APS will build renewable energy sources including solar PV, battery storage, and transmission in Arizona.
January 7, 2025
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Jigar Shah
Former Director, Loan Programs Office
Jigar Shah served as Director of the Loan Programs Office (LPO) at the U.S. Department of Energy (DOE) from March 2021 to January 2025. He led and directed LPO’s loan authority to support deployment of innovative clean energy, advanced transportation, and Tribal energy projects in the United States. Prior, Shah was co-founder and President at Generate Capital, where he focused on helping entrepreneurs accelerate decarbonization solutions through the use of low-cost infrastructure-as-a service financing. Prior to Generate Capital, Shah founded SunEdison, a company that pioneered “pay as you save” solar financing. After SunEdison, Shah served as the founding CEO of the Carbon War Room, a global non-profit founded by Sir Richard Branson and Virgin Unite to help entrepreneurs address climate change.
Shah was also featured in TIME's list of the "100 Most Influential People" in 2024.
Originally from Illinois, Shah holds a B.S. from the University of Illinois-UC and an MBA from the University of Maryland College Park.
The U.S. Department of Energy’s Loan Programs Office (LPO) announced today a conditional commitment for a loan guarantee of up to $1.81 billion to Arizona Public Service Company (APS), the largest electric utility in Arizona. The loan guarantee would help finance APS’ investments into several new or upgraded transmission projects, renewable power generation, and grid-integrated energy storage systems. APS aims to invest in a broad range of new infrastructure technologies to meet expected demand growth while lowering its emissions and saving their 1.4 million customers money on their electricity bills. APS submitted its application to LPO in November 2023.
As part of President Biden’s Investing in America agenda to create good-paying, high-quality job opportunities in communities across the country, this project would support approximately 960 construction jobs and 20 operations jobs.
The first investment to be supported by the proposed loan is the construction of the Agave Battery Energy Storage System (BESS) Phase 1 project, a 4-hour duration 150-MW (600-MWh) BESS located next to an existing solar photovoltaic (PV) site. It will provide several primary functions and benefits including ensuring stable and reliable grid operations when integrating renewable energy, system peak shaving, and storing excess renewable generation.
Future projects funded by the LPO loan may include, but are not limited to, additional BESS facilities, new renewable energy generation projects (including solar PV or wind-energy generation), and transmission projects. Additional transmission infrastructure can significantly improve grid operational flexibility, which can reduce overall grid costs and enhance system reliability (particularly during extreme weather events), according to the Grid Deployment Office’s National Transmission Needs Study.
All electric utilities receiving an Energy Infrastructure Reinvestment (EIR) loan must provide assurance to DOE that financial benefits received from the financing will be passed on to the customers of that utility. APS’ proposed loan is expected to reduce upward pressure on electricity rates for APS ratepayers due to the reduced cost of debt associated with LPO financing, and APS customers are expected to benefit from approximately $250 million in total savings over the life of the loan guarantee.
If finalized, this transaction would support new, clean-energy infrastructure investments, enhance the reliability of energy supply, reduce long-term operational costs, and lower electricity rates. Consistent with APS’ 2023 Integrated Resource Plan and U.S. EPA regulations, the renewable energy generation financed by the loan guarantee would support replacing generation from the planned retirement of coal-fired generation assets.
This financing opportunity supports APS’ publicly stated goals of delivering affordable 100% clean and carbon-free electricity by 2050. This commitment is supported by interim goals of achieving a resource mix that is 65% clean energy, with 45% of its generation portfolio coming from renewable energy by 2030, and a plan to exit from coal-fired generation in 2031.
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. LPO borrowers are required to develop and ultimately implement a comprehensive Community Benefits Plan (CBP). CBPs ensure borrowers meaningfully engage with community and labor groups to create good-paying jobs and improve the well-being of the local community and workers.
With its planned exit from coal-fired generation resources, APS has provided community-transition support, including direct financial support of $2.25 million to the Hopi Tribe, $10 million to the Navajo Nation, and $1.6 million to Navajo County Communities. APS has also committed to working with the Hopi Tribe and the Navajo Nation to contribute up to $2.5 million toward electrification projects on these Tribal lands.
In addition, APS has committed $2.5 million per year to the Navajo Nation for transmission line development. Payments start when APS exits the Four Corners plant (or 2032, whichever is earlier) and end in 2038, for a total of $17.5 million over 7 years. APS will provide job redeployment offers within the APS organization to all APS employees at coal-fired power plants in advance of APS’s exit from coal generation.
APS has also developed a partnership with Arizona State University to provide seed funding for the Indigenous Leadership Academy at the University. APS has partnered as well with the Salt River Project and Tucson Electric Power Company on the Utility Grant Funding Program, providing financial assistance to communities affected by the exit from and decommissioning of coal-fired generation facilities.
Today’s announcement is the latest EIR project under LPO’s flexible loan facility and disbursement approach tailored for regulated, investment-grade utilities. President Biden’s Inflation Reduction Act created the EIR category under the of 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.
While this conditional commitment indicates DOE’s intent to provide a loan guarantee to finance the project, DOE and the company must satisfy certain technical, legal, environmental, and financial conditions before the Department enters into definitive financing documents and funds the loan.