US provides historic $26.5 billion loan to Southern Co subsidiaries
The?U.S. The Energy Department announced on Wednesday that it has provided a loan of $26.54 billion to'subsidiaries' of Southern Co in order to improve grid reliability. This is the largest loan ever offered by its loan office. According to the Energy Department, this financing will allow power customers in Georgia & Alabama to save more than $7 billion. Southern announced last year that it would freeze power bill increases for three years. Negotiations over loans made the company's decision possible, according to the?department. The Trump administration changed the name of the loan office to Energy Dominance Financing. It was established in 2005 to finance innovative clean energy technologies and advanced vehicles like electric cars. The loan office offers lower interest rates than banks and was used by Democrats as a way to provide conditional loans or loan guarantees to technology companies that couldn't get loans from banks. The two loans, which are roughly 30 years in duration, will be used to build or upgrade more than 16 gigawatts (or?power) to the electrical grid. Nearly a third of the money will go to new natural gas generators and to a larger gas plant.
Energy Secretary Chris Wright stated that these loans would not only reduce energy costs, but create thousands of new jobs and improve grid reliability in Georgia and Alabama. He added that the Department would continue to look for opportunities for loan "across the country."
Wright has stated that
Most effective use
The Trump administration will be able to provide loans for nuclear energy.
Southern will receive loans that support 6.3 GW in nuclear energy, including the expansion of existing nuclear plants and payments for relicensing. Greg Beard, the head of the department's lending office, stated that Southern has eight nuclear power plants. Six of these need to be licensed or have their capacity increased over the next 8 years.
The Department of Energy said that the loans will also be used to modernize hydropower stations, develop 3.5 GW in energy storage, including battery systems, as well as more than 2,092 km (1,300 miles) of transmission projects and grid enhancements.
Southern CEO Chris Womack stated that the loans "will lower the cost of investment in our grid, which will enhance reliability and resiliency?for the benefits of our customers". The company stated that the loan can be drawn from if certain conditions are met. This is possible until September 15, 2033. Reporting by Timothy Gardner in Bengalur and Pranav Mathur; editing by Shilpa Majumdar and Jan Harvey.
(source: Reuters)
