The U.S. Department of Energy, newly equipped with $250 billion to lend to projects that repurpose or convert existing energy infrastructure, is now figuring out how to advertise the program to the communities that need it the most.

"I would say the biggest challenge that we have, honestly, is that for many of these communities, they haven't thought about how to build a project," Jigar Shah, director of the DOE Loan Programs Office, told S&P Global Commodity Insights. "That's the hard part, is starting that process."

The Inflation Reduction Act, or IRA, signed by U.S. President Joe Biden in August, authorized $369 billion in climate and energy spending, with its bundle of tax credits receiving top billing. But the law also authorized nearly as much in new DOE loan authority — about $350 billion — as it did in overall spending.

The DOE Loan Programs Office, created by the Energy Policy Act of 2005, has provided about $36 billion in debt financing to commercial energy and advanced vehicle manufacturing projects. However, while previous loans prioritized innovation, Congress's latest authorization focuses on reuse.

The IRA appropriated $11.7 billion to the loans office, for credit subsidies and administrative costs, and added about $100 billion in lending authority to DOE's existing loan programs. But the act also created a new Energy Infrastructure Reinvestment program, authorizing DOE to lend up to $250 billion to projects making use of existing energy assets.

"Some of the projects that would be in that definition are really straightforward — things like converting a coal plant to a nuclear plant, or a renewable energy and battery storage facility, or a natural gas facility," said Shah.

Other projects may invest in midstream infrastructure, repurposing natural gas pipelines for new energy ventures like hydrogen fuel or carbon capture and storage. These technologies, poised to benefit from IRA, require pipelines to transport ammonia and carbon dioxide, respectively.

"We've had a couple of folks reach out to us and say, 'We want to convert that pipeline into a CO2 pipeline or an ammonia pipeline,'" said Shah, who joined the Biden administration from Generate Capital PBC, which invests in energy infrastructure.

As the U.S. moves away from coal-powered electricity, retired coal plant sites still retain value from their grid connection and former workforce. Vistra Corp., supported by Illinois's "Coal to Solar" initiative, committed in 2021 to building six solar-and-storage and three standalone energy storage facilities in that state.

Fortescue Future Industries Pty. Ltd. is also weighing reinvestment in a former coal mine in Centralia, Wash., where the Australian developer plans to build a green hydrogen production facility.

The broadly defined Energy Infrastructure Reinvestment program does not specify whether the conversion of old mine sites would be eligible for a loan. In addition to projects to turn gasoline stations into electric vehicle charging facilities, such "edge cases" will be taken into consideration over the next several months as the DOE prepares its guidance for the program, Shah said. 

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