treasury Rate

*Applies in some cases.

For loans guaranteed by DOE, but from a non-Federal (3^rd party) lender (for the Title 17 Clean Energy Financing Program and Tribal Energy Financing Program):

• Interest Rate = Lender’s agreed-upon rate + Applicable Risk-Based Charge**

**The Risk-Based Charge applies to most DOE guarantees of third-party loans through the Title 17 Clean Energy Financing Program – 1703, may apply to DOE guarantees of third-party loans through the Tribal Energy Financing Program, and currently does not apply to DOE guarantees of third-party loans through Title 17 Clean Energy Financing Program – 1706.

Applicable US Treasury Rate

Fixed-Rate FFB Loans: Loan rates are set based upon the U.S. Treasury rates at the time of each cash draw. Thus, the overall interest rate of a loan may change as additional draws are made. The loan interest rate is the single effective rate that would result in the same present value as discounting each cashflow at the interpolated U.S. Treasury rate for that borrowing date. This will be similar (but not equal) to the interpolated U.S. Treasury rate at the (spread) duration of the loan.

Floating-Rate FFB Loans: A final maturity is set at the outset of the loan, but the loan rates are reset periodically by the U.S. Treasury rate corresponding to the length of the floating rate period (e.g., if the floater resets quarterly, it would be the 91-day rate at each reset).      

Liquidity Spread

37.5 basis points (0.375%) added to the loan rate for FFB loans borrowed under the Title 17 Clean Energy Financing Program (both 1703 and 1706) and the Tribal Energy Financing Program. 

Risk-Based Charge

LPO adds a risk-based charge to both FFB loans and DOE guarantees of third-party loans for loans and loan guarantees offered through some programs. The risk-based charge reflects the credit risk of a project, taking into account the prevailing rate of interest in the private sector for similar loans and risks, and is determined according to Table 2. 

• FFB Loans: For FFB loans, the applicant pays the government a rate that includes the Risk-Based Charge, along with the treasury and basis point spread.
• Third-Party Loans: For third-party loans, in which there is no liquidity spread, applicants pay the government the applicable Risk-Based Charge and pay the lender the base rate.   

Table 2. The maximum risk-based charge which may be assessed to a project based upon its credit rating. LPO will update this table periodically.