The U.S. Department of Energy’s (DOE’s) Loan Programs Office (LPO) has announced a conditional commitment for a loan guarantee of up to $15 billion to Pacific Gas & Electric, (PG&E), the natural gas and electric utility serving Northern and Central California. It’s the largest loan guarantee ever for the LPO, which under the Biden administration has issued billions of dollars for energy infrastructure improvements.
The Dec. 17 announcement, if finalized, would support PG&E’s Project Polaris, which includes a portfolio of projects to expand hydropower and battery energy storage. The utility also wants to upgrade its transmission capacity through reconductoring and grid-enhancing technologies.
The funds also would be used to further enable virtual power plants, which use distributed energy resources, across PG&E’s territory. The utility also plans investments to help an expected rise in demand for electricity, increase reliability, and lessen the cost of power for its customers.
The LPO wants to finalize the commitment before President Biden leaves office next month. The money would be issued in installments over a period of several years. Energy industry analysts have said they expect the incoming Trump administration will attempt to pull back funding for projects designed to combat climate change and increase energy efficiency, although legal experts continue to debate whether committed federal funding could be withdrawn.
The announcement is the second Energy Infrastructure Reinvestment (EIR) project under the LPO’s flexible loan facility and disbursement approach, which is tailored for regulated, investment-grade utilities, according to the DOE. PG&E had submitted its loan application in June 2023.
The DOE in Tuesday’s announcement said that utilities receiving loans for EIR projects “must demonstrate that the financial benefits received from the DOE loan guarantee will be passed on to the customers of, or communities served by, that utility.” Financing from the LPO comes with a lower interest rate than traditional lending, which the DOE said will help reduce electricity costs for PG&E’s 16 million customers.
The announcement said PG&E will partner with the International Brotherhood of Electrical Workers (IBEW) Local 1245 to train and employ members of underserved groups interested in operational roles through its existing PowerPathway program.
The EIR was created as part of the Biden administration’s Inflation Reduction Act (IRA) passed in 2022. The EIR category formed under the Title 17 Clean Energy Financing Program. The DOE said the EIR “supports projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or that enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions.”
The DOE in October, also as part of its Investing in America agenda, announced nearly $2 billion in funding for dozens of projects through the Grid Resilience and Innovation Partnerships (GRIP) program. The money is earmarked for upgrades to transmission and distribution infrastructure. The money included funding for projects in support of utilities in the U.S. Southeast impacted by Hurricanes Helene and Milton.
—Darrell Proctor is a senior editor for POWER.
