The United States Export-Import Bank and Renewable Energy Finance

Travis Lowder's picture

A recent report from Greentech Media reveals that, in 2010, the U.S. was a net exporter of solar energy products, with a positive trade balance of about $1.9 billion to boot [1]. While certain conspicuous Federal policies have played a significant role in this development, there is another, perhaps unsung government institution at work here as well: the Export-Import Bank (Ex-Im Bank).

Logo of the Export-Import Bank of the United States

The Ex-Im Bank is the United States government's official export credit agency. Its purpose is to provide financial support for the export sale of U.S. goods and services to international markets [2]. It was established in 1934 to fill financing gaps during the Great Depression…and also, oddly enough, to facilitate trade between the U.S. and its then-ally the Soviet Union [3]. It is an independent, and self-sustaining agency, which means that it finances itself through its own lending activities (it does receive appropriations from Congress, but it returns all capital in excess of expected credit losses—essentially, it has a net appropriation of zero) [4]. The bank does not compete with the private sector, but instead steps in where the risk profile of a particular export transaction would otherwise disqualify it from a commercial loan.

The Ex-Im bank has a dedicated Environmental Products Program, under which it allocates a certain portion of its funding to renewable energy and energy efficient (RE &EE) technologies. The bank offers a suite of financing products to support businesses in these sectors:

  • • Debt issued at terms of up to 18 years for some recipients (namely water and RE-related exports), with fixed terms and flexible repayment schedules
  • • Export-credit insurance provided against in-country risks and nonpayment
  • • Working capital guarantees designed to support small and medium-sized businesses in their transition from venture capital funding to commercial viability.
  • • A fast-tracking program ("Renewable Express") designed to provide post-completion project financing to small RE power producers whose high transaction costs relative to project size may have otherwise precluded viability.
Date Recipient Name Recipient Business Support Type and Amount Background Country
Sept 2011 First Solar Thin Film PV manufacturer Total $455.7 million guarantee Support export of 90MW of modules in Ontario Canada
July 2011 Azure Power Rajasthan Ltd. Project Developer (based in India) $16 million direct loan Finance purchase of thin-film modules from First Solar India
July 2011 Punj Lloyd Solar power Ltd. Proejct Developer (based in India) $9.2 million direct loan Finance purchase of thin-film modules from Abound Solar India
March 2011 Dalmia Solar Power Ltd. Project Developer (based in India) $30 million direct loan Finance purchase of 10MW of solar dishes from Infinia Corp. India
March 2011 First Solar Thin Film PV manufacturer $19 million guarantee Support export of modules in Gujarat India
March 2011 Northern Power Systems Next-gen wind turbine manufacturer Total $22.2 million guarantee (using Renewable Express) Support export of 55 turbines for community wind projects Italy

Recent Ex-Im Bank benefactors in the RE sector
*Table based on Ex-Im Press Releases and other news sources

While the last three years have seen heightened Ex-Im activity in the RE sector, the bank has encountered some difficulty in meeting its RE & EE funding targets. A 2010 Government Accountability Office (GAO) report found that RE exports accounted for a mere 0.23% of overall Ex-Im financing from 2003-2010. Even after a 2008 Congressional directive mandated that the bank beef up its RE & EE portfolio for FY09 and FY10, support for these exports remained well below the 10% mark (despite a 300% increase in support from 2008-2010) [5]. The GAO report identifies some causal factors for these shortfalls, including: administrative difficulties in responding to the directive; imperfect communication of the bank's RE & EE financing goals to stakeholders; and an unclear definition of the "energy efficient" subcategory of environmental exports [6]. The bank has stated plans to build a reputation as the "best-in-class" in the RE business [7], and while they may not be there quite yet, it will be interesting to watch them implement this strategy in the coming years.  They may yet prove a valuable resource for the deployment of U.S.-manufactured renewable energy products in international markets.

The bank has another Congressional mandate to make at least 20% of its annual financing available to small businesses (and this target is being met) [8] and is touting record numbers for FY 2011 ($178 billion in authorizations) [9]. If you are an RE/EE manufacturer or power producer, and are interested in tapping the Ex-Im Bank for financial support, click on the "Apply" link at http://www.exim.gov/index.cfm.

 

 

[1] Greentech Media. U.S. Solar Energy Trade Assessment 2011: Trade Flows and Domestic Content for Solar Energy-Related Goods and Services in the United States. Prepared for Solar Energy Industries Association, August 2011. Available at https://forms.greentechmedia.com/Extranet/95679/forms.aspx?msgid=t14lkt4unjquzx041nzbyrsy.

[2] The Export-Import bank of the United States Mission Statement. Available at http://www.exim.gov/about/mission.cfm.

[3] Becker, William H. and McClenahan, William M. The Market, The State and the Export-Import Bank of the United States, 1934-2000. Cambridge: Cambridge University Press, 2003. Available at http://catdir.loc.gov/catdir/samples/cam033/2002066521.pdf.

[4] The Export-Import Bank of the United States 2010 Annual Report. Pg. 53. Available at http://www.exim.gov/about/reports/ar/2010/exim_2010annualreport_full.pdf.

[5] Ibid. Pg. 12.

[6] United States Government Accountability Office. Export-Import Bank: Reaching New Targets for Environmentally Beneficial Exports Presents Major Challenges for Bank. Report to Congressional Committees, July 2010. Available at http://www.gao.gov/new.items/d10682.pdf.

[7] The Export-Import Bank of the United States. Report to the US Congress on Export Credit Competition and the Export-Import Bank of the United States for the Period January 1, 2009 through December 31, 2009. The Export-Import Bank of the United States, June 2010. Accessed at  http://www.exim.gov/about/reports/compet/documents/2009_competitiveness_report.pdf.

[8] United States Government Accountability Office. Export-Import Bank: Reaching New Targets for Environmentally Beneficial Exports Presents Major Challenges for Bank. Report to Congressional Committees, July 2010. Accessed at http://www.gao.gov/new.items/d10682.pdf.

[9]  "U.S. Exports Hit $178 Billion in July: Ex-Im Bank Breaks All-Time Record in Authorizations." Press Release from the Export-Import Bank of the United States, September 8, 2011. Available at: http://www.exim.gov/pressrelease.cfm/1DD0316D-DAB6-93C8-461CD5F354D1FE54/