Energy Infrastructure Reinvestment Loans By Borrower Type

The Energy Infrastructure Reinvestment (EIR) category of the Title 17 Clean Energy Financing Program serves several types of LPO borrowers, but for one purpose––to ensure access to cleaner energy is reliable and affordable for all Americans. This page lists all announcements LPO has made under EIR by type of borrower and summarizes what sets them apart from a federal lender’s perspective.

Investment-Grade Utilities

Utilities today are expected to deliver multiple objectives with their capital investments––providing affordable, reliable service while serving fast-growing demand and, in many cases, meeting the decarbonization goals of the state in which they operate. Anticipating the tall order utilities would face, the Inflation Reduction Act tasked DOE with supporting utility applicants with low-cost capital through the EIR program while ensuring cost-savings attributable to the financing are fully passed along to customers. 

Utilities differ from other types of EIR borrowers in the following ways:

• Loans to utility borrowers pose minimal risk to the taxpayer. Unlike the limited recourse structure used to isolate risk in categorically innovative projects, loans under EIR are made directly to the operating company (i.e., the utility or its parent company). These loans are only made to investment-grade utilities and are secured by the assets of the company, not just those LPO finances. This means that in the unlikely event of default LPO could recover what it is owed, up to the loan amount, beyond the sale or acquisition of assets financed through the loan.
• The way utilities build infrastructure necessitates a portfolio-style lending approach. As described in the Flexible Loan Facility Tailored for Utilities blog post, utility infrastructure plans include investments across multiple individual project sites that are technologically diverse, geographically varied, and at different stages of the utility planning and execution process. Recognizing this dynamic, LPO allows utility borrowers to include multiple investments in a single loan application. LPO refers to them as “individual projects” or “IPs.” Every individual project meets the criteria of the EIR program. Some IPs have been planned in full detail before closing, while others may be added to the loan facility after closing, once LPO reviews and approves them.

• Investments are based on pre-established capital plans that are approved by utility regulators. LPO’s EIR loans are not like loans that provide a bridge to bankability for technologies that have trouble attracting private sector financing. Rather, these loans serve the third part of LPO’s mandate: making the clean energy transformation affordable and achievable for everyone. In many cases, the need for the individual projects in these utility loans were identified years prior as part of a long-term, resource-planning process reviewed and approved by regulators. In fact, some investments, like gas mainline replacement, are part of programs that have been running for a decade or more. If an investment hasn’t already been approved for cost recovery by regulators, LPO doesn’t disburse financing for it.

   

Independent Power Producers                

In many markets, independent power producers (IPPs) develop projects and compete with one another to sell power to utilities. To qualify for EIR, these projects must reinvest in existing energy infrastructure or enable operating energy infrastructure to operate more cleanly.

• LPO can and does take informed risk when lending to IPPs. In contrast to the corporate financing structure used for investment-grade utilities, the risks of default in transactions with IPPs are specific to the project company and most often do not have the financial backing of the parent company. The project still must offer a reasonable prospect of repayment. The Inflation Reduction Act created EIR with these tradeoffs in mind; it is why LPO re-estimates remaining loan authority under the program each year based on the risk profiles of potential projects, and the corresponding amount of credit subsidy they are expected to require.

While these projects do not typically deploy innovative technology, other kinds of risk may still be inherent to their completion. For example, a project like Holtec Palisades uses established nuclear technology but still faced challenges attracting private investors simply because a nuclear recommissioning had never been done in the United States. The resources to evaluate such novel risk is part of the value LPO financing offers.

• Projects may include multiple investments, but typically consist of fewer individual assets or sites. Projects could have multiple investments at multiple sites, such as the case with many projects in Puerto Rico, but the risks of each are assessed independently when LPO determines whether the project qualifies for EIR and offers a reasonable prospect of repayment.

• Though they are privately owned and operated, these investments are still subject to regulatory scrutiny. Because regulators require utilities purchase electricity at lowest cost, these projects still serve to minimize cost increases for customers. For projects in Puerto Rico, the Federal Oversight Management Board requires new developers with utility agreements to pursue LPO financing in order to ensure the lowest possible cost of borrowing is incurred by the utility and passed to consumers.

   

Other Types of Borrowers

EIR isn’t limited to supporting the grid. EIR can support any project that retools, repowers, or repurposes energy infrastructure for other uses, so long as it reduces or avoids emissions compared to the status quo for the product or process.

Further Reading

To learn more about EIR, visit the Energy Infrastructure Reinvestment Overview page. To learn more about what regulated utilities should consider when applying to EIR, see LPO’s June 2024 blog series.

This page was originally published on January 16, 2025 and is periodically updated.