PG&E lands $15B federal loan guarantee to expand clean energy

The Biden administration is rushing to get funding for major clean energy projects out of the door before the Trump administration takes over — and big utilities are its latest focus.

On Tuesday, the Energy Department’s Loan Programs Office announced a conditional commitment for a loan guarantee of up to $15 billion to California utility Pacific Gas & Electric. It’s the single biggest commitment yet from an office that has offered $55 billion in funding to 32 different low-carbon energy-related manufacturing, transportation, and infrastructure projects over the past four years.

If finalized, the backing from LPO will ​“support a portfolio of projects to expand hydropower generation and battery storage, upgrade transmission capacity through reconductoring and grid enhancing technologies, and enable virtual power plants throughout PG&E’s service area,” according to a Tuesday statement. LPO aims to close the loan before President-elect Trump takes office in January, per reporting from The Wall Street Journal.

PG&E was forced into bankruptcy in 2019 after incurring tens of billions of dollars in liabilities when a failed power line sparked a deadly wildfire. It emerged from bankruptcy in 2020 under a challenging debt load and has been struggling to modernize and harden its power grid since then.

PG&E also has the most customers with rooftop solar systems, solar-charged batteries, and electric vehicles of any U.S. utility. Those resources could stand in for more expensive grid upgrades if aggregated into virtual power plants. PG&E has been working over the past few years to integrate those customer-owned energy technologies into how it operates its grid and find ways to control them to lower grid costs.

The $15 billion commitment, first sought by PG&E last year, is the second under LPO’s Energy Infrastructure Reinvestment program. The EIR program has $250 billion in lending authority to finance the restructuring or renovation of power plants, power lines, and other energy infrastructure into new or modernized clean assets. The first proposed EIR loan was announced last week, in the form of a $2.5 billion conditional loan guarantee to Wisconsin Electric Power to build up to 1,650 megawatts of utility-scale renewable power generation and energy storage projects.

Recipients of EIR loans will have to make sure that ​“the financial benefits received from the DOE loan guarantee will be passed on to the customers of, or communities served by, that utility,” LPO noted in its Tuesday statement.

That could be good news for PG&E customers who’ve seen rates nearly double over the past decade.

“We’re excited to see PG&E harness this unique opportunity to make already low-cost clean energy even more affordable for ratepayers,” Julia Dowell, senior electric sector organizer with the Sierra Club, said in a Tuesday statement. ​“This innovative loan program will help ensure that Californians will see more stable rates, enjoy more good clean energy jobs, and live with fewer harmful emissions.”

These loans are the latest in a flurry of activity as the LPO races to issue and finalize deals before Trump’s second term begins. Trump has called for ending federal spending on the Biden administration’s climate and clean energy priorities, and Republican majorities in both chambers of Congress are seeking trillions of dollars of federal spending cuts to extend a tax-cut package passed under the first Trump administration.

On Monday, LPO finalized a $9.6 billion loan to BlueOval SK, a joint venture of Ford Motor Co. and South Korea–based battery maker SK On, aimed at scaling up domestic lithium-ion battery production for the U.S. electric vehicle market. The week before, it closed a $303.5 million loan guarantee for long-duration battery manufacturer EOS.

Several new conditional commitments have also been announced in recent weeks.

In addition to the new PG&E and Wisconsin Electric Power deals, LPO has so far this month proposed up to $7.5 billion to finance two electric-vehicle battery-manufacturing plants in Kokomo, Indiana, and announced a conditional loan guarantee of nearly $5 billion for the first phase of the Grain Belt Express interregional transmission line in the Midwest. Last month, the agency announced conditional commitments for a direct loan of $6.6 billion to Rivian to build an EV manufacturing plant in Georgia, and a loan guarantee of $290 million to Sunwealth to deploy up to a thousand solar PV systems and battery energy storage systems across 27 states.

Legal experts have noted that the Trump administration will face barriers to clawing back LPO loans that have been finalized. But little stands in the way of the administration ending or slowing the process of completing conditional agreements.

Earlier this month, Republicans in Congress sent a letter to Jigar Shah, the head of the LPO, demanding that the office cease finalizing agreements, saying the rush ​“exposes the federal government — and American taxpayers — to tremendous risk.”

But Shah told an audience at a DOE conference in Washington, D.C., last week that the office is moving at the pace set by the companies and utilities applying for loans. ​“Our process hasn’t changed. Their ability to move through it faster is in their control,” he said.

And while the LPO does exist for the purpose of making loans that private-sector lenders find too risky, the office has earned a profit for the federal government on the nearly $35 billion it has disbursed since it was created in 2005. As of September 2024, the LPO has realized $1.03 billion in actual and estimated losses, but it has also earned $5.4 billion on interest paid and collected $15 billion in principal repaid, meaning the office is in fact a moneymaker.