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US DOE Offers US$15 Billion Loan to California Utility PG&E Ahead of Second Trump Term by April Bonner Energy Storage News, December 18, 2024

California's record 10 gigawatts of grid batteries are finally pushing solar generation
into post-sunset hours at a meaningful scale, new data shows.

The US Department of Energy's (DOE) Loan Programs Office (LPO) has announced a conditional commitment for a loan of up to US$15 billion to California utility Pacific Gas & Electric Company (PG&E).

The loan gaurantee will be used to support PG&E's Project Polaris, a portfolio of projects to expand hydropower generation and battery storage, upgrade transmission capacity with reconductoring and grid enhancing technologies, and enable virtual power plants (VPP) within PG&E's service area.

The DOE and its LPO are continuing a trend of soaring grant and loan activity after Donald Trump's second term election, as reported by Energy-storage.news. According to a US political analyst who spoke with Energy-Storage.news anonymously, Trump is giving the office good reason to worry.

"Trump has made it clear he will clamp down on DOE and LPO activity, so they are clearly getting everything out the door while they can."

While today's announcement is only a conditional commitment, dependent on the DOE and PG&E satisfying certain technical, legal, environmental and financial conditions, even money promised by finalised grants or loans could be in danger.

"Trump thinks he can use impoundment to not disburse funds which have been ordered to be disbursed by Congress. That has not held up in court in the past, we'll see this time. I'm not convinced he'll be able to do that," the source told Energy-Storage.news.

Trump's plans for impoundment may be struck down under The Impoundment Control Act of 1974, which prevents the president from substituting their own funding decisions for those of Congress.

This is the second project to meet the requirements of an Energy Infrastructure Reinvestment (EIR) project under LPO's Title 17 Clean Energy Financing Program. The first EIR project, recently announced, was US$2.5 billion for Wisconsin Electric Power Company (WEPCO).

EIR Projects must demonstrate that the financial benefits received from the loan guarantee will be passed on to the communities served by the utility. The loan also comes at a lower interest rate to help reduce upward pressure on electricity costs for PG&E's customers.

EIR projects must also involve investments relating to existing energy infrastructure. As such, projects can be at various stages of execution, technologically diverse, and geographically varied, providing PG&E more flexibility for utilising the funds.

Borrowers of the LPO are required to implement a community benefits plan (CBP), to ensure borrowers engage with community and labour groups to create good-paying jobs and improve the wellbeing of the community.

PG&E says it plans to expand outreach programs and deliver community benefits in partnership with local governments, Native American Tribes, community-based organisations, and low-and-middle income customers.

The company also claims to locate many projects in disadvantaged communities identified by the Climate and Economic Justice Screening Tool, a tool created from President Biden's Executive Order 14008 used to help identify disadvantaged communities that will benefit from programs included in the Justice40 Initiative.

Part of the Justice40 initiative, Project Maharu, 200MW of solar PV and 285MW/1,140MWh of BESS projects in Puerto Rico received a loan of US$861.3 million from the DOE in July.

PG&E also plans to partner with labour union the International Brotherhood of Electrical Workers (IBEW) to train and employ members of underserved groups through the company's PowerPathway program.

Approximately two-thirds of PG&E employees are covered by collective bargaining agreements with labour unions. The DOE and LPO claim that at full deployment, PG&E's projects are expected to support thousands of on-going construction and operation jobs.

PG&E has a 2050 goal of what the company describes as a ‘climate and nature-positive energy system.' If approved, this loan would also help with the company's 2030 goals of delivering 70% Renewable Portfolio Standard (RPS) clean energy and having 50% of its workforce education and training classes on electrification.

In June, PG&E agreed to a long-term resource adequacy (RA) agreement with developer and IPP Leeward Renewable Energy for a large-scale PV co-located 112.5MW/450MWh BESS project in Arizona.

California, where PG&E is primarily active, is the largest energy storage market in the US with 10.5GW of installed battery capacity as of 1 November, 2024, according to transmission system operator (TSO) CAISO.

Earlier this month, the DOE and LPO announced a conditional commitment to thermal energy storage startup Nostromo Energy subsidiary IceBrick Energy for a loan of up to US$305.54 million for the company's IceBrick virtual power plant. This project met the requirements for the Innovative Energy category of LPO's Title 17 Clean Energy Financing Program and followed the LPO's commitment to zinc hybrid cathode battery manufacturer Eos Energy Enterprises for a similar amount.

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