DOE Loan Programs: Actions Needed to Address Authority and Improve Application Reviews
Fast Facts
The Department of Energy can issue or guarantee loans for innovative or high-impact energy projects that private lenders can't or won't take on. In 2021 and 2022, legislation increased the amount of money available to DOE's loan programs. The number of applications for loans and guarantees also increased substantially.
We looked at these programs and found:
DOE isn't on track to issue loans and guarantees before billions of dollars' worth of new funding expires
DOE's process for determining eligibility may not always identify whether projects are sufficiently innovative to qualify
Our recommendations address these and other issues we found.
Nuclear energy generation facility in Covert Township, Michigan, that received a Department of Energy loan guarantee
Highlights
What GAO Found
The Department of Energy (DOE) is to provide loans and loan guarantees for innovative and other high-impact energy-related ventures through its Loan Programs Office (office). In recent years, Congress added two new loan programs and hundreds of billions of dollars in new loan authority for the office to manage. At the same time, the number of applications for loans and guarantees increased substantially. In response, the office increased its staff from 104 in 2020 to 412 in 2024, and made organizational changes, among other actions.
The office is not on track to issue loans in the amounts Congress authorized. A key example of this is the Energy Infrastructure Reinvestment Program. Enacted in August 2022, it received $250 billion in loan authority due to expire September 30, 2026. However, as of September 30, 2024, the office had made one loan for about $1.4 billion. While it has a total of $108.3 billion in outstanding submitted applications for loans and guarantees, the program almost certainly will fall short of the $250 billion in loan authority. Further, DOE needs to thoroughly review the current applications to ensure the government's interests are protected.
Department of Energy (DOE) Loan Programs Office Loan and Loan Guarantee Application Process
However, the office cannot ensure consistent and accurate application reviews. For example, their guidance is at times incorrect and outdated. In several instances, the guidance refers to documents that officials said are no longer used, and it is at times contradictory or unclear. As a result, staff would likely find it difficult to follow the correct practice. Further, GAO found that the office's guidance does not always follow the law. For projects that are required to be innovative, the office determines innovativeness early in the application review process and risks issuing a guarantee for a project that is no longer innovative. Without confirming innovativeness when it offers conditional commitment, the office may make loans or guarantees for projects that are not eligible.
Finally, the office does not comprehensively evaluate its application review process, including whether guidance is up to date, because officials have not considered the application review process to be high risk. Conducting a comprehensive annual review of this process could help the office identify and correct errors to better ensure it is consistently and accurately reviewing applications. Without correcting its guidance, the office cannot be assured that application reviews lead to selecting projects that further program goals.
Why GAO Did This Study
The Infrastructure Investment and Jobs Act (2021) and the Inflation Reduction Act (2022) added two new loan programs to the three in DOE's portfolio. The additions increased the office's available loan authority many times over, bringing it to over $400 billion. Much of this authority expires in 2026 and 2028.
Congress provided in statute for GAO to review DOE's Loan Guarantee Program. GAO's scope for its report is the five loan programs administered by the office. The report examines (1) how the office has addressed the expansion of its loan programs and loan authority; and (2) the extent to which the office's application review guidance and procedures ensure consistent and accurate application reviews.
GAO analyzed DOE actions to address an increase in applications. GAO also identified the extent to which DOE was planning to use the amount of its loan authority. It also reviewed application review guidance, documentation, and training, and interviewed DOE officials.
Recommendations
GAO recommends that Congress consider changing authority for the five programs by, for example, reducing authority for the Energy Infrastructure Reinvestment Program. GAO is also making four recommendations to the Secretary of Energy; DOE concurred with three of them. DOE did not concur with GAO's recommendation to review innovativeness at the time of conditional commitment. As discussed in the report, GAO maintains that such action is needed to help ensure that DOE is compliant with applicable law.
Matter for Congressional Consideration
| Matter | Status | Comments |
|---|---|---|
| Congress should consider making changes to the authority for LPO's five loan programs or reducing appropriations to reflect what LPO is likely to use before the authority expires. (Matter 1) | In July 2025, Congress rescinded funds appropriated by the Inflation Reduction Act to the loan programs. More specifically, in P.L. 119-21, it rescinded funds unobligated as of July 4, 2025, to four DOE loan and guarantee programs: Advanced Technology Vehicles Manufacturing Program, Title XVII Clean Energy Financing Program, Title XVII Energy Infrastructure Reinvestment Program, and Tribal Energy Financing Program. According to DOE's budget office, the unobligated funds to be rescinded total nearly $9.6 billion. |
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Energy | The Secretary of Energy should ensure that the Director of LPO directs staff to undertake an annual comprehensive review to identify and correct errors in application review guidance. (Recommendation 1) |
In its comments on the report, LPO said it will conduct an annual comprehensive review of its application review guidance at the beginning of each fiscal year beginning October 31, 2025. The review will assess the application review guidance to ensure and confirm it is accurate and complete and will update the guidance to address any issues, errors, and process updates identified by the review.
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| Department of Energy | The Secretary of Energy should ensure that the Director of LPO directs staff to undertake an annual comprehensive review to assess the completeness and accuracy of its application review documentation, including evaluating any deficiencies in the documents, determining appropriate corrective actions, and evaluating the effectiveness of implemented remedies. (Recommendation 2) |
In its comments on the report, DOE said the Loan Programs Office (LPO) Divisions responsible for reviewing applications will conduct an annual comprehensive assessment of application review documentation to (a) identify, evaluate, and document any deficiencies in documents, (b) determine corrective action by identifying document or process improvements to address deficiencies and prevent incidence of errors and incomplete document information, and (c) perform an evaluation to confirm the effectiveness of the implemented document updates. The applicable LPO Division DIrectors will be required to provide their sign-off as evidence that the annual comprehensive assessment has been successfully completed. These corrective actions will be implemented immediately and annually at the beginning of the fiscal year, beginning October 31, 2025.
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| Department of Energy | The Secretary of Energy should ensure that the Director of LPO directs staff to undertake an annual comprehensive review to identify application review training needs and to evaluate the extent to which training addressed deficiencies. (Recommendation 3) |
In its comments on the report, DOE said LPO will ensure that its current approach to ad hoc training needs assessment for application reviews is evaluated and improved through an annual comprehensive review of staff training needs, including (a) assigning a review team in the LPO training working group as a dedicated team focused on integrating existing processes and process updates in identified training needs throughout the year, and to help in the development of orientation materials for new staff; (b) incorporating into federal performance plans in applicable LPO Divisions language that states that employees will stay current on policies and procedures relating to their job function; and (c) upon completion of the annual comprehensive reviews of application review guidance and documentation, LPO will conduct a refresher for new and existing staff to review the application review process and any new updates to the process. In addition, LPO supervisors will assess and evaluate the training needs of the staff; also, they will assess the extent to which training has addressed deficiencies and will provide results of this assessment to LPO leadership. LPO leadership will ensure (a) corrective actions are initiated immediately and implemented annually in December or as soon as practicable, following the completion of the annual comprehensive reviews of application review guidance and documentation, and (b) necessary corrective actions arising from these reviews result in training that reflects accurate and complete processes, procedures, and documents. The first annual review will be completed in December 2025.
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| Department of Energy | The Secretary of Energy should ensure that the Director of LPO updates application review guidance for Section 1703 loans to include an evaluation of whether a project qualifies as innovative at the time the term sheet is issued. (Recommendation 4) |
In September 2025, DOE officials said they concur with the recommendation. LPO said it will ensure that it clearly documents that it has determined innovativeness at the Part I review, through the interagency review process, when the term sheet is offered, and at financial closing. Further, LPO committed to adding a step in the application review process that will task the technical and market subject matter experts to confirm the project still qualifies as innovative at the time the term sheet is issued.
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