By Timothy Gardner and Laila Kearney
WASHINGTON/NEW YORK (Reuters) – The U.S. Department of Energy said on Tuesday it had offered a conditional loan of up to $15 billion to California-based electric utility PG&E (NYSE:) to support climate resilience projects and strengthen the power grid.
President Joe Biden’s administration is rushing to push out billions of dollars in financing from the Loan Programs Office, or LPO, which faces uncertainty under President-elect Donald Trump, who takes office on Jan. 20.
“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 CEO Patti Poppe said in a statement.
“The DOE loan program can help us accelerate the pace and impact of this work,” Poppe added of plans for PG&E, which provides power and to about 16 million people as the biggest electric utility in the most populous U.S. state.
The DOE and PG&E must satisfy technical, legal, financial and environmental conditions before the U.S. signs definitive financing documents.
If finalized by the LPO, the record loan will support multiple energy projects.
These include refurbishing PG&E’s hydroelectric infrastructure, which produces enough energy for 4 million homes, as well as expanding and upgrading substations and transmission networks.
The loan would also be used toward increasing the deployment of energy storage, with PG&E currently logging 4.2 gigawatts of battery storage under contract. Funds may also be used to add to the 400 megawatts of virtual power plants in PG&E’s system.
Partially funding the projects with the low-cost federal loans could save PG&E bill payers as much as $1 billion in net present value over the life of the financing, the utility said.
PG&E said earlier this month that it planned to raise $2.4 billion from investors via a stock offering.
U.S. utilities have been making stock offerings and filing rate case requests to fund their infrastructure upgrades as the country’s power grids face surging demand from industrial customers like data centers and the electrification of industries like transportation.
At the same time as power consumption grows, increasingly extreme weather that brings intense storms and wildfires threatens to destabilize the grid.
PG&E, which in 2020 emerged from a bankruptcy that was prompted by deadly California blazes linked to the utility’s equipment, continues to face the risk of wildfire liabilities.
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