The hotel ballroom was packed before breakfast as Jigar Shah took the stage at the oil and gas industry’s annual conference in Houston this spring. The host joked that he was sure a huge crowd would come out for Mr Shah even at 7.30am.
It is rare for a mid-level federal public servant to attract so much attention. But the obscure little office that Mr Shah oversees, the Ministry of Energy Loan Programs Office, has become a driving force behind the Biden administration’s efforts to aggressively advance clean energy. And Mr. Shah is no ordinary bureaucrat.
As part of last year’s Inflation Reduction Act, Congress expanded the office power to contract loans to companies trying to bring emerging energy technologies to market, increasing it tenfold from $40 billion to over $400 billion. This potentially makes it one of the largest economic development loan programs in US history.
Mr. Shah, 48, is the guardian of this source of taxpayers’ money. And the clock is ticking; he has about a year and a half to get the money out before the 2024 election means White House changes that would scale back the program.
He brings an entrepreneurial swagger and risk tolerance to the job. Before coming to government in 2021, Mr Shah was something of a celebrity in energy circles. A solar industry pioneer who made millions, he co-hosted a popular energy podcast for nearly a decade where he downright riffed on everything from driverless cars to Canadian energy policies. (“Countries shouldn’t have stupid politics,” he told listeners in 2017, dubbing it “the Jigar Shah rule.”) He tirelessly promoted the idea that the shift to clean energy is not to be feared, but will amount to the “greatest wealth creation opportunity of our lifetime”. He is regularly present on social networks, where he jokes with the public.
Mr. Shah’s business acumen carries weight with energy companies. “Jigar brings credibility to the street,” said Atul Arya, chief energy strategist for S&P Global, a research firm.
The job comes with huge expectations – and high stakes. Created in 2005 to help finance clean energy projects that commercial banks found too baffling, the loan program funded some of the nation’s first major wind and solar farms and spawned Tesla, the electric vehicle maker. But he also loaned $535 million in 2009 to Solyndra, a solar company that went bankrupt two years later, forcing taxpayers to absorb the loss. In Republican circles, Solyndra has become shorthand for government mess and the Trump administration essentially froze the loan program.
Mr. Shah has worked to avoid another Solyndra while reviving the office, hiring staff and persuading energy companies that the federal government is ready to lend again.
He is still aware that Republicans are on the verge of seizing any taxpayer-backed loans that go bad. energy management the Inspector General warned his office does not have enough resources to properly oversee the newly created agency, raising concerns among some members of Congress.
“Americans deserve to know that this money is being spent responsibly,” said Rep. Cathy McMorris Rodgers, a Republican from Washington, who chairs the House Energy Committee and called the increased funding for the office a loan from “Solyndra on steroids”. She said she would hold the Department of Energy “accountable for every penny spent.”
Shah says the role of the loan program is not to take a leap of faith on random projects, but to support promising clean energy deals that can’t get conventional financing because commercial lenders do not have the ability to verify them – a scientific expertise that resides in the Department of Energy.
In a recent interview, Mr Shah said the office today bears little resemblance to the one that made a bad bet on Solyndra ten years ago. The staff has increased from 12 to 250 and has guarantees to eliminate projects that are too risky. Last month, the office reported that its overall loan portfolio made a profit, while incurring losses equal to just 3% of its loans – a performance in line with commercial banks.
“Failed projects from the past clearly wouldn’t make it through the office this time around,” Shah said. “Now we can look at our portfolio of $38 billion in loans and say, actually, we’ve been pretty good stewards of capital, and we’re actually making money for the federal government.”
Sitting in his office at the Department of Energy in front of a map covered in color-coded decals depicting projects across the country, Mr. Shah exuded relaxed confidence. Dressed casually in a fleece vest more befitting a tech executive than a federal worker, Mr. Shah spoke in full paragraphs, seamlessly moving from Wall Street lending practices to geothermal energy challenges. .
He estimated that cutting U.S. planet-warming emissions by about half this decade, as promised by President Biden, will require about $10 trillion in investment. The Inflation Reduction Act could make $1 trillionbut the rest must come from the private sector.
“We’re not the smartest people in the room,” he explained. at a recent podcast event in Napa, California. “The smartest people are the American innovators and entrepreneurs who put their sweat and tears behind something and come to us for the last bit of help they need to get to the finish line.”
Mr. Shah also insists that clean energy can be bipartisan. His office is currently reviewing applications for 141 energy projects seeking $121 billion in loans, many of them in red states. Fossil fuel companies are also investing in renewable energy.
“Everyone is getting into this action,” Shah said at the Napa event. “I understand that some of them were worried that their country club membership would be canceled if they were too outwardly supportive of what we are doing. But increasingly, everyone in the country club is in on it.
One of the biggest hurdles facing clean energy companies is traversing what is known as the “valley of death”. Investors could fund small demonstrations of new battery chemistries or geothermal drilling techniques. But financing a commercial-scale version is difficult.
Consider Monolith, a chemical company based in Nebraska. For years, Monolith has refined “pyrolysis of methane”, which involves taking natural gas, heating it to high temperatures and producing two valuable products: ammonia, used in fertilizers, and black carbon. , used in tires. Both products are typically made using highly polluting methods, but Monolith believes it can do so without heating up the planet.
Monolith had already built a small production plant and was ready to expand significantly. This is where the loan office came in. Tapping into the network of scientists and experts within the Department of Energy, the office assessed Monolith’s proposal and has since conditionally approved a $1.04 billion loan.
“The scrutiny you go through can be quite intense – it takes years, they bring in teams to look at every little detail of our technology, our business plans,” said Rob Hanson, CEO of Monolith. “But in the end, you’re not just getting a loan, you’re getting validation from one of the most sophisticated technical organizations in the world, which is incredibly valuable.”
Other projects currently supported by the loan office include a new plant in Rochester, NY, which recovers lithium from old electric vehicle batteries and a giant salt cave in Utah which will be converted into a hydrogen battery as a reserve for wind and solar energy.
Even if government experts examine a new technology, success is not guaranteed. Markets change, raw material prices fluctuate, foreign competitors can impose themselves. Solyndra failed not because its solar technology didn’t work, but because alternatives became cheaper when silicon prices fell.
For Mr. Shah, the office is a natural choice. He is almost encyclopedic on energy and finance.
“In some ways he knew more about methane pyrolysis than I did,” said Monolith’s Hanson. “He knew what Exxon and Chevron had done in this space in the 1970s, who had tried what. He immediately understood the importance of what we were trying to do.
In 2003, Mr. Shah founded SunEdison, a solar company that pioneered a new way to pay for solar projects. SunEdison would bear the risk of financing and building solar panels, and the customer would agree to purchase the power from these panels at a fixed price over a longer period. His first client was a Whole Foods store in New Jersey. Today, many solar and wind projects are funded through similar agreements.
“There’s no better way to learn than the world of hard knocks,” said Claire Broido Johnson, its co-founder at SunEdison. “We had a lot of ups and downs in those early days as we tried to persuade potential customers and investors that our idea wasn’t crazy.”
The lending office wants to make advanced technologies, such as clean hydrogen fuels, as commonplace and as easy to finance as wind and solar have become.
And he’s trying to develop clean energy in a way that affects all Americans. Last month, the office said he would conditionally guarantee up to $3 billion to help Sunnova, a solar company, finance rooftop solar panel arrays and battery systems to help reduce energy costs in underserved communities.
As part of his new windfall, Mr Shah’s office has $250 billion to retool old fossil fuel infrastructure – by far his biggest prize pool. While the office has yet to clarify how it intends to use the money, experts say it could, for example, help avoid economic devastation in communities facing the closure of coal-fired power plants.
One question is how quickly the loan office can transfer money without rushing decisions. Since Mr. Shah took office, the program has only finalized a handful of loans.
“It’s incredibly difficult to get through the application process, especially with all of the protections put in place after Solyndra,” said Taite McDonald, partner at law firm Holland & Knight, which represents dozens of claimants and claimants. loan office fellows. “The Jigar team has been working hard to help the projects restart, but it’s not easy.”
Mr. Shah is aware that he must act quickly. He pointed to the Monolith project as proof that the office is no longer crippled by past failures. “Everyone was like ‘Wow this is a really risky project.’ And we’re like, ‘Well, we’re back.’