Biden admin offers utilities $22.4B to cut energy costs — and emissions

The Biden administration announced $22.4 billion in loans for eight U.S. utilities across 12 states on Thursday, in what may be the swan song for an Inflation Reduction Act program aimed at cutting carbon emissions and energy bills by helping build and retrofit power plants and bolster the grid.

The conditional loans, issued by the Department of Energy’s Loan Programs Office (LPO) via the Energy Infrastructure Reinvestment (EIR) program, are meant to help utilities reduce the cost of securing financing for projects stretching from the Pacific Northwest to the mid-Atlantic coast. Those projects include building or retrofitting hundreds of miles of new high-voltage transmission lines, repairing fossil gas pipelines, and deploying new renewable energy, battery storage, and customer-sited energy assets.

These loans offer lower interest rates than what utilities can typically secure for debt on commercial markets and could allow them ​“to stabilize energy costs and expand access to clean energy to nearly 15 million customers nationwide,” a DOE official said during a Wednesday briefing with reporters.

U.S. utilities are facing the challenge of building infrastructure to supply rapidly rising demand for energy at a time when the costs of prior grid investments are driving up rates for their customers. Utilities also need to keep expanding and strengthening power lines to maintain grid reliability and undo grid bottlenecks that are holding back new solar and wind power projects that could reduce utility bills.

It’s unclear how the Trump administration will handle these conditional loans, which must still meet certain terms and milestones to be finalized. Donald Trump campaigned on a promise to undo the Inflation Reduction Act’s clean energy incentives. Some Republicans in Congress have argued that the LPO, which was largely dormant during the first Trump administration, is putting taxpayer money at risk.

Over its nearly two decades, the office has in fact earned money for the federal government, despite a handful of high-profile failures of LPO-backed companies such as Solyndra and Fisker Automotive. As of September 2024, it has made $5.4 billion in interest and collected $15 billion in principal payments, counterbalancing its $1.03 billion in actual and estimated losses. LPO recipients also include standout clean technology companies like Tesla.

Under the Biden administration, LPO has issued just under $55 billion in loans and loan guarantees across 32 deals. Recipients include battery and EV manufacturing firms, nuclear power plants, ​“clean” hydrogen facilities, virtual power plants, and critical minerals projects. The office has hundreds of billions of dollars in remaining loan authority. Most political and energy industry observers doubt that the Trump administration will make much use of that remaining money or choose to assist companies focused on clean technology.

Nor is it clear how Trump’s DOE might prevent as-yet-unfinalized conditional loans from being processed under the agreements made by the Biden administration. ​“As a binding agreement, funds are obligated at the time of conditional commitment,” the DOE official said at Wednesday’s briefing. The majority of the projects backed by LPO loans are in Republican districts, according to a Politico analysis, which could also lead some GOP lawmakers to oppose any efforts to restrict them from receiving the loans they’ve been promised.

Lending to utilities is also less risky than LPO’s usual clientele, the DOE official noted. The utilities in question are all ranked as investment grade, the projects have been approved by state regulators as financially prudent, and the loans are backed by all of a utility’s assets, the official said.

For those same reasons, utilities aren’t the typical target for LPO, which was created with the primary purpose of helping bring new technologies to commercial viability. That mission was expanded with the EIR, which authorized LPO to lend up to $250 billion to finance the repurposing or rebuilding of power plants, power lines, and other energy infrastructure to lower consumer costs and reduce carbon emissions.

But the program has been slow to process and finalize deals. The first conditional loans were announced in December, including $2.5 billion for Wisconsin Electric Power to build renewables and energy storage projects and $15 billion for California utility Pacific Gas & Electric to expand hydropower generation and battery storage, upgrade transmission grids with new power lines and grid-enhancing technologies, and expand ​“virtual power plant” programs that equip customers with solar panels, batteries, and controllable thermostats, EV chargers, and other devices to relieve grid stress.

Thursday’s $22.4 billion in loans are set to bolster the financing of a host of similar projects.

In Michigan, more than $14 billion in loans will help utilities DTE Energy and Consumers Energy build clean power and batteries and upgrade fossil gas pipelines. Alliant Energy is set to receive more than $3 billion to build about 2 gigawatts of clean power and storage over the next decade in Iowa and Wisconsin.

And nearly $6 billion in loans are aimed at lowering the cost of large-scale transmission projects being built by Jersey Central Power & Light in New Jersey; PacifiCorp across Idaho, Oregon, and Utah; and American Electric Power subsidiary AEP Transmission in Indiana, Michigan, Ohio, Oklahoma, and West Virginia.