How will the DOE finance $250 billion to clean our dirty energy system?

canary media down to the wire This column tackles the more complex challenge of decarbonizing the energy system.

of Inflation control law including $369 $1 billion was spent on tax credits, grants and incentives aimed at driving investment in new clean energy technologies over the next decade. This fact has been widely reported.But it is also the Department of Energy’s loan program office Not only building new clean energy sources, but also transforming old or dirty energy infrastructure into new or modernized clean assets, spurring revitalization of the communities where that old infrastructure now resides. Power.

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In implementing Energy Infrastructure Reinvestment Program — Also called a section 1706 Programs — Loan program offices can cover up to $.250 Low-interest loans in millions. This is a big opportunity: $250 $1 billion is enough to radically reshape the entire US energy landscape.

Projects aimed at decommissioning or reusing dirty infrastructure can be difficult to finance through traditional private sector debt models, and the tax dollars offered under most Inflation Reduction Act programs Deductions and incentives are aimed at building new projects rather than repurposing old projects.So section 1706 Programs can play an important role.

By retrofitting or reusing existing infrastructure, developers can avoid many of the siting, permitting, and grid interconnection challenges faced when building new clean energy projects. Coal-fired power plants, for example, have large power lines and transformers that can be used in other types of power plants, and existing transmission lines can be replaced with new power cables much easier than building new ones. You can upgrade. And finding new uses for polluting power plants and petrochemical facilities can bring jobs and tax revenues to communities that face hardship when they close.

section 1706 This program differs from other programs administered by the Loan Program Office primarily in the following ways:

  • Projects don’t have to be technically innovative.
  • Expires relatively quickly. 2026.
  • It is basically operated on a first-come, first-served basis.

But many questions swirl about this novel program. Most companies that might benefit from it don’t quite understand what types of projects they can finance and how the system works.

This column and an upcoming follow-up will cover the basics of sections. 1706 program and explore the opportunities it offers and the challenges that may limit its scope.

What types of projects can qualify?

The Inflation Control Act is a section 1706 The program can provide loans for projects naRebuild, reuse, reuse or replace closed energy infrastructure or enable infrastructure that is still in operation and naAvoid, reduce, utilize or sequester carbon emissions or air pollutants. This can involve a dizzying number of projects.

The entire energy infrastructure ecosystem will 1706 Reused Programs”, Jigar Shah, the head of DOEsLoan Program Office of, told Canary Media in a recent interview. He said his office has received a wide variety of proposals for programs since the passage of the Inflation Control Act – and the variety could be even wider.

section 1706 The program could finance energy developers to convert coal- and fossil-gas-fired power plants into battery-backed solar and wind farms, Shah said recently. pointed out in the paper. Conversation with BloombergA similar project was previously proposed to the site in Illinois, Louisiana, new mexico and other states.

Small modular nuclear power plants can be built on the site of former coal plants. Recently DOEs Research suggests — SMR Ready for commercial scale deploymentExisting nuclear power plants that are struggling to keep running or have already shut down could be upgraded to operate for decades or longer, he said, and recently shut down. I gave the example of a nuclear power plant. Palisades factory in Michigan.

Shah said existing plants could be used for purposes other than power generation, such as the former coal plant in Somerset, Massachusetts. converting Manufacture transmission cables for offshore wind farms and connect one offshore wind farm to the existing onshore grid connection of the plant.

And power plants aren’t the only potential targets. Many oil refineries and fossil gas pipeline operators have brought the idea of ​​reusing systems for production or transportation to the Loan Program Office. clean hydrogen Also carbon dioxide recovered From energy generation or industrial sites, Shah said september podcast.

and washington post editorialDan Reicher — Senior Fellow at Stanford University’s Dohr School of Sustainability, formerly DOEs — created your own list of projects where you can use the section 1706 From retrofitting fossil gas power plants run on hydrogen For the construction of underground transmission lines Along highways and railways.

section 1706 This program also aims to quickly phase out coal-fired power plants. naThis involves raising low-cost debt to close coal-fired power plants, closing them before the power companies that own them reach their revenue-generating life, and creating cleaner, cost-effective, renewable power plants. Including reinvesting in energy. Another possibility is naswath rewires of the US power grid” advanced cable It can carry more power than standard aluminum and steel cables. But even with low-cost federal funding, these two types of projects can struggle to cross the finish line (more on that in the next section). down to the wire digit).

In an interview with Canary Media, Shah gave some more examples of methods. 1706 Financing institutions can back projects that might otherwise struggle to get private sector backing. naHelp utilities broker deals with project regulators 80 Percentage of debt financing instead of 50 It will limit rate hikes for utility customers.”

Independent developers looking to redevelop coal-fired power plants may also face barriers to financing that meet the environmental, social and governance requirements of private lenders (ESG. namany ESG Funds are not going to fund a coal plant, even if it is only owned for a week before it closes and redevelopment work begins,” Shah said. naWe can help fill that gap. ”

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