As of this week, the Department of Energy’s Loan Programs Office has finalized 14 loans since director Jigar Shah’s tenure began in 2021. Four of those closings took place in the month before the election, and four in the month since.
Another 19 loans are in the conditional commitment stage, meaning DOE has signaled its intent to finance a project, but that the requirements for cash to be doled out haven’t yet been met. Five of those were announced in the last month.
Those deals — both finalized and announced — add up to just under $55 billion in project investments.
And the number of deals and dollars going out the door isn’t going unnoticed. Last week, Republicans on the Hill sent Shah a cease and desist letter, accusing the office of “scrambling to close deals” and citing its ramp up in projects post-election.
“On election day, the American people rejected the Biden-Harris administration’s rush-to-green agenda,” the letter, authored by the Committee on Energy and Commerce, said. “We insist that the Biden-Harris administration cease its campaign to quickly distribute federal funding before the incoming administration takes office.”
But the letter mischaracterizes what’s going on. It’s certainly true that loans are being signed and finalized at a quicker pace than in prior quarters or years. As the letter noted, the office has closed four loans in less than a month — after finalizing ten total earlier in the administration. And LPO staff are working around the clock to get them out, to the tune of 75-hour weeks.
However, the pressure and urgency is flooding into the office, not emanating from it. As conversations at Deploy last week made clear, the rush is not that of the outgoing Biden administration, but from the private sector.
Hundreds of companies already in the office’s application pipeline, the majority of whom applied long before the election, turned up at the Walter E. Washington convention center last week for the second annual conference focused on investment in clean energy tech. The event recorded a 200% attendance jump over last year. Even the registration line alone, which stretched for more than an hour and a half on day one, suggested that these companies are eager to be a part of this LPO’s final, ferocious months — and aren’t sure that the support that the office has offered will be around come January.
Private sector pressure
Despite the GOP lawmakers’ alarm, the clock didn’t start for LPO on election day.
The office has in fact been ramping up since this summer, working to finalize as much as possible before January, even in the case of a Harris change-over. That’s in part because even a new Harris administration would inevitably result in some lost momentum in the office as key players use the transition as an opportunity to pursue work elsewhere in the administration, or beyond.
The private sector is nudging the process faster as well. Just a few months ago, it often took six months or longer for LPO to get signed documents back from applicants, many of whom weren’t fully prepared for the office’s rigorous vetting process, and who often wanted to negotiate terms of the offered loans.
(LPO loan terms, though not publicly disclosed, are set by Treasury and are not negotiable. They are, however, significantly more favorable than other types of financing, several recipients confirmed to Latitude Media.)
Now though, companies and their non-LPO investors are eager to finalize deals before the inevitable slowdown — if not rollback — that a new administration backed by a GOP-majority in Congress will bring. In the weeks since the election, companies in LPO’s pipeline have been turning around their paperwork in record time, without attempting to negotiate terms. Some are even following up to ask just how quickly things can be finalized.
The pace of LPO’s financing process is “ultimately up to the borrowers,” Shah told reporters at Deploy. Post-election, would-be LPO borrowers are motivated to move more quickly than they were in the early years of Biden’s term, he added. “Our process hasn’t changed. Their ability to move through it faster is in their control.”
That increased urgency is also evident in the office’s remaining pipeline of active applications, i.e. for projects that have not yet been offered conditional commitments. In November 2023, LPO reported 125 active applications, totaling $174.7 billion. By last month, the office had 212, totalling $324.3 billion.
The makeup of sectors seeking LPO funding has also shifted dramatically, even in the last year. In January 2024, it was virtual power plant companies that were requesting the most funding, followed by renewables development, transmission, and clean fuels. By November, renewables development moved into the top spot, closely followed by advanced nuclear.
The bounds of the process
The process of receiving a loan from LPO is an arduous one. It inevitably takes several months from start to finish, regardless of how eager an applicant may be.
“There is no way that you would choose the Loan Programs Office if you could easily get money out of the commercial markets,” Shah explained. “Our process is always going to be more difficult, more bureaucratic.”
Nancy Loewe, CFO of finalized loan recipient CelLink, agreed. If the company could have gotten financing for their Texas manufacturing facility elsewhere, she said, they certainly would have. “I really tried to find alternatives because I was trying to avoid [the LPO process]” Loewe added. “But the terms on this are undeniable.”
For instance, LPO gives CelLink a so-called “payment holiday” before it must start repaying the loan. “That’s exactly when a small company like ours needs it,” she explained. Alternative equipment financing options that the company considered required repayment starting within a year.
“We need the funding to last a couple years while we build out the factory, and that’s where I think the DOE is invested long-term,” Loewe said. CelLink’s $362 million loan took nearly a year to finalize after receiving a conditional commitment in May 2023.
There is no way that you would choose the Loan Programs Office if you could easily get money out of the commercial markets. Our process is always going to be more difficult, more bureaucratic.
But loans being finalized this month are happening much more quickly. Entek, which received $1.3 billion to manufacture lithium-ion battery separators for EVs, finalized its loan in around six months. And loans are also moving from application to conditional commitments much more quickly.
That said, there’s a limit to how quickly the process can happen. Every loan approved by LPO must also be approved by the Energy Secretary, the White House Office of Management and Budget, and the Treasury Department, among others.
And many companies applying for loans aren’t readily able to do the due diligence and reporting required by the office, or else don’t have the needed legal teams on retainer. As Allen Cadreau, founder and CEO of loan recipient Indian Energy put it: “Legal fees are a horse of another color. We’ve gotta figure something out about that.” Indian Energy, he said, had seven different law firms vet the project over the course of three years to lock in the funding.
So loans that were already in the works as late as this summer could still be finalized before January 17, the Biden administration’s last working day. For those that have entered the pipeline in recent months, though, the outlook is more challenging.
Prepping for a Trump LPO
Especially for companies that have received conditional commitments from LPO, a quiet effort to “Trump-proof” themselves is underway. The hope is that loans described in terms of domestic manufacturing or American innovation will be preserved despite the likely political upheaval to come.
Between conditional commitments and finalized loans, LPO has agreed to around $55 billion in loans to 33 projects spanning battery production, nuclear, and virtual power plants. That amounts to just over an eighth of the office’s total $400 billion loan authority. (And the office has been pointed in its vocabulary throughout the Biden administration; you’d be hard put to find the words “climate” or “green” anywhere in the office’s announcements or materials.)
But Project 2025, the conservative policy initiative from the Heritage Foundation and former Trump officials, calls for the Loan Programs Office to be eliminated entirely. Elon Musk and Vivek Ramaswamy, co-leads of the new Department of Government Efficiency, have said the office — and its already-approved loans — are in their budget-cutting crosshairs.
(Musk, incidentally, is one of the most prominent users of the Loan Programs Office, having borrowed $465 million in the early days of Tesla for the company’s factory in Fremont, California. Tesla repaid its loan in full three years later.)
Among the outstanding conditional commitments yet to be finalized are a $6.5 billion loan to help Rivian build a massive manufacturing facility in Georgia, and $9.2 billion for BlueOval SK LLC to build three plants to churn out electric vehicle batteries for Ford.
After Trump’s win, though, many loan recipients are already planning for how to engage with the incoming administration.
Sustainable aviation fuel maker Gevo, for example, received a conditional commitment in October, but has been public about the fact that they won’t be able to finalize their $1.46 billion loan before Inauguration Day.
The delay, CEO Patrick Gruber told Latitude Media, is largely on the Gevo side. Specifically, they need to shore up companion funding before finalizing the LPO dollars. He said the company is looking forward to working with the incoming Trump administration to finalize the loan.
Gevo isn’t worried about the future of the loan, he added, given the fact that their South Dakota corn starch-to-jet fuel facility isn’t particularly partisan; in fact, last year, corn-state Republicans in the House made their support for increasing the debt limit contingent upon preserving biofuel tax credits extended by Democrats.
Other loan recipients are taking a different approach to keeping their heads down. The Grainbelt Express, for example, received a conditional commitment in November for up to nearly $5 billion to help build the high voltage, interregional transmission line. That project has been mired in partisan debate for several years now, and the company opted not to do any publicity for the LPO loan commitment, sticking only to the requisite announcement on LPO’s own site. Grainbelt Express’s website still does not include any mention of the loan.
The Biden LPO’s legacy
Even companies that have their loans finalized — and are ostensibly in a more secure position — are doing some strategic planning. CelLink, for example, is taking its loan in tranches, and has currently taken just one $73 million installment, of the $362 million it has available.
“That makes me nervous for next year, because who knows?” Loewe said. “They can’t take this away from us, but it does change our thought process in terms of making sure we’re only [accepting] what we really need. I don’t want to take on more government debt with the uncertainty of ‘are the Republicans going to keep [LPO] or not’.”
Moving into 2025, CelLink is going to get “very creative” with equity raises, she added, to make sure the company only borrows from its LPO loan “if we really have to.”
At the same time, Loewe said, LPO’s stamp of approval has given the company “so much more credibility” with customers. In the months after finalizing CelLink’s loan in April, she said, they were able to sign a massive, multi-year deal that will “fill our factory in Texas.”
Meanwhile, Holtec International is using a finalized LPO loan to restart an 800-megawatt nuclear generating station in Michigan. Pat O’Brien, who leads the company’s government affairs, said that financing is already helping to de-risk nuclear energy even beyond their specific project. “In the last two months, I’ve had more financial institutions reach out to say ‘Hey, can we just do a Q&A with you to ask about where nuclear is headed and what it is?’, because they’re getting interested,” he said.
Despite the furious conversations underway about the future of the Department of Energy and unspent IRA funding more broadly, Shah is confident that the office’s impact will endure long-term.
“You won’t know, obviously, until it’s in the rearview mirror,” he told Latitude Media, “but I really think that we have reset the way in which America commercializes innovation forever.”
