PG&E receives a $15 billion loan guarantee from the DOE for hydropower and battery expansion

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Diving certificate:

• The Energy Department’s loan program office said Tuesday that it had granted Pacific Gas & Electric a $15 billion conditional loan guarantee to expand the company’s portfolio of hydropower and battery storage projects.
• The loan will also go towards expanding network capacity and other network-enhancing technologies. The loan will help PG&E create virtual power plants – or Systems combining small energy resources – in all of its service areas, which include Northern and Central California.
• PG&E has been working with the DOE’s LPO on the deal for “months” and expects the deal could be finalized and finalized “within the next few weeks,” PG&E CEO Patti Poppe said an interview on Bloomberg TV Wednesday.

Insight into the dive:

The loan represents the second investment from the LPO Energy Infrastructure Reinvestment Program. The EIR program provides up to 80% of eligible project costs for projects that “retrofit, retrofit, repurpose, or replace” dormant energy infrastructure or operational infrastructure make possible “Avoid, reduce, utilize or bind” pollutants.says the program’s website.

According to LPO’s press release on Tuesday, PG&E submitted the loan application in June 2023. Poppe said in the Bloomberg TV interview that the loans will be a replacement for other traditional debt financing and will come with a lower interest rate and “up to approximately $100 million in annual interest savings for customers.”

“This allows us to save our customers money; This is direct access to all of our customers in the PG&E service areas,” Poppe said. “Over the life of the loans, we would save our customers over $1 billion. … If electricity is essential to California’s growth, we must ensure it is affordable.”

Under the agreement, 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, will expand its outreach programs to improve engagement with Native American tribes, community organizations, and low- and moderate-income communities.

PG&E also plans to locate “many projects” in communities identified as disadvantaged by the White House Council on Environmental Quality Climate and Economic Justice Screening Toolaccording to LPO.

“These infrastructure investments will help PG&E manage projected load growth, increase electric reliability and reduce costs for its consumers across California,” DOE said in the release.

While Poppe said she is “optimistic” that the deal will be completed before President-elect Donald Trump takes office in January, she said she sees agreement with the new administration on the value of increasing U.S. energy capacity to meet the need for artificial intelligence.

“I think the Trump administration shares our value on the importance of the electric grid and powering onshoring in America (and) powering new data centers,” Poppe told Bloomberg TV. “Remaining a global leader in AI requires energy. So a better network will be beneficial for everyone, and we believe the Trump administration will also see the value of it.”

The loan announcement comes as the LPO seeks to empty as many coffers as possible before Trump takes office.

Accordingly Interim findings from the DOE Office of Inspector General As disclosed on Tuesday, the LPO has closed more than $15 billion in loans and loan guarantees since 2021 and plans to close an additional $22 billion in loan guarantees for 13 more projects by January 20, 2025.