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Biden Administration Infrastructure Plan Provides Opportunities for Investments in Electric Transmission and Other Energy ProjectsApril 30, 2021
Several recent announcements from the White House and US Executive Branch departments highlight opportunities for private investment in high-voltage electric transmission and other energy projects to help achieve the Biden Administration’s goals for infrastructure, clean energy, and jobs.
Department of Energy (DOE) Loan Guarantees
The White House and DOE announced on April 27, 2021, the availability of up to $5 billion in loan guarantees to support innovative electric transmission projects, as well as transmission projects owned by tribal nations or Alaska Native Corporations.1 These loan guarantees in the past have primarily supported the financing of new nuclear and renewable electric generation projects and advanced vehicle manufacturing, but in 2011 DOE issued a $343 million loan guarantee for financing the One Nevada Transmission Line to help bring renewable energy from Wyoming, Idaho, and Nevada to California and other major-load areas.
DOE now has announced the availability of $3 billion in loan guarantees for electric transmission projects using innovative technology—these may include but are not limited to high-voltage direct current (HVDC) systems, projects to transmit energy from offshore wind generation facilities, and transmission projects sited along rail and highway routes that follow US Department of Transportation (DOT) guidelines (as discussed below). These are offered under DOE’s Title 17 Innovative Energy Loan Guarantee Program.
In addition, DOE announced the availability of up to $2 billion in partial loan guarantees for projects that are wholly (or majority) owned by a federally recognized tribe or Alaska Native Corporation. These guarantees are offered under the Tribal Energy Loan Guarantee Program.2
Unlike many elements of the Biden Administration’s infrastructure and clean energy initiatives, these loan guarantees are available now, with no new legislation needed.
Western Power Administration (WAPA) Loans
The April 27, 2021, White House and DOE statements also announced the availability of up to $3.25 billion in loans from WAPA’s Transmission Infrastructure Program (TIP). These loans are available for utility-scale electric transmission or related projects with a terminus in one of the 15 Western states covered by WAPA and that will facilitate delivery of clean energy. These loans have a tenor of up to 10 years, with interest rates based on US Treasury rates plus, if applicable, a credit-based spread. Co-lending from commercial lenders is preferred for larger projects. The TIP program previously has provided financing for 6 projects, including the completed Electrical District No. 5-Palo Verde and Montana-Alberta Tie Ltd projects, as well as four projects in the planning or development stage. WAPA also offers project development assistance.3
As for the DOE loan guarantees, no new legislation is needed for loans under WAPA’s TIP.
DOT Guidance on Highway Rights-of-Way
The DOT joined in the April 27, 2021, announcements by issuing guidance from the Federal Highway Administration to its division field offices to provide clarification to state departments of transportation (State DOTs) about appropriate uses of highway rights-of-way. The guidance supports use of rights-of-way for renewable energy generation, electric transmission and distribution projects, broadband projects, vegetation management, inductive vehicle charging in travel lanes, and electric vehicle charging and other alternative fueling facilities (among others). The guidance supports efforts by state DOTs—including through participation in public-private partnerships—to leverage these right-of-way uses to enhance the productivity of the rights-of-way, reduce maintenance expenses, create revenues, and reduce energy costs.4
The guidance encourages State DOTs to accommodate these uses as utilities under existing DOT regulations5 or to approve them as alternative highway uses under the regulations.6 Provided that the State DOT actions to accommodate these uses meet the requirements of the applicable regulations, no further statutory or rulemaking action, and no new appropriations, should be required for implementation of this guidance.
Additional Tax Incentives
In addition to the DOE and DOT support to help achieve the administration’s clean energy and infrastructure initiatives, the White House announced that it is proposing an investment tax credit for the buildout of at least 20 gigawatts of high-voltage transmission power lines to incentivize private investment in these projects.7 Furthermore, the White House is proposing a 10-year extension of the existing investment tax credit and production tax credit for wind, solar, storage, and other renewable energy projects.8 The White House’s plan further contemplates “expanding” credits available for energy storage projects (presumably, a new tax credit for energy storage). In each case, the plan further contemplates making such tax credits “direct pay” (i.e., the tax credit could be payable in cash as opposed to being limited to offset taxable income). The mechanics of any “direct pay” tax credit have not been specified.
The above described changes to tax credits will require new legislation.
1 See: FACT SHEET: Biden Administration Advances Expansion & Modernization of the Electric Grid | The White House; DOE Announces Up to $8.25 Billion in Loans to Enhance Electrical Transmission Nationwide | Department of Energy.
2 For more detail on these programs, see: DOE-LPO_Program_Handout_Transmission-April2021.pdf (energy.gov)
3 For more information, see: TIP - Project Financing (wapa.gov)
5 23 CFR Part 645.
6 23 CFR Part 710.
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