PG&E's $15 Billion Loan Guarantee: A Boon for Infrastructure and Customers

The U.S. Department of Energy's Loan Programs Office (LPO) has announced a significant milestone in its Investing in America agenda, closing a $15 billion loan guarantee for Pacific Gas & Electric Company (PG&E). This Energy Infrastructure Reinvestment (EIR) project, known as Project Polaris, is designed to support a portfolio of projects aimed at expanding hydropower generation and battery storage, upgrading transmission capacity through reconductoring and grid enhancing technologies, and enabling virtual power plants (VPPs) throughout PG&E's service area. These infrastructure investments will help PG&E meet forecasted load growth, increase electric reliability, and reduce costs for its consumers across California.

PG&E submitted its loan application to LPO in June 2023, and the loan guarantee marks the first EIR project to reach financial close under LPO's flexible loan facility and disbursement approach tailored for regulated, investment-grade utilities. Electric utility borrowers for EIR projects must demonstrate that the financial benefits received from the DOE loan guarantee will be passed on to the customers of, or communities served by, that utility. LPO's financing of the individual projects within the loan facility comes at a lower interest rate than traditional capital market financing, helping to reduce upward pressure on electricity costs for PG&E's 16 million customers.

Through its due diligence approach to regulated utility lending, LPO confirms that one or more anchor projects meet program eligibility and environmental review requirements for inclusion in the guaranteed loan facility, verifying PG&E's ability to identify and execute eligible projects. PG&E will partner with the International Brotherhood of Electrical Workers (IBEW) Local 1245 to train and employ members of underserved groups interested in operational roles through its existing PowerPathway program. Currently, approximately two-thirds of PG&E employees are covered by collective bargaining agreements with unions. At full deployment, PG&E's investments are expected to support thousands of on-going construction and operations jobs.

LPO borrowers must develop and implement a comprehensive Community Benefits Plan (CBP), which ensures borrowers meaningfully engage with community and labor stakeholders to create good-paying, high-quality jobs and improve the well-being of the local community and workers. In its CBP, PG&E plans to expand its outreach programs to boost engagement and deliver community benefits in partnership with key stakeholders, including local governments, Native American Tribes, community-based organizations, and low-and-middle income customers. This investment supports the Biden-Harris Administration's Justice40 Initiative, which sets a goal that 40% of the overall benefits of certain federal investment in climate, clean energy, and other areas flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. PG&E has committed to locate many projects in disadvantaged communities, as identified by the Climate and Economic Justice Screening Tool.

The Inflation Reduction Act created the EIR category under the Title 17 Clean Energy Financing Program. Also known as the Title 17 Clean Energy Financing Program (Section 1706), EIR supports projects that retool, repower, repurpose, or replace energy infrastructure that has ceased operations or that enable operating energy infrastructure to avoid, reduce, utilize, or sequester air pollutants or greenhouse gas emissions.

Across all LPO's programs, DOE has attracted 182 applications for projects across the country totaling over $278.9 billion in requested loans and loan guarantees, as of December 2024. For more information about PG&E's Project Polaris, read the conditional commitment blog post and visit LPO's portfolio projects page.



PG&E's Project Polaris is expected to have a positive impact on the utility's financial stability and customer rates in the long term. The loan guarantee comes with a lower interest rate than traditional capital market financing, which will help reduce upward pressure on electricity costs for PG&E's 16 million customers. PG&E estimates that the lower cost of debt will save customers as much as $1 billion over the years. The utility has committed to passing along these savings to its customers as it works to modernize the grid and stabilize customer bills.

PG&E's investments are expected to support thousands of on-going construction and operations jobs, which will contribute to the local economy and create good-paying, high-quality jobs. The utility will partner with the International Brotherhood of Electrical Workers (IBEW) Local 1245 to train and employ members of underserved groups interested in operational roles through its existing PowerPathway program.

PG&E's Community Benefits Plan (CBP) will ensure that the utility meaningfully engages with community and labor stakeholders to create good-paying, high-quality jobs and improve the well-being of the local community and workers. The utility plans to expand its outreach programs to boost engagement and deliver community benefits in partnership with key stakeholders, including local governments, Native American Tribes, community-based organizations, and low-and-middle income customers. This investment supports the Biden-Harris Administration's Justice40 Initiative, which sets a goal that 40% of the overall benefits of certain federal investment in climate, clean energy, and other areas flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. PG&E has committed to locate many projects in disadvantaged communities, as identified by the Climate and Economic Justice Screening Tool.

In summary, PG&E's Project Polaris is expected to enhance the utility's financial stability by reducing costs and creating jobs, while also improving electric reliability and reducing customer rates in the long term. The project's focus on community engagement and benefits will also contribute to the well-being of the local community and workers.