In one of its final acts under the Biden administration, the Department of Energy’s Loan Programs Office today announced conditional commitments to loan nearly $23 billion to electric utilities.
The loans span eight legacy energy companies, with projects largely in conservative states. And as a result, they are likely to be more insulated from political risk than LPO’s loans to companies working on advanced clean energy technologies. The money will fund critical infrastructure upgrades: from replacing thousands of miles of leaking natural gas lines to building a 220-megawatt battery storage system at a retired coal plant.
They come at a time of unprecedented utility capital needs, as they face simultaneous pressure from extreme weather events, electrification, and of course the looming load from data centers expected to be built to support the AI boom, which by some estimates will require up to 26% more annual generation in the U.S. by 2028.
But it’s also a time when, in the waning days of the outgoing administration, LPO itself has been in the political crosshairs.
In December, Republicans on the Hill sent LPO head Jigar Shah a cease and desist letter, accusing the office of “scrambling to close deals” and citing a ramp up in loans in the weeks after Trump’s election win in November. Later that month the DOE inspector general, a Trump nominee, issued a report asserting that the office was failing to address potential conflicts of interest with contract workers, and urging LPO to “put into abeyance all loan and loan guarantee packages.” (The newly-created Office of Government Efficiency, as well as Project 2025, have also called for the office to be dismantled.)
A different type of loan
Today’s eight loans are dispersed under a separate authority from the so-called “bridge loans” that LPO has offered to advanced technology projects.
The Energy Infrastructure Reinvestment program — dubbed by RMI as “the most important clean energy policy you’ve never heard about” — establishes up to $250 billion in loan authority for infrastructure projects. In particular, EIR offers up funding for projects that update or replace energy infrastructure, or that build new clean energy facilities that will utilize legacy infrastructure.
EIR loans are distinct from others that LPO has on offer. For one thing, utilities must demonstrate that the financial benefits they receive through the loan are passed on to their customers. They must also get approval from their respective regulators, and are able to borrow for multiple investments in a single loan application.
That “portfolio-style lending approach” is due to the fact that unlike other borrowers, utilities don’t raise capital for specific projects, an LPO spokesperson said. For EIR loans, LPO’s support looks more like a line of credit, they added.
The EIR loans LPO has dispersed to date now include up to:
- $15 billion to Pacific Gas & Electric to support expansion of hydropower and battery storage, transmission upgrades, and virtual power plants;
- $7.17 billion to DTE Electric Clean Energy and $1.64 billion to DTE Gas Clean Energy, for upgrading natural gas lines, and financing new generation and storage;
- $5.23 billion to Consumers Energy for renewables generation, virtual power plant projects, energy storage, and upgrading gas pipelines;
- $3.52 billion to PacifiCorp to finance transmission projects in several states in the West;
- $3.05 billion to Alliant Energy to finance 2,000 megawatts of new clean energy and storage in Iowa and Wisconsin;
- $1.81 billion to Arizona Public Service Company, for investments in transmission, renewable power generation, and energy storage;
- $1.60 billion to AEP to upgrade nearly 5,000 miles of transmission lines;
- $716 million to Jersey Central Power and Light for transmission upgrades; and
- $584.5 million to Convergent Energy and Power to finance solar and storage systems in Puerto Rico.
The majority of the utilities that stand to benefit operate in states that lean red.
As a DOE spokesperson emphasized on a call with reporters this week, these loans are made only to “investment grade utilities,” and are backed by all of the company’s assets, not just the ones LPO finances. “That means that in the unlikely event of default, LPO could recover what it is owed up to the loan amount beyond the sale or acquisition of assets financed through the loan,” the spokesperson confirmed.
A post-election acceleration
In the wake of the election that propelled Donald Trump — and his promises to nix Biden-era efforts on clean energy — back into office, LPO’s pipeline of applicants accelerated. In the final quarter of last year, loans were signed and finalized at a much more rapid pace than prior quarters or years. While it was common pre-election for companies to take six months or more to close loans, post-election that time was trimmed significantly, as companies rushed to get in before the administration handover.
And it seems utilities were no exception. Up until today, only four EIR loans have been offered. In September, Holtec Palisades closed a $1.42 billion loan guarantee to bring a nuclear power plant back online. In December, PG&E and Convergent both landed conditional commitments, for up to $15 billion and $584.5 million, respectively. And in early January, Arizona Public Service Company received a conditional commitment of $1.8 billion.
In nearly all of the now 12 EIR loans, utilities first submitted their applications well over a year ago; long before the outcome of last year’s elections became clear, and even before the dramatic data center load growth projections had really started to take off.
PG&E, for example, submitted its initial application in June 2023. Jersey Central Power and Light applied in November 2023, and Consumers Energy and PacifiCorp, which also announced conditional commitments today, applied in December 2023.
Alliant Energy, which today received conditional commitments totaling over $3 billion for its subsidiaries Interstate Power and Light and Wisconsin Power and Light, declined to state in their announcements when they had applied; but according to regulatory filings in both Iowa and Wisconsin, the utility submitted their initial applications in August 2023.
In those filings, WPL said it expected to hear back from LPO as to whether they would be invited to submit a “Part II application” by November 2023, and that the entire process could take “up to 12 months” to reach the conditional commitment stage. (Alliant didn’t respond to Latitude Media’s request for comment on the pace of its process.)
The latest announcements bring the total amount of committed EIR funds to nearly $42 billion across 12 loans, with only the Holtec Palisades nuclear project loan fully finalized. That’s less than 20% of the program’s total lending authority, leaving more than $200 billion in potential loans to be dispersed by the end of EIR authority in 2031.
