The lodge ballroom was packed earlier than breakfast as Jigar Shah took the stage on the oil and fuel business’s annual convention in Houston this spring. The host joked he was assured an enormous crowd would come out for Mr. Shah, even at 7:30 a.m.
It’s uncommon for a midlevel federal official to draw a lot consideration. However the small, obscure workplace that Mr. Shah oversees, the Division of Vitality’s Mortgage Applications Workplace, has develop into an engine of the Biden administration’s efforts to aggressively advance clear power. And Mr. Shah is not any bizarre bureaucrat.
As a part of final 12 months’s Inflation Discount Act, Congress supersized the workplace’s authority to rearrange loans to corporations attempting to convey rising power applied sciences to market, growing it tenfold from $40 billion to greater than $400 billion. That makes it doubtlessly one of many greatest financial growth mortgage applications in United States historical past.
Mr. Shah, 48, is the gatekeeper for that gusher of tax {dollars}. And the clock is ticking; he has roughly a 12 months and a half to get the cash out the door earlier than the 2024 elections might imply adjustments within the White Home that may curtail this system.
He brings an entrepreneurial swagger and a tolerance for threat to the job. Earlier than arriving in authorities in 2021, Mr. Shah was a celeb of kinds in power circles. A pioneer within the photo voltaic business who earned thousands and thousands, he co-hosted a well-liked power podcast for almost a decade the place he bluntly riffed on every part from driverless automobiles to Canadian power insurance policies. (“Nations shouldn’t have silly coverage” he informed listeners in 2017, dubbing it “the Jigar Shah Rule.”) He has relentlessly promoted the view that shifting to scrub power is nothing to worry, however will quantity to the “largest wealth-creation alternative of our lifetime.” He’s an everyday presence on social media, the place he banters with the general public.
Mr. Shah’s enterprise acumen carries weight with power corporations. “Jigar brings avenue credibility,” mentioned Atul Arya, chief power strategist for S&P International, a analysis agency.
The job comes with monumental expectations — and excessive stakes. Created in 2005 to assist finance clear power initiatives that industrial banks discovered too bewildering, the mortgage program bankrolled a few of the nation’s first massive wind and photo voltaic farms, and seeded Tesla, the electrical car maker. Nevertheless it additionally lent $535 million in 2009 to Solyndra, a photo voltaic agency that went bankrupt two years later, requiring taxpayers to soak up the loss. In Republican circles, Solyndra grew to become shorthand for presidency boondoggle, and the Trump administration primarily froze the mortgage program.
Mr. Shah has targeted on avoiding one other Solyndra whereas reviving the workplace, hiring workers and persuading power corporations that the federal authorities is able to lend once more.
He’s ever conscious that Republicans are poised to grab on any taxpayer-backed loans that go unhealthy. The Vitality Division’s inspector normal has warned her workplace doesn’t have sufficient sources to correctly monitor the newly-flush company, elevating considerations amongst some in Congress.
“Individuals should know this cash is being spent responsibly,” mentioned Consultant Cathy McMorris Rodgers, Republican of Washington, who chairs the Home power committee and has known as the elevated funding for the mortgage workplace “Solyndra on steroids.” She mentioned she would maintain the Vitality Division “accountable for each cent spent.”
Mr. Shah says the mortgage program’s position is to not take a leap of religion on chancy initiatives however to again promising clear power offers that may’t get standard financing as a result of industrial lenders lack the aptitude to vet them — scientific experience that resides on the Division of Vitality.
In a current interview, Mr. Shah mentioned right this moment’s workplace bears little resemblance to the one which made a foul wager on Solyndra a decade in the past. The workers has grown from 12 to 250, and has safeguards to weed out overly dangerous initiatives. Final month, the workplace reported that its total mortgage portfolio has turned a revenue, whereas struggling losses equal to only 3 p.c of its loans — a efficiency according to industrial banks.
“The failed initiatives of the previous clearly wouldn’t get by means of the workplace this time round,” Mr. Shah mentioned. “Now we are able to have a look at our portfolio of $38 billion price of loans and say, truly, we have now been fairly good stewards of capital, and we truly generate profits for the federal authorities.”
Sitting in his workplace on the Vitality Division in entrance of a map coated in color-coded decals representing initiatives throughout the nation, Mr. Shah exuded a relaxed confidence. Dressed casually in a fleece vest extra befitting a tech government than a federal employee, Mr. Shah spoke in full paragraphs, shifting seamlessly from Wall Avenue lending practices to the challenges of geothermal power.
He estimated that reducing America’s planet-warming emissions roughly in half this decade, as President Biden has pledged, would require about $10 trillion in funding. The Inflation Discount Act might present $1 trillion, however the remainder has to come back from the non-public sector.
“We’re not the neatest individuals within the room,” he defined at a current podcast occasion in Napa, Calif. “The oldsters who’re the neatest persons are the American innovators and entrepreneurs who put their sweat and tears behind one thing and are available to us to get that final little bit of assist they should get to the end line.”
Mr. Shah additionally insists clear power will be bipartisan. His workplace is at present reviewing purposes from 141 power initiatives in search of $121 billion in loans — many in pink states. Fossil gas corporations, too, are investing in renewable power.
“Everyone seems to be getting on this motion,” Mr. Shah mentioned on the Napa occasion. “I get that a few of them had been nervous that their nation membership membership may get canceled in the event that they’re too outwardly supportive of what we’re doing. However more and more everybody within the nation membership is in on it.”
One of many greatest obstacles that clear power corporations face is crossing what is named the “valley of demise.” Buyers may fund small demonstrations of latest battery chemistries or geothermal drilling methods. However financing a commercial-scale model is difficult.
Contemplate Monolith, a Nebraska-based chemical substances firm. For years, Monolith has been refining “methane pyrolysis,” which entails taking pure fuel, heating it to excessive temperatures, and producing two priceless merchandise — ammonia, utilized in fertilizer, and carbon black, utilized in tires. Each merchandise are normally made by means of extremely polluting strategies, however Monolith thinks it may possibly accomplish that with out heating the planet.
Monolith had already constructed a small manufacturing facility, and was able to considerably develop. That’s the place the mortgage workplace got here in. By tapping the community of scientists and consultants inside the Vitality Division, the workplace evaluated Monolith’s proposal and has since conditionally authorised a $1.04 billion mortgage.
“The scrutiny you undergo will be fairly intense — it takes years, they create in groups to go over each little element of our know-how, our enterprise plans,” mentioned Rob Hanson, Monolith’s chief government. “However on the finish, you don’t simply get a mortgage, you get validation from one of the vital subtle technical organizations on this planet, which is extremely priceless.”
Different initiatives at present backed by the mortgage workplace embody a novel plant in Rochester, N.Y., that harvests lithium from outdated electrical car batteries and an enormous salt cavern in Utah that will likely be transformed right into a hydrogen battery as a backup for wind and solar energy.
Even when authorities consultants vet a brand new know-how, success isn’t assured. Markets change, commodity costs fluctuate, abroad opponents can muscle in. Solyndra failed not as a result of its photo voltaic know-how didn’t work, however as a result of alternate options grew to become cheaper when silicon costs plummeted.
For Mr. Shah, the workplace is a pure match. He’s almost encyclopedic about each power and finance.
“In some methods he knew extra about methane pyrolysis than I did,” mentioned Mr. Hanson of Monolith. “He knew what Exxon and Chevron had been doing on this area again within the Nineteen Seventies, who had tried what. He immediately grasped the significance of what we had been attempting to do.”
In 2003, Mr. Shah based SunEdison, a photo voltaic firm that pioneered a brand new option to pay for photo voltaic initiatives. SunEdison would bear the chance of financing and constructing photo voltaic arrays, and the client would agree to purchase electrical energy from these panels at a set worth over an extended interval. His first buyer was a Entire Meals retailer in New Jersey. In the present day, many photo voltaic and wind initiatives are financed by comparable agreements.
“There’s no higher option to study than the world of arduous knocks,” mentioned Claire Broido Johnson, his co-founder at SunEdison. “We had plenty of ups and downs in these early days as we tried to steer potential clients and buyers that our thought wasn’t loopy.”
The mortgage workplace needs to make leading edge applied sciences, corresponding to clear hydrogen fuels, as mundane and as straightforward to finance as wind and photo voltaic have develop into.
And it’s attempting to develop clear power in a manner that touches all Individuals. Final month, the workplace mentioned it will conditionally assure as much as $3 billion to assist Sunnova, a photo voltaic agency, fund networks of rooftop photo voltaic panels and battery methods to assist reduce power prices in deprived communities.
As a part of its new windfall, Mr. Shah’s workplace has $250 billion to retool outdated fossil-fuel infrastructure — by far its greatest pot of cash. Whereas the workplace nonetheless must make clear the way it intends to make use of this cash, consultants say it might, for example, assist fend off financial devastation in communities dealing with coal plant closures.
One query is how shortly the mortgage workplace can transfer cash out the door with out speeding selections. Since Mr. Shah got here into workplace, this system has finalized solely a handful of loans.
“It’s extremely difficult to get by means of the applying course of, particularly with all of the protections put in place post-Solyndra,” mentioned Taite McDonald, a accomplice on the regulation agency Holland & Knight, which represents dozens of mortgage workplace candidates and awardees. “Jigar’s staff has labored arduous to assist initiatives begin shifting by means of once more, but it surely’s not straightforward.”
Mr. Shah is conscious that he should transfer quick. He pointed to the Monolith undertaking as proof that the workplace is not paralyzed by previous failures. “Everybody was like ‘Wow that’s a very dangerous undertaking.’ And we’re like ‘Effectively, we’re again.’”
