Nearly $80 billion of government stimulus spending for clean energy technology was brought to bear in 2010. Looking back, it was a year of tremendous impact and growth for the sector, with the government emerging as one of the most active investors. Federal programs such as the Department of Energy (DOE) and United States Department of Agriculture (USDA) loan guarantee programs leveraged billions of private sector dollars and created more than 61,000 jobs. Other government agencies are supporting initiatives with tremendous impact, including the Department of Defense, where the Navy is positioning itself to procure more than 50 percent of its energy from alternative sources by 2020. For companies in certain sectors, particularly biofuels companies, the Department of Defense represents both a development partner and a first customer.

Initiatives and financing programs such as these have supported energy technology companies through some of the more difficult late-stage commercialization gaps, but demand for these types of government programs has increasingly exceeded supply. The DOE Title XVII loan guarantee program, for example, has experienced unparalleled demand as well as sharp criticism. At best, only a handful of additional DOE loan guarantees will be completed by the impending September 2011 deadline for Section 1705 projects. Moreover, the USDA Biorefinery Assistance Loan Guarantee Program expects to utilize the last of its mandatory appropriations this year. Nonetheless, the demand for financing to demonstrate innovative technology or build a first commercial project is not subsiding, and dozens of companies that had been pursuing a DOE or USDA guarantee will need alternative financing mechanisms. If viable alternatives are not uncovered and created, prior U.S. investment (public and private) in these technologies will be lost to job creation and economic growth overseas, as promising domestic technologies commercialize abroad.

Because of the multiple and often capital-intensive hurdles that energy technology must overcome to reach commercial markets, and the inseparable intersection between energy and government regulation, the government policy and financing landscape in 2011 continues to exert a significant influence on the energy technology sector. Reining in government spending means that billion-dollar appropriations requests will be unlikely to gain traction. There are, however, several lesser-known federal financing options that companies and investors can utilize. This primer provides an overview of the alternative government financing and funding programs available to support a variety of energy and clean technologies, as well as a summary of the status of programs at DOE and USDA.