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Companies are racing to finish the paperwork on their Department of Energy loans.
Of the over $13 billion in loans and loan guarantees that the Energy Department’s Loan Programs Office has made under Biden, nearly a third of that funding has been doled out in the month since the presidential election. And of the $41 billion in conditional commitments — agreements to provide a loan once the borrower satisfies certain preconditions — that proportion rises to nearly half. That includes some of the largest funding announcements in the office’s history: more than $7.5 billion to StarPlus Energy for battery manufacturing, $4.9 billion to Grain Belt Express for a transmission project, and nearly $6.6 billion to the electric vehicle company Rivian to support its new manufacturing facility in Georgia.
The acceleration represents a clear push by the outgoing Biden administration to get money out the door before President-elect Donald Trump, who has threatened to hollow out much of the Department of Energy, takes office. Still, there’s a good chance these recent conditional commitments won’t become final before the new administration takes office, as that process involves checking a series of nontrivial boxes that include performing due diligence, addressing or mitigating various project risks, and negotiating financing terms. And if the deals aren’t finalized before Trump takes office, they’re at risk of being paused or cancelled altogether, something the DOE considers unwise, to put it lightly.
“It would be irresponsible for any government to turn its back on private sector partners, states, and communities that are benefiting from lower energy costs and new economic opportunities spurred by LPO’s investments,” a spokesperson wrote to me in an email.
The once nearly dormant LPO has had a renaissance under the Biden administration and the office’s current director, Jigar Shah. The Inflation Reduction Act supercharged its lending authority to $400 billion, from just $40 billion when Biden took office. Then a week after the election, the office announced that it had recalibrated its risk estimates for the loan guarantees that it makes under the Energy Infrastructure Reinvestment program, which works to modernize and repurpose existing energy infrastructure to make it cleaner and more energy efficient. As the office explained, these projects “may reflect a relatively moderate risk profile in comparison to typical projects LPO finances with higher project risk.” When there’s less risk involved, LPO doesn’t have to set aside as much money to cover a possible default, which in this case has allowed the office to more than quadruple its funding for qualifying projects.
It’s not just that LPO staffers are working fast, though that’s part of it — it’s also that loan beneficiaries have picked up their pace in responding to the LPO. As Shah emphasized today at the LPO’s second annual Demonstrate Deploy Decarbonize conference, finalizing conditional commitments largely depends on companies getting their ducks in a row as quickly as possible. “I do think that right now borrowers are sufficiently motivated to move more quickly than they have probably a year ago,” Shah said. “It's up to the borrowers. Our process hasn’t changed. Their ability to move through it faster is in their control.”
Shah noted that though timelines may be accelerating, the office’s due diligence procedures have remained the same. Thus far, the project that has moved the fastest from a conditional commitment to a finalized loan was for a clean hydrogen and energy storage facility in Utah. That took 43 days, and there are 46 left in Biden’s presidency. Let’s see what the LPO can do.
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The department creates a seemingly impossible new permitting criteria for renewable energy.
The Interior Department released a new secretarial order Friday saying it may no longer issue any permits to a solar or wind project on federal lands unless the agency believes it will generate as much energy per acre as a coal, gas, or nuclear power plant.
Hypothetically, this could kill off any solar or wind project going through permitting that is sited on federal lands, because these facilities would technically be less energy dense than coal, gas, and nuclear plants. This is irrespective of the potential benefits solar and wind may have for the environment or reducing carbon emissions – none of which are mentioned in the order.
“Gargantuan, unreliable, intermittent energy projects hold America back from achieving U.S. Energy Dominance while weighing heavily on the American taxpayer and environment,” Interior Secretary Doug Burgum said in a statement included in a press release announcing the move. “By considering energy generation optimization, the Department will be able to better manage our federal lands, minimize environmental impact, and maximize energy development to further President Donald Trump’s energy goals.”
Here’s how this new regime, which I and many in the energy sector are now suddenly trying to wrap their heads around, is apparently going to work: solar and wind facilities will now be evaluated based on their “capacity density,” which is calculated based on the ratio of acres used for a project compared to its power generation capacity. If a project has a lower “capacity density” than what the department considers to be a “reasonable alternative,” then it may no longer be able to get a permit.
“On a technology-neutral basis,” the order states, “wind and solar projects use disproportionate Federal lands relative to their energy generation when compared to other energy sources, like nuclear, gas, and coal.” The document going on to give an example, claiming that data from the U.S. Energy Information Administration shows an advanced nuclear plant uses less federal acreage than an offshore wind farm and “thus, when there are reasonable alternatives that can generate the same amount of or more energy on far less Federal land, wind and solar projects may unnecessarily and unduly degrade Federal lands.” The order also includes a chart comparing the capacity density of wind and solar facilities to conventional nuclear, gas, and coal, as well as geothermal, and claims that these sources are superior as well. The document does not reference hydropower.
There’s also a whole host of other implications in this order. Crucially, does the Interior expect that by choking off the flow of permits, cities and companies will just pony up to build what the Trump administration considers “reasonable alternatives” instead? Is the federal government going to tell communities in Nevada, for example, that they must suddenly build gas plants in the desert instead of solar farms to meet their increasing energy needs?
In any case, much more is coming, as this order simply built off of a separate secretarial order earlier this week commanding staff to prepare a litany of recommendations on ending alleged “preferential treatment” for solar and wind facilities. In other words hold my beer – and hold onto yours, too.
The U.S. central bank left its interest rate target unchanged for the fifth time in a row.
Interest rate relief isn’t coming anytime soon for renewables. As widely expected, the Federal Reserve chose to keep rates unchanged on Wednesday, despite intense pressure from President Trump and two Republican Fed governors to lower rates.
The Fed maintained the benchmark short term rate at a range of 4.25% to 4.5%. During the press conference that followed the rate announcement, Fed Chair Jerome Powell gave no indication that the board will lower rates at the Fed’s next meeting in September, either. That’s contrary to Trump’s claims to reporters after the meeting. “We have made no decisions about September,” Powell said. “We don’t do that in advance. We’ll be taking that information into consideration and all the other information we get as we make our decision.”
High interest rates are particularly detrimental to renewable energy projects, as my colleague Matthew Zeitlin has noted many times over. The long-term benefit of renewables, of course, is that the wind and the sun are free (and effectively inexhaustible) fuel sources. The short-term tradeoff, however, is that renewables are capital-intensive, requiring high upfront costs to get up and running. The highest proportion of the lifetime cost of a renewable energy generator, such as a wind turbine or a solar farm, is in building it. Elevated interest rates make it that much more difficult to lure investors and borrow the significant capital necessary to build out renewable infrastructure.
“The lack of interest rate relief means that construction loans, which are floating-rate loans tied to market conditions, will command higher interest rates and raise the total project costs for energy developers,” Advait Arun, senior associate of energy finance at the Center for Public Enterprise and a Heatmap contributor, told me over email. “Developers rushing to build solar and wind energy between now and next summer to take advantage of tax credits will have to pay out these higher interest costs as they build.”
Though the Fed’s decision was unsurprising, the circumstances surrounding Wednesday’s meeting were out of the ordinary. For the first time since 1993, multiple Fed governors cast no votes on a rate decision. Christopher Waller and Michelle Bowman, both Republicans appointed by Trump, have voiced their preference for the Fed to lower rates by a quarter of a percentage point.
Additionally, Trump himself has been vocal about his views on chopping interest rates,— even going so far as to publicly threaten to fire Powell and appoint himself as head of the central bank, though he is legally unable to make good on his promise. Trump also recently criticized the Fed’s $2.5 billion building renovation project, singling out Powell for cost overruns. At the press conference on Wednesday, Powell emphasized the importance of the Fed’s independence from outside influence. “If you were not to have that, there’d be a great temptation of course to use interest rates to affect elections, for example,” he said.
While it may appease Trump, cutting interest rates won’t hold back the major energy price shocks that are very likely on their way. “Cutting rates sooner rather than later might make it easier for market actors to weather the coming shocks, but — crucially — they will not address the fiscal policy issues that created the shocks,” Arun noted. “However helpful rate cuts might be, they are not a solution to tariffs, tax credit uncertainty, and, soon, sharp spikes in electricity prices.”
The Department of Energy announced Wednesday that it was scrapping the loan guarantee.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project intended to connect wind power in Kansas with demand in Illinois that would eventually stretch all the way to Indiana.
“After a thorough review of the project’s financials, DOE found that the conditions necessary to issue the guarantee are unlikely to be met and it is not critical for the federal government to have a role in supporting this project. To ensure more responsible stewardship of taxpayer resources, DOE has terminated its conditional commitment,” the Department of Energy said in a statement Wednesday.
The $11 billion project had been in the works for more than a decade and had won bipartisan approval from state governments and regulators across the Midwest. The conditional loan guarantee announced in November 2024 would have secured up to $4.9 billion in financing to fund phase one of the project, which would run from Ford County in Kansas to Callaway County in Missouri.
In response to a request for comment, an Invenergy spokesperson said, “While we are disappointed about the LPO loan guarantee, a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance while delivering billions of dollars in energy cost savings, strengthening grid reliability and resiliency, and creating thousands of American jobs.”
The project had long been the object of ire from Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. Two weeks ago, Hawley posted on X that he’d had “a great conversation today with @realDonaldTrump and Energy Secretary Chris Wright. Wright said he will be putting a stop to the Grain Belt Express green scam. It’s costing taxpayers BILLIONS! Thank you, President Trump.” The New York Times later reported that Trump had made a call to Wright on the issue with Hawley in the Oval Office.
Hawley celebrated the Grain Belt Express decision, writing on X, “It’s done. Thank you, President Trump,” and exulting in a separate post that “Department of Energy officially TERMINATES taxpayer funding for Green New Deal ‘grain belt express.’”
The senator had claimed that the plan would hurt Missouri farmers due to the use of eminent domain to acquire land for the project. In 2023, Hawley wrote a letter to Invenergy chief executive Michael Polsky claiming that “your company’s Grain Belt Express construction campaign has hurt Missouri’s farmers,” and that “they have lost the use of arable land, seen their property values decline, and been forced to operate under a cloud of uncertainty.”
Controversy over eminent domain and the use of agricultural land by transmission lines illustrates the difficulties in building the long-distance energy infrastructure necessary to decarbonize the grid.
Opposition to the project had been gestating for years but picked up steam in recent weeks. Earlier this month, Andrew Bailey, the Republican attorney general of Missouri, announced an investigation into the project. “This is a HUGE win for Missouri landowners and taxpayers who should not have to fund these green energy scams,” he wrote on X Wednesday following the DOE’s announcement.
As the project appeared to be more imminently imperiled, Invenergy scrambled to preserve its future, including making plans to connect gas to the transmission line. In a letter to Secretary of Energy Chris Wright written earlier this month, the Invenergy vice president overseeing the project wrote that the Grain Belt Express “has been the target of egregious politically motivated lawfare,” echoing language President Trump has used to describe his own travails.
If the author’s intent was to generate sympathy from the administration, it didn’t work. The end of the loan guarantee could be a death blow to the project, and will at the very least force Invenergy into a mad dash to try to match the lost capital.
Editor’s note: This story has been updated to include a comment from Invenergy.