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The Energy Department said Thursday it plans to offer $22.9 billion in guarantees to help eight electric utilities across the country upgrade their power grids, add renewable energy — and transmit which can be savings for customers.
The deal is one of the largest commitments by the department’s Office of Loan Programs, which under President Biden has already committed billions of dollars to battery companies. and low carbon energy projects.
As part of the 2022 Inflation Reduction Act, Democrats in Congress gave the agency $250 billion in borrowing authority to restore or replace existing energy infrastructure to reduce air pollution and reduce emissions. gases that warm the planet. So far, the board has used that authority to support efforts to restart Michigan’s shuttered nuclear reactor and help California’s largest utility improve its electric grid.
There is still a long way to go with the loan guarantee, which still has to be done. They are designed to help utilities that serve more than 14.7 million people across 12 states upgrade aging transmission lines or build new ones. Doing so, the board said, would help power companies access more wind, solar and hydroelectric power and improve grid reliability.
In Michigan, DTE Electric and DTE Gas will receive nearly $9 billion in loan guarantees to install thousands of megawatts of solar, wind and battery power and replace existing gas pipelines to reduce methane emissions, a greenhouse gas -extreme danger.
In the Pacific Northwest, PacifiCorp will receive $3.52 billion in loan guarantees to help build 700 miles of new transmission lines in Idaho, Oregon and Utah, with the goal of using more renewable energy and reducing emissions.
In Iowa and Wisconsin, Alliant Energy and its subsidiaries will receive $3 billion in loan guarantees to add more than 2,000 megawatts of wind and battery power to the grid. The company plans to close a large coal-fired power plant by 2030.
Other recipients are Consumers Energy of Michigan; Jersey Central Power & Light in New Jersey; and AEP, which serves Indiana, Michigan, Ohio, Oklahoma and West Virginia.
Although all of these facilities can borrow money in the private market, it is easier to borrow money with federal backing. Under the program, the facility is required to pass on all savings from lower financing to customers.
In August, Jigar Shah, head of the Office of Credit Programs, said that a growing number of companies are interested in the program as a way to help keep up with the increase in electricity rates, which have increased faster than the cost of living since 2021.
“We see investors looking at low-cost financing as an opportunity to invest in new technologies,” said Mr. Shah. “They are making investments in infrastructure improvements and expansions at a reasonable cost to ratepayers.”
The move comes as the U.S. power grid is facing major disruptions. Demand for electricity has risen sharply, at a two-decade high, as new factories open and tech companies build massive data centers for artificial intelligence. Many companies are looking to meet that demand, at least in part, by delaying the retirement of coal plants or by burning more natural gas, which could raise greenhouse gas emissions. Some consumer watchdogs also fear that electricity bills may rise.
Mr Shah urged utilities to find more affordable solutions, for example by helping customers use less electricity during peak hours or by using advanced drivers to push more renewable energy. through existing transmission lines.
“We need to implement a new playbook, moving away from traditional, very expensive solutions to the most efficient solutions for safe and clean energy,” Mr. Shah said in August.
As evidence that credit programs can help ratepayers, Energy Department officials point to California. There, Pacific Gas & Electric, which has been struggling with rising electricity prices and fire-related costs in recent years, said it expects to see lower consumer bills next year. One reason, PG&E said, is that it hopes to receive $15 billion in loan guarantees from the credit bureau to help invest in renewable energy generation. water, batteries and power lines.
Thursday’s move comes at a time when the future of the credit bureau is uncertain. In recent months, officials have been scrambling to raise money before President-elect Donald J. Trump returns to the White House.
Although Mr. Trump has not outlined a plan for the Energy Department, some Republicans in Congress are already considering the appropriations bureau, as they look for ways to cut federal spending. In December, three House Republicans sent a letter to Mr. Shah demanding that he “end his campaign to quickly distribute federal funding before the next administration takes office.”
The loan guarantees announced on Thursday are unlikely to be completed before Mr Trump takes office next week. But officials at the Department of Energy said that the commitment to the conditions is legally binding, as long as the borrower can meet certain conditions, and cannot be canceled easily.
The credit bureau will still have unused lending authority under the Trump administration: As of December, 212 applications totaling $324 billion were still being processed.
