Cover art for Direct Current podcast episode "LPO's New Look: A Conversation with Jigar Shah"

Getting to Know LPO

With more than $40 billion in lending authority, the Loan Programs Office is one of the most powerful clean energy investment tools at the Energy Department’s disposal. We sat down with the office’s new director, Jigar Shah, to talk about what's new at LPO, how the office works, and what’s in store for the future of energy.

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Loan Programs Office, U.S. Dept. of Energy

Explore LPO's Portfolio

Through its Title XVII Innovative Clean Energy Projects loan program and Advanced Technology Vehicles Manufacturing (ATVM) loan program, LPO has financed a portfolio of innovative clean energy projects and advanced technology vehicle manufacturing facilities across the United States. LPO’s portfolio has supported job creation and is preventing harmful CO2 pollution while enhancing American competitiveness in the global economy.

Check out LPO's series of New Deal-inspired posters illustrating the office's wide array of supported projects.

U.S. Department of Energy


DIRECT CURRENT PODCAST — LPO’s New Look: A Conversation with Jigar Shah 

MATT DOZIER: Hello and welcome to Direct Current – An Podcast. I’m your host, Matt Dozier. Today we’ve got an interview for you with Jigar Shah. He’s the new director of the Loan Programs Office, one of the Energy Department’s most powerful tools for investing in clean energy. Jigar had a ton of interesting stuff to say about how LPO works, how it has changed, and how it’s advancing Secretary Granholm’s vision for creating jobs and combatting the climate crisis. Stay tuned. 


DOZIER: I’m speaking today with Jigar Shah, Director of the Department of Energy’s Loan Programs Office. Jigar, welcome to the show.  

 JIGAR SHAH: Thanks for having me. I feel right at home in the podcasting booth.  

 DOZIER: Right. You’re no stranger to podcasts.  


DOZIER: Since you were a co-host on “The Energy Gang” for many years. And I can’t believe it’s taken you this long, you know, joining the Department of Energy, to finally get that Energy Gang-Direct Current crossover people have been waiting for.  

 SHAH: This is going straight to my LinkedIn page.  

 DOZIER: Yes, yes. Welcome. I listened to your final episode of the show, and it was quite a heartfelt send off from your co-hosts.  

 SHAH: Yeah, you should have seen how long it took us to get through it. We were all teary-eyed.  

 DOZIER: I bet. So you’ve joined the Department of Energy now, as director of the Loan Programs Office. Now the Loan Programs Office — not one of DOE’s better-known elements, I think it’s safe to say. For our listeners out there who aren’t familiar with LPO, what is the office’s function?  

SHAH: Yeah, I mean, the office was set up by Pete Domenici and others in 2005, during the Energy Policy Act, and it’s been enhanced in 2007 and 2009, during the ARA stimulus bill, and, you know, at its core, it provides senior debt to innovations that really need to, you know, sort of cross this bridge to bankability. So when you think about the technologies that we funded in the past, under Title 17 it's renewable energy, energy efficiency, nuclear with the Vogtle nuclear plant, fossil — so you know, things like carbon sequestration and storage and others — and then we have the ATVM program, which is the Advanced Technology Vehicle Manufacturing program, where we gave $5.9 billion to Ford to recapitalize all their manufacturing facilities and almost $500 million dollars to Tesla, Nissan, Fisker, et cetera. And then we’ve recently been given a $2 billion loan guarantee program for the Tribal Energy Program that we manage, as well. But the office has about, you know, $40 billion or so of existing capacity that we’re actively seeking applications for. And the rates, the interest rates are, you know, right around U.S. Treasury's, plus a vig. And then we can go out 30 years, and then there’s some premium that gets paid to smaller borrowers in the beginning, but pretty good rates, and a pretty flexible program.  

DOZIER: So just from your description here, I know you’re coming in as somebody with, you know, pretty in-depth knowledge of this this world. When you say senior debt, can you elaborate on that a little bit?  

SHAH: Yeah. So when you think about project finance, and how project finance works, or asset finance, for that matter, there’s somebody who actually holds title to the property. So it’s sort of like, if you have a mortgage on your house, that’s senior debt, right? Like, if something goes wrong, they have the ability to foreclose on your house, and, you know, take your house, right, and they’re first in line. And so we’re always first in line, so we are the most senior debt on there. And it’s important, because it gives us the most flexibility by which to help the borrowers in times of struggles and needs.  

DOZIER: Right, and a term that comes up with LPO a lot is “loan guarantees.” I think people are familiar with loans. Now, LPO is more focused on loan guarantees. Can you help elaborate the difference there?  

SHAH: Yeah, so in Title 17 and ATVM, we actually have the ability to provide people with loans direct from the U.S. Treasury Department through the Federal Financial Bank. And so that’s cash, directly to a project. So those are loans that we can provide directly to a project. And in the guarantee product, that’s basically someone like PNC Bank or Huntington Bank or, you know, someone like that, doing all the underwriting work, all the effort, and then coming to us and saying, "We would like the loan guarantee office to give us an 80% guarantee of our exposure. Because we don’t feel comfortable with this technology risk or this particular aspect or whatever. So if you guys agree that this is a good project to fund, we’d like for you to give us 80% guarantees." And so in that case, the bank did all the underwriting work, all we did was provide a guarantee to the bank, and we certainly had to do our own underwriting work. But it’s a much easier process because we can read their work.  

DOZIER: What’s it been like moving from the private sector to a federal agency?  

SHAH: Honestly, it’s not that much different, right? I mean, ultimately, we go out to market and we convince people that it’s worth talking to us. And then we say, you know, put in a loan application. They say, we don’t know how to do that, and so then we, you know, help them through it and go through the steps and why the steps are needed.  But the process of educating the marketplace about what we do, and why we might be able to be helpful to them is pretty straightforward and familiar to me. And then our origination group is, you know, the same, right, so it basically spends about $2 million per loan, evaluating the loan. So we hire independent engineers, and we hire outside market participants to double-check all the borrower’s work, right? We want to make sure that if they say, hey, here’s what the cost of electricity has been for the last 20 years, and here’s what we think it’ll be in the future. Or, here’s what the price of hydrogen has been in the last five years, here’s what we think it’ll be in the future. We want an independent third party to validate that for us, and so that we’re not taking the borrower’s word for it. And we reach out to our 10,000 engineers and scientists who work for the Department of Energy and the Labs around the country, and ask them to opine on whether the technology is going to work. And you know, whether we’re going to really be able to get comfortable with what we call the "reasonable prospect of repayment." And then once it gets funded, then there’s a portfolio management division — all of the things that we do at the Loan Programs Office, it’s actually quite similar to what a bank does. The only differences is that banks basically don’t want to do new things, right? Not because, you know, they hate innovation, but just because if they can meet their numbers for the year — write their loan book for the year without doing something new — that’s easier than doing something new. Doing something new means you have to convince a bank president to do it, and the credit committee, and there’s all sorts of people who haven’t heard of it before. And you know, they don’t want to do it. And so that’s why we exist, because a lot of banks are saying, well, until there’s three or four other projects that have been operating for a few years, we don’t really want to look at it.  

DOZIER: So what is your focus going forward, now that you’ve joined LPO? What are you thinking about?  

SHAH: Well, so there’s two answers to the question, right? The one answer is very clear, right, which is, we need to get the money out the door. The Secretary has been very clear that the money has been dormant for a little while, and we have $40 billion capacity, and, you know, some portion of that’s fairly straightforward to get out the door, and we should get it out the door. So that’s, I mean, that’s pretty clear marching orders, I think. (LAUGHS) The other side of it is where applications are coming from, right. So we might on paper say, this particular, you know, area is really large, and there’s a lot of money moving, and a lot of deals to be done and a lot of senior debt needed. But if people don’t really need us, or don’t want to use us, well, then you know, we’re not going to succeed by continuing to hit our head against a wall. So a lot of it’s really sort of just identifying sectors, and then double-checking to make sure that there’s actually interest from the private sector in using what we have to offer. So for instance, areas that we found a lot of synergy in are green hydrogen, biofuels, transmission lines, offshore wind projects, energy efficiency and virtual power plants. You know, we’ve had a lot of interest on the fossil side on carbon sequestration and storage, a lot of interest on the nuclear side, within advanced small modular reactors and microreactors, a lot of interest in the Advanced Technology Vehicle Manufacturing program on battery manufacturing, critical minerals, EV manufacturing facilities. And then even in the Tribal Energy Program, we’ve actually been able to really do a concentrating listening session, and I think out of that we’ve gotten three or four new projects that have been proposed to us. So we haven’t yet issued our first loan out of the Tribal Energy Loan Program — our first loan guarantee. But we’re pretty hopeful that these projects that have recently come in, you know, will be qualifying.  

DOZIER: Right. And Secretary Granholm, as you mentioned, has been abundantly clear about her feeling on the matter. We had her on the show recently, and she specifically shouted out LPO as a big component of her vision for creating good-paying, union jobs in clean energy. How, from your standpoint, does the Loan Programs Office fit into that goal, that vision, along with the president's American Jobs Plan? 

SHAH: Yeah, so you know, we have a requirement to pay Davis-Bacon wages on all of the construction of all of the projects that we fund. So from that perspective, we’re paying very healthy wages to all of the people that are involved in the projects that we fund. Separately, I think, on the union side, we have been having extensive conversations with the unions around how they might bring technical expertise, as well as other value to the table to make sure that, you know, they get selected as the EPC contractors for a lot of the work that we’re promoting. And so we’ve spent a lot of time making sure that both sides — the borrowers that we service and the unions — are able to talk to one another, and, you know, some of the communication SNAFUs of the past have been bridged. And yeah, we can’t force people to use one contractor or another, but we can certainly suggest to people that we want to make sure that these projects are built in a way that's safe and a very high-quality and, you know, meet the needs of the American taxpayer.  

DOZIER: Turning to climate, can you talk about the importance of investment in large-scale clean energy projects in the way that LPO is able to do, in tackling the climate crisis? 

SHAH: Yeah, it’s a good question. I guess what I’d say is that the Loan Programs Office was really essential at these large-scale projects back in 2010, 2011. But today, I’d say the largest large-scale projects — whether it’s offshore wind, or onshore wind, or solar — really are well served by commercial debt markets. And so there’s really no reason for us to step in to a place that’s well-served. And so where we insert ourselves is in places where there’s a disconnect in the market. So for instance, in offshore wind, a lot of the individual components of the supply chain have to be stood up in the country so that we can manufacture those parts here. And those companies are having a hard time raising money. Or in the solar space, when you think about solar manufacturing in the United States, or inverter manufacturing in the United States, or some of these other types of things that, you know, folks are interested in. So in those mature categories, I would say that we have a lot less of a role to play there. Now in residential solar, we might have a much bigger role. And then that’s a collection of a bunch of $15,000 projects, where there are solar plus storage, which is innovative, or, you know, including DER — distributed energy resources — where you can also control the thermostat or the refrigerator or the water heater, and, you know, use that to be able to level the grid. Right? So, you know, when you think about California spilled about 1600 gigawatt-hours of renewable energy last year, and they could have captured a lot of that if they had demand dexterity in the grid. So they could, you know, make people’s houses a little bit cooler than they had set it for, and use some of that power then, and then not used it later in the afternoon when they would have turned it on, right? And so starting to time the loads in the homes with when there’s overproduction of electricity is something that does qualify for Loan Programs Office, and a lot of the residential solar players are in the best place to, you know, promote those services. And so you can imagine that there are more innovative next-generation approaches that we’re looking at today than we did before. Virtual power plants are very similar, where a lot of appliances are financed at the point of purchase on the spot, right, so your air conditioning craps out, and you’re like, oh man, I need one because it’s hot outside. You hire the guy to come out and the guy goes, "Well, you don’t have money? Oh, well, you know, we’ve got a financing plan right here." Turns out that finance plan is often 30% interest. And so we can insert ourselves there and help people get 6% interest rates or 7% interest rates, but in exchange, they have to, you know, opt in their air conditioning system into a distributed energy resources project, and, you know, get paid to provide grid flexibility. And so those are the kinds of innovations we can lean into. There still are very large-scale projects that we’re funding. So we’ve recently gotten applications in for transmission. And so there’s some, you know, those are on average $1 billion to $2 billion projects. So those are big projects. And we also have large-scale projects on the biofuel side where those are, you know, usually $500 million to $1 billion projects, and others. And so we certainly see large-scale projects today. But I think on the environmental justice side, which, you know, the President cares deeply about. I think distributed infrastructure is a good place for us to be able to pivot to be able to help meet the President’s objectives.   

DOZIER: On the justice front, that was another thing that came up in my conversation with Secretary Granholm. In terms of the work that LPO does and the way that it provides funding for energy, what are some of the ways that it can help advance energy justice and environmental justice?  

SHAH: Well, I think these distributed energy programs are the most straightforward way that we’ve thought about it. And when you think about appliances, it’s not just refrigerators, air conditioners and water heaters. It also includes solar plus storage, but it also includes electric cars. Right? So electric cars are DER-enabled appliances as well, right? So when you think about, when you look at the Texas polar vortex, there were some people who actually were able to power their whole house off their car. And so, you know, in fact, I’d say a car battery is probably the cheapest way to get a battery these days, because it’s, you know, 90 kilowatt-hours for I think, $14,000 or $15,000 for a used Chevy Bolt. So I think that there’s a lot that we can do there. I also think that the scope and the scale that we’re trying to get after is pretty large. And, you know, I think we need to find large pockets of opportunity, right? So when you think about appliances, appliances alone — not counting electric vehicles — is about a $10 billion a month — a month — business. Right? And roughly 40% of those purchases are made by low-moderate income households. Right, so that’s $4 billion a month. So if we can shift $4 billion dollars a month of purchases, from, you know, like some form of payday lending to low-interest loans with long durations, that’s going to save a tremendous amount of money for the average consumer. And if those appliances are plugged into distributed energy resources, all of our modeling shows that it’s the only idea that we have that can actually reduce electricity rates. Not reduce the growth of electricity rates, but actually reduce electricity rates. 

DOZIER: Yeah, that’s huge. Is there anything going forward that folks listening should know about working with LPO?  

SHAH: Yeah, there’s a lot of things. And so we had a fairly substantial improvement to the program passed during the Energy Act of 2020, in December of 2020. And so one of the things that that does is really delay all application fees and payments to the loan program office, until we actually approve and fund the loan. Right? And so now you don’t have to pay a bunch of fees up front just to talk to us, right, which was always offensive. But in any case, it was part of our rules. And so we've finally been able to drop that. I think the second piece of it is that when you think about the breadth of what we can do, the Congress was very clear that actually, they want us to look at supply chains within the nuclear sector, they want us to look at, you know, some of these small business opportunities, they want us to not just do big deals, but small deals, too. And so we have, you know, really leaned in to that process. And the other thing I would say is that we have significantly shifted our part 1 application process. So it used to be that we did pre-consultations with people for six months, really kind of helping them write their application before they came in. Today, that pre-consultation process has really gotten short. So we’re down to like two or three weeks. And then you know, folks are putting in applications. So we’re seeing a huge uptick in application starting this week. I think we got two in yesterday. And then that’s when we adjudicate the loan. So we actually have a six-week process, where we determine one: whether the technology that they’re applying for saves greenhouse gas emissions, and two: whether they actually qualify within the existing solicitations that we put out. And so we can tell them that in six weeks, which is pretty great, right? So now you have a piece of paper from the Department of Energy that says, "You qualify for the loan program." Right? And so now you don’t have to spend all of that money putting together all those documents on part two, which is, you know, the actual meat of the process where we have to spend $2 million of outside consulting, we have to do all this other stuff, to actually underwrite the loan. We get the quick parts out of the way first, so people can be confident that they’re going to be evaluated fairly within part two, before they get their hopes up. And so that has, you know, been a huge sigh of relief to a lot of our borrowers, they think that that process is far more straightforward than it was before. And so I think that’s a huge win for the team at LPO, as you can imagine. Most of that was already underway before I got there, so I can’t take credit for any of it. But I have a fabulous team. And then the last thing I’d say is that we’ve you know, really admitted that the Tribal Energy Loan Program has just been not able to meet the needs of our partners. And so the Tribal Nations just have not found it to be useful. And so we’ve done a number of listening sessions, one in particular just for the Loan Programs Office and the Office of Indian Energy. And we’re working really well together, and we’ve reformulated that team and that approach to really be able to be responsive to what we heard. And, you know, we got our first application in yesterday, under that program, so we’ll see whether that qualifies. But we also have four or five more that we know that are in the hopper. And so I feel pretty good that we — I think we’ve done a good job of listening to folks and are now starting to gel with what the Tribal Nations want.  

DOZIER: Right. And I remember that, you know, being kind of a refrain that would come up of the challenge being there’s this money available, and there are people who need money, and finding a way to connect those two things sometimes falling short within LPO. Is that I mean, would you say that that’s fair? And that’s something that's been addressed and is part of what you’re thinking about going forward?  

SHAH: Yeah, I mean, you know, saying that something’s been addressed is a difficult thing to do. It’s like sort of saying "mission accomplished." I feel like our work is never done. So like, I mean, part of this is actually really explaining to people what we do, some of our limitations, and the benefits that we provide. And for some people, we’re not going to be the best place to get money because we’re not inherently a subsidy. We’re a bridge to bankability. What we’re providing is money where no one else will provide money. We’re not here to subsidize the project further. Right? And I think that’s critical, because I think a lot of people think that we’re here to provide a form of subsidy through a lower interest rate. And that’s really not what the office does.  

DOZIER: And LPO is really one part of DOE’s larger portfolio, array of funding options and sources. Is that right?  

SHAH: Yeah, I mean, that’s been frankly, the best, most exciting part of this job, is I’ve been able to have one-on-one meetings with, I’d say, a number of the program offices within the Department of Energy. And it’s just breathtaking to see how much the Department of Energy is doing, from demonstration projects to spinning out, you know, technology from the Labs and the Office of Tech Transfer and commercialization. When you think about some of the early-stage research that we’re doing, it’s really amazing what we’re doing to prepare for the full decarbonization by 2035 of the electricity grid, and the decarbonization of our society by 2050. And a lot of the folks at the Loan Programs Office are entering those conversations early, to give guidance from our perspective around what we think the commercial markets might think is interesting, and bridge-building, and others that they might think is a cul-de-sac or, you know, some sort of dead end, which they’re unlikely to fund. And, yeah, no one at DOE has to actually, you know, follow our advice. We’re just one part of the voice. But I think we’re having good conversations now, which I think is great. And I think the Secretary has really stressed the "one DOE" approach. And we certainly have spent a lot of time working on that. But more importantly, I think, the other program offices that we’ve interacted with have spent a lot of time working on that. And so we feel, you know, like we’re really part of the family.  

DOZIER: Really exciting times.  

SHAH: It is. I mean, you know, I can’t even imagine what a difference the Secretary has made. I mean, it’s just the "deploy, deploy, deploy" mantra is ringing through all of our ears on a fairly regular basis. And, you know, when I talk to external stakeholders, whether it was the city of Boston that I talked to today, or some of the other municipalities or nonprofits or municipal utilities, investor-owned utilities, they’re hearing the message. They’re like, "Hey, how do we get in on 'deploy, deploy, deploy?' How do we get involved in green hydrogen? How do we get involved in electrifying transit buses or school buses?" Or, how do we build out EV charging stations, or, you know, other priorities of the president? And it’s really breathtaking to see the sea change in the way in which people think the federal government is not only supporting them, but catalyzing them, I think has been, you know, really extraordinary to watch.  

DOZIER: Jigar Shah with the Loan Programs Office, thank you for joining me today.  

SHAH: Thanks for having me. You’ve, you know — I thought that I was cold turkey on the podcast, now, and you’ve now got me, like craving podcasting again. So, no thank you! (LAUGHS)  

DOZIER: (LAUGHS) You thought you were out, and I dragged you back in. Hopefully, we’ll have you back on in the near future. You can scratch that itch again.  

SHAH: Yeah, exactly. I’d love to be on. And thank you for giving me this opportunity.  

DOZIER: All right. Cheers.   


DOZIER: Thanks for listening to this episode of Direct Current! If you want to learn more about what’s new in the Loan Programs Office, we’ll have more info and links on our website, Thanks to my guest, Jigar Shah, and the rest of the folks at LPO for arranging the interview. If you’re enjoying the show, share it with a friend or leave us a review on Apple Podcasts. Direct Current is produced by me, Matt Dozier. Sarah Harman creates original artwork for all of our episodes. This is a production of the U.S. Department of Energy and published from our nation’s capital in Washington, D.C. See you next time.