Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:14)

And I'm Tracy Alloway.

Joe Weisenthal (0:15)

Tracy, today we have a special episode of the podcast.

Tracy Alloway (0:19)

That's right, so we traveled to Austin, Texas. We were there for the Texas Tribune Festival, and we recorded a live episode with one of our favorite Odd Lots guests, Jigar Shah.

Joe Weisenthal (0:30)

That's right, Jigar is, as listeners may know, the head of the loan program at the Department of Energy. This is his third time appearing. The first time we talked to him was early 2022, when the Loan Programs Office was this sort of small backwater office within the DOE. Then we talked to him again about a year ago, right after the Inflation Reduction Act was passed, when his office got tons of money to lend out. And then this was sort of like a one-year-on episode.

What are they doing with all this money at his office? And what are the real prospects for sort of decarbonizing our electricity system?

Tracy Alloway (1:08)

He's sort of in the groove now. He's spending some of the billions of dollars that he's been authorized to spend by Washington. And it's really interesting to see how he's actually putting that money to work and what's getting him excited in the energy space right now.

Joe Weisenthal (1:22)

All right, so take a listen. Jigar, we've talked to you a couple of times in the past on the podcast about the Loan Programs Office.

What do we start, just sort of a quick summary, and we've talked about what you do. Like, real quickly, just what is the Loan Program Office for people who may have not familiar with it or passed episodes, and what do you do?

Jigar Shah (1:44)

Well, thanks for having me back.

The Loan Programs Office was started in 2005, and the whole point of it was that for a lot of this technology that DOE is awesome at inventing, it tends to not be able to get commercial debt for commercialization. So a lot of these projects might be a billion-dollar project, and going to get debt from the commercial markets for a first-of-a-kind project, you know, namely like, you know, the Tesla's first loan or some of the large solar and geothermal projects we did, was just not feasible.

But what's more interesting is today, our remit's been expanded substantially. So it used to be we had this innovation bucket, and then we had this vehicles bucket, basically. Today, we have a tribal energy program. We have this energy infrastructure refurbishment program, right, so figuring out how to take old coal plants and turn them into nuclear plants or old transmission lines and double them up or, you know, figuring out what to do with old refineries or tank farms. And so we have a much larger scope today. So we've got, you know, a lot more resources today.

Tracy Alloway (2:53)

So how much money do you actually control now? Because of course, I've seen variable estimates, and I get that a lot of it depends on how things develop. But you've been doing this for a while now. You have extended some loans. Do you have a good sense of whether it's 400 billion or 500 billion or 600 billion?

Jigar Shah (3:12)

I mean, what's a billion between friends?

Joe Weisenthal (3:15)

What's 100 billion between friends?

Jigar Shah (3:17)

Yeah, I think, so when I first came into office, it was roughly $40 billion of loan authority. Today, if all of our loan authority was used, it would be closer to 400 billion.

We have no idea whether it'll all be used, right? So the largest program there is this refurbishment program, which is $250 billion. Interestingly enough, it really is taking off. So I think when we first started talking to electric utilities and oil and gas companies and others about using it, I think they didn't want any part of it. They didn't really see how it was valuable. Today, I think we've already got about $56 billion worth of loans either received or being actively prepared that we've seen early drafts of.

So we are seeing a lot of interest in that program. And so, you know, whether we get to that number or not, we'll be determined on whether that program is successful.

Joe Weisenthal (4:05)

Yeah, the first time we ever talked to, I think it was early 2022 and someone said, oh, Jigar, he's someone you should talk to. He knows about energy. He's sort of an interesting guy and knows about this stuff. And then I think it was like about three or four months later and the Inflation Reduction Act passed and someone was like, oh, you know, that guy, Jigar you talked to, his office just got whatever, 600 billion, like, oh. So what went from like this sort of, I don't know if backwater is the right word, but fairly like modest division of the Department of Energy.