Dive Brief:
- The Department of Energy’s Loan Program Office announced Tuesday it had given a $15 billion conditional loan guarantee to Pacific Gas & Electric to help expand the company’s portfolio of hydropower and battery storage projects.
- The loan will also go towards expanding grid capacity and other grid-enhancing technologies. The loan will also give PG&E the capability to create virtual power plants — or systems that combine small-scale energy resources — throughout its service areas, which include Northern and Central California.
- PG&E has been working with DOE’s LPO on the deal for “months” and expects that the deal could finish and close “within the next couple weeks,” PG&E CEO Patti Poppe said in an interview on Bloomberg TV Wednesday.
Dive Insight:
The loan represents the second investment from LPO’s Energy Infrastructure Reinvestment program. The EIR program provides up to 80% of eligible project costs for projects that “retool, repower, repurpose, or replace” dormant energy infrastructure or allow operational infrastructure to “avoid, reduce, utilize, or sequester” pollutants, according to the program website.
PG&E submitted the loan application in June 2023, according to LPO’s Tuesday press release. Poppe said in the Bloomberg TV interview that the loans represent a replacement for other traditional debt financing and will come with a lower interest rate and “up to about $100 million in annual rate savings for customers.”
“This enables us to save money for customers; this is a straight pass through to all of our customers in PG&E service areas,” Poppe said. “Over the life of the loans, we would save over $1 billion for customers. … When electricity is essential to powering the growth of California, we need to make sure that it's affordable.”
As part of the deal, PG&E will work with the local chapter of the International Brotherhood of Electrical Workers to train and employ members of underserved communities. Additionally, PG&E’s community benefits plan — required by LPO borrowers — said it will expand its outreach programs to improve engagement with Native American tribes, community organizations and low and middle-income communities.
PG&E is also planning to locate “many projects” in communities identified as disadvantaged by the White House Council on Environmental Quality’s Climate and Economic Justice Screening tool, according to LPO.
“These infrastructure investments will help PG&E meet forecasted load growth, increase electric reliability, and reduce costs for its consumers across California,” DOE said in the press release.
While Poppe said she is “optimistic” the deal will get done before President-elect Donald Trump takes office in January, she said she sees alignment with the incoming administration on the value of increasing U.S. energy capacity to handle artificial intelligence demands.
“I do think the Trump administration shares our value of the importance of the grid and powering the on-shoring in America [and] powering new data centers,” Poppe told Bloomberg TV. “Remaining the global leader in AI will require power, so having a better grid is going to be good for everyone and we think the Trump administration will see the value of that, too.”
The loan announcement comes as the LPO looks to empty as much of its coffers as possible before Trump takes office.
According to interim findings from the DOE’s Office of the Inspector General released Tuesday, the LPO has closed more than $15 billion in loans and loan guarantees since 2021 and is planning to close an additional $22 billion in loan guarantees for 13 additional projects by Jan. 20, 2025.
