Banking the Energy Transition with the DOE's Loan Programs Office

October 15, 2023

Larger than ten blue whales, grayer than the eye of a hurricane, more daunting than that ten-page paper due in the morning. There are plenty of hyperboles available to describe the U.S. Department of Energy (DOE) Headquarters. I thought through a plethora of them as I walked into the office for my first in-person day of interning for the Loan Programs Office (LPO) at the DOE. The pasty white, aged walls were intermittently broken up by colorful posters (like this one).

Despite the inimical nature of the building, the people inside wore a much friendlier appearance. This was my first time meeting my colleagues at LPO (physically) since I began my semester-long internship with LPO’s legal team. My biggest takeaway is that I was struck by their knowledge and passion for the work they are doing at LPO. The pervading sentiment is that there is no time like the present to deploy capital toward financing the energy transition.


LPO was established by the Energy Policy Act of 2005. It sits within DOE and acts to finance energy infrastructure and advanced transportation technologies that may not have access to commercial debt markets. Today, LPO provides loans and loan guarantees and is accepting applications under its four loan programs: Title 17 Clean Energy Financing (Title XVII), Advanced Technology Vehicle Manufacturing (ATVM), Tribal Energy Financing (TGELP), and Carbon Dioxide Transportation Infrastructure Financing (CIFIA). These four programs all have different loans and loan guarantees, which are the tools in LPO’s arsenal to advance the energy transition. But what guides the LPO?

LPO’s mission is to “Build a Bridge to Bankability.” This bridge fills the gap in commercial deployment for innovative energy technologies by financing technologies that usually cannot receive financing from traditional lenders. Since the more nascent technologies have yet to reach full commercialization, market financiers often view them as too risky. This is where LPO steps in, enabling commercial deployments of technologies to cross the bridge. Some different examples of potential qualifying projects under the Title 17 program are: HVDC transmission, virtual power plants, advanced geothermal, small modular nuclear, low-carbon cement, and the list goes on. The requirements for projects guarantee that this money is allocated towards innovative energy-related projects that will contribute to decarbonization.

The organization’s history has been varied, and somewhat timid, with certain administrations failing to capitalize on LPO’s potential. However, LPO has made significant contributions to the modern economy, the most notable being a $465 million loan to Tesla in 2010 that helped Tesla build its first cars and manufacturing facility. There have also been failures within LPO, most notably Solyndra. Solyndra’s collapse soured views of LPO’s efforts as wasteful government spending. But what those critics failed to note is that LPO has historically achieved an aggregate loss rate of around 3%, which is very close to most commercial banks. Figures below evidence the enormous benefits reaped by the American public as a result of LPO investments.

For instance, as of June 2023, LPO had issued over $38 billion of loans and loan guarantees. The principal repaid currently sits at $14.17 billion, with interest paid of $4.74 billion and actual and estimated losses at $1.03 billion. This means that the interest paid back to the U.S. Treasury is four times higher than any losses experienced by LPO. Current losses on its portfolio sit at 3.1% despite LPO engaging in what commercial banks view as “risky” lending. This financial benefit is augmented by the creation of more than 46,000 permanent jobs in the U.S. economy and over 71 million metric tons of CO2 displaced. LPO’s stat line speaks for itself. But thinking ambitiously, how can the team aim to improve? After recent legislation, namely the Energy Act of 2020, the Infrastructure Investment and Jobs Act, and the Inflation Reduction Act, LPO is flush with money to loan and companies that need it.

This legislation has provided substantial funding for LPO, breathing new life into a dormant giant. Supporting the Biden Administration’s push to reach a net-zero carbon economy by 2050, in total, the LPO now has over $400 billion in funding (more than ten times previously authorized). Moreover, the office is led by Jigar Shah, a prominent clean energy entrepreneur and voice for the power of private-public sector partnership. With the opportunity to provide loans and loan guarantees to emission-reducing clean energy technologies that typically cannot access commercial debt markets, LPO stands to usher in a new era of commercialization of energy technologies.

With a statutorily imposed deadline of 2026, the LPO team is rushing to ensure this capital can have maximum impact. LPO is preparing for a “tsunami” of deals to reach conditional commitment or close. As of September 2023, there are 177 active applications with $157.1 billion in loans requested. The LPO is averaging 2.1 new applications per week, a historic pace. After having issued zero loans or loan guarantees from 2016 to 2021, LPO is ramping up dramatically. Many of these loans will pay dividends in the future, not only for the U.S. Treasury, but also for the American public. Tesla can credit its survival, and the maturation of the U.S. EV market, from its ability to receive “risky” financing from an LPO loan. What technologies or companies will we be looking back on in ten years and thanking LPO for? My time as an intern on LPO’s legal team has given me a deep sense of optimism that we can achieve our decarbonization goals. My experience on the team may end in December, but their work will continue. A net-zero carbon economy awaits and LPO is leading the charge.