On November 25, 2024, LPO announced a loan guarantee of up to $4.9 billion to Grain Belt Express LLC to help finance Grain Belt Express Phase 1, a high-voltage direct current (HVDC) interregional transmission line.
Loan Programs Office November, 25 2024
As part of the Biden-Harris Administration’s Investing in America agenda, the Department of Energy (DOE), through its Loan Programs Office (LPO), today announced a conditional commitment for a loan guarantee of up to $4.9 billion ($4.4 billion in principal and $470 million in capitalized interest) to Grain Belt Express LLC to help finance a high-voltage direct current (HVDC) transmission project (Grain Belt Express Phase 1). If finalized, the 2,500-megawatt (MW) interregional transmission line would run approximately 578 miles from Ford County, Kansas, to Callaway County, Missouri. Today’s announcement reinforces the Biden-Harris Administration’s efforts to increase transmission capacity throughout the United States, which will strengthen grid resilience and bring clean, reliable, and affordable power to more American families and businesses when and where they need it most.
Grain Belt Express Phase 1, a project covered by FAST-41, will unlock access to new domestic energy and transmit it to customers across the central United States. The line’s use of HVDC transmission technology and interregional configuration will promote the reliability and resilience of electric delivery. The states of Kansas and Missouri have approved Grain Belt Express Phase 1 based in part on the economic development benefits the project will bring to both states.
The project will connect three regional grids: the Southwest Power Pool (SPP), the Midcontinent Independent System Operator (MISO), and Associated Electric Cooperative Incorporated (AECI). Grain Belt Express Phase 1 will significantly expand import and export capabilities between these areas. MISO, which is already a net importer of electricity, is expected to have a growing electricity supply gap as electricity demand grows.
Grain Belt Express Phase 1 would unlock access to low-cost energy in Kansas to help bridge this gap. The National Transmission Needs Study, published by DOE’s Grid Deployment Office, estimates interregional transmission capacity between SPP and MISO regions may need to increase by up to 1000% to meet demand by 2035. As a merchant line, Grain Belt Express Phase 1 will contract with customers through voluntary agreements. In Missouri, 39 municipal utilities across the state have already contracted for transmission service on Grain Belt Express Phase 1.
Developing HVDC transmission is essential to helping us add more energy to the grid faster and expanding transmission capacity across the nation. HVDC transmission’s higher efficiency and lower line losses compared to traditional alternating current (AC) transmission lines make it ideal for moving large amounts of power over long distances and between grid regions. Innovative technology such as voltage-sourced converters with multi-level modular converter topology improves grid performance, flexibility, power quality, and grid access for renewable power sources. Grain Belt Express Phase 1 will also have bidirectional capabilities, allowing power to be transmitted in either direction, which will also improve the grid’s resilience and flexibility.
Today’s announcement helps ensure that, in support of the Justice40 Initiative, 40% of the overall benefits of certain federal investments in climate, clean energy, and other areas flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution. LPO borrowers are required to develop and ultimately implement a comprehensive Community Benefits Plan (CBP). CBPs ensure borrowers meaningfully engage with communities and labor groups to create good-paying jobs and improve the well-being of the local community and workers. Grain Belt Express LLC values collaboration with local communities and labor unions and is committed to establishing agreements to support its workforce strategy. As a part of LPO’s financing, the construction of Grain Belt Express Phase 1 is expected to create at least 1,110 direct jobs through the onsite prime construction workforce, as well as numerous additional jobs in construction management, engineering, procurement, commissioning, logistics, and other scopes.
The loan guarantee would be offered through LPO’s Title 17 Clean Energy Financing Program, which includes financing opportunities for innovative energy and supply chain projects and projects that reinvest in existing energy infrastructure. The Grain Belt Express Phase 1 project is estimated to reduce greenhouse gas emissions by 3.1 million tons of CO2 equivalent annually.
While this conditional commitment indicates DOE’s intent to finance the project, DOE must complete an environmental review, and the borrower must satisfy certain technical, legal, environmental, and financial conditions before the Department enters into definitive financing documents and funds the loan guarantee.