Biden energy official Jigar Shah (energy.gov/lpo/person/jigar-shah)
The Department of Energy loan office quadrupled its available lending budget to over $240 billion this week, as Biden officials rush to approve a flurry of "green energy" loans before President-elect Donald Trump takes office.
The DOE Loan Programs Office (LPO) said on Tuesday that it’s increasing its lending power under the Energy Infrastructure Reinvestment program from $57 billion to $246 billion in the final months of Biden’s presidency.
The announcement comes amid speculation over Trump’s plans for the controversial office, which is under investigation by Republican lawmakers and the DOE inspector general over potential conflicts of interest relating to loan disbursements. Trump advisers proposed shutting down the LPO in 2016, but now some are suggesting that he use it to fund domestic fossil fuel production.
In a statement announcing the increase, LPO director Jigar Shah said his office plans to give out less risky loans and, therefore, will not need to set aside as much money for credit subsidies, which are mandated by Congress in case a borrower defaults. Because of this, he said the LPO can increase its lending budget to its full capacity.
"Less credit subsidy may be required for such projects, allowing LPO to potentially finance more projects," Shah said. "Accordingly, LPO is revising its reported loan guarantee authority under [the Energy Infrastructure Reinvestment program] to now reflect the statutory maximum loan guarantee authority."
The office has ramped up its loan disbursements since September, with some of that funding going to companies with prior financial connections to Shah.
Last month, the office finalized an $861 million loan to AES Marahu, a subsidiary of AES Corporation, to fund the construction of solar farms in Puerto Rico.
In 2017, Shah sold his solar company, sPower, to AES for $850 million.
"When we sold sPower to AES and AIMCo, we saw that these pension funds really want to own these assets," Shah told PV Magazine in 2017, in a profile that described him as the "Kanye West of Solar Finance."
Last week, the LPO also closed a $475 million loan to Li-Cycle, a lithium battery company that has been under congressional scrutiny due to its shaky financial history. The loan will help finance construction of a battery plant in Rochester, N.Y., a project the company previously had to pause due to lack of funds.
Last year, Li-Cycle was invited to present at an invitation-only event co-hosted by the LPO and Cleantech Leaders Roundtable, a trade association founded by Shah before he joined the Biden administration. Cleantech Leaders, which charges corporate executives up to $7,500 a year for membership, has acted as a gatekeeper for companies seeking loans from Shah’s office, the Washington Free Beacon has reported.
In September, the LPO also issued a $1.5 billion loan to Holtec, a nuclear power company that has faced legal issues in multiple states involving false tax information, bribery allegations, and misrepresenting its finances. Last January, the company was forced to pay $5 million to the state of New Jersey to settle claims that it had sought tax breaks under false pretenses.
The LPO is also in advanced talks to approve a $1.5 billion loan to Plug Power, a hydrogen fuel company. Prior to joining the Biden administration, Shah was a major investor in Plug Power, pouring $100 million into the company through an investment firm he founded called Generate Capital.
DOE inspector general Teri Donaldson told lawmakers last October that her office launched a review "looking at conflicts of interest particularly in the Loan Programs Office." Her announcement followed a Free Beacon report that a trade group founded by Shah had been acting as an intermediary for companies seeking loans from his office.
In July, Donaldson’s office appeared to expand the probe by hiring a Houston-based energy law firm for "legal support" in reviewing the DOE's loan decisions.
Sen. John Barrasso (R., Wyo.), the ranking Republican on the Senate Energy and Natural Resources Committee, has also pressed the DOE for more information on the loans and potential conflicts of interest involving Shah.
Source link