The US Department of Energy has pledged $22.9 billion in loan guarantees to support the modernization of eight electric utilities’ power grids, aiming to reduce emissions and keep rates low. The loans will help these utilities add large amounts of renewable energy, upgrade aging transmission lines, and improve grid reliability.
This move is part of President Biden’s efforts to encourage the power sector to cut emissions while minimizing rate increases. The loan guarantees are one of the largest commitments made by the department’s Loan Programs Office, which has already backed tens of billions of dollars for low-carbon energy projects.
The new loans will support eight utilities serving over 14.7 million people across 12 states, including Michigan, California, and the Pacific Northwest. Recipients include DTE Electric and DTE Gas in Michigan, PacifiCorp in Oregon, Idaho, and Utah, and Alliant Energy in Iowa and Wisconsin.
Under the program, utilities can borrow from private markets but prefer federal backing due to lower costs. They are required to pass on any savings from lower-cost financing to customers. The loans will help reduce emissions and improve grid reliability, while also providing more renewable energy sources.
This move comes as the US electric grids face increasing demand for electricity, driven by new factories and data centers. Some consumer watchdogs worry that electric bills could rise due to increased strain on the grid. However, Energy Department officials point to California’s example, where Pacific Gas & Electric has seen its customer bills stabilize thanks to expected loan guarantees from the department.
The loan program’s future is uncertain, with President-elect Donald Trump returning to office next week. Despite this, the conditional commitments are legally binding, and the department will continue to review applications worth $324 billion under the Trump administration.
Source: https://www.nytimes.com/2025/01/16/climate/us-utilities-loan-energy.html