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As the cost of the energy transition begins to draw growing attention, the Biden Administration has announced it will provide $8.25 billion in loans for companies to upgrade the power grid as part of efforts to adapt the grid to the planned shift to renewables.
The Energy Department will finance projects that “improve resilience and expand transmission capacity across the electrical grid, so we can reliably move clean energy from places where it’s produced to places where it’s needed most,” Energy Secretary Jennifer Granholm said.
“This is a down payment on our efforts to modernize our transmission nationwide—but we need the American Jobs Plan to complete them. These investments will make our power system more resilient against threats and more reliable as we increase our clean energy capacity, creating thousands of jobs in the process,” she added.
Of the total, up to $5 billion will be in the form of loan guarantees from the Administration’s Loan Program Office. The rest will come from the Western Area Power Administration’s Transmission Infrastructure Program revolving loan scheme.
The Biden Administration has set itself a very ambitious goal in the energy field, aiming to make the electric utilities sector 100-percent zero-emission by 2035. Yet this will require massive investments in additional wind and solar capacity. It also will mean substantial investments in transmission infrastructure, as per Secretary Granholm’s explanation above.
Despite assurances from Washington that the transition will not only make energy cleaner but also create jobs, there are concerns that the shift from fossil fuels to renewables will weigh on certain segments of society. More specifically, as Reuters’ John Kemp noted in a recent column, unless handled very carefully, the energy transition risks putting a disproportionate weight on poorer households.
These households traditionally spend more on utilities, Kemp wrote, than wealthier households. If the cost of the energy transition is passed onto the consumers of the energy services, this will unjustly penalize poorer households and deepen the economic inequalities that the Biden Administration has vowed to erase.
Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com