The U.S. Department of Energy’s Loan Programs Office offered a conditional $15 billion loan to Pacific Gas & Electric (PG&E) to support the California-based utility’s energy infrastructure and clean energy initiatives, the agency announced Dec. 17.
The conditional loan, which is not yet finalized, would provide federal funds for PG&E’s operation of its hydroelectric fleet, expansion of battery storage, enhancements to the utility’s transmission systems and the enablement of virtual power plants in PG&E’s service area, the agency said in an announcement.
“Investments in a clean and resilient grid for northern and central California will have significant returns for our customers in safety, reliability and economic growth,” PG&E’s CEO Patti Poppe said in a statement. “The DOE loan program can help us accelerate the pace and impact of this work, which supports thousands of living wage jobs, at a lower cost to our customers.”
The utility said funding the projects “could save customers up to $1 billion net present value over the life of the financing, while paying for critical investments in safety and reliability to serve customers.”
The loan is the second LPO investment made under the office’s Energy Infrastructure Reinvestment program, funded by the Inflation Reduction Act. On Dec. 12, the LPO announced a conditional $2.5 billion loan under the program to Wisconsin Electric Power Co., a subsidiary of the Milwaukee-based WEC Energy Group.
More announcements could be on the way. The LPO has a pipeline of $139.2 billion in applications under the Energy Infrastructure Reinvestment program across 47 applications located in every region of the country.
Commenting on the announcement in a newsletter, investment bank Jefferies said the loan “is a positive development” but added that “the receipt of funds could hinge on the Trump Administration.”
“It remains to be seen what portion of the $15 billion, eligible to be drawn through 2031, the utility is ultimately able to access,” the investment bank said.
However, speaking at the U.S. Energy Association’s Advanced Energy Technology Showcase on Dec. 12, LPO Director Jigar Shah said conditional and final loans should be safe from any claw-back attempts by the incoming Trump administration. Existing LPO loan contracts were honored during President-elect Donald Trump’s previous four years in the White House, and conditional commitments are signed contracts.
The conditional loan to PG&E is subject to certain conditions that both the utility and the DOE must meet before the department can authorize the loan to be funded.
PG&E submitted its loan application to LPO in June 2023. The money would support PG&E’s 61 hydropower powerhouses that produce more than 3.8 GW. Additionally, the utility, which has 4.2 GW of battery storage under contract, would use part of the loan to fund further expansions of battery storage, PG&E said in a news release.
The utility’s transmission infrastructure would see enhancements to help reduce congestion and improve reliability. The loan would also allow PG&E to “integrate more renewable energy and demand management by deploying and interconnecting [virtual power plants],” according to the news release.
The $15 billion comes after the utility received blame for a series of California wildfires starting in 2015. The fires included the 2018 Camp Fire, which leveled the town of Paradise, killed 84 people and drove PG&E to file for bankruptcy reorganization in January 2019.
