Interview with Arpita Bhattacharyya, DOE Loan Programs Office

Interview with Arpita Bhattacharyya, DOE Loan Programs Office

Catherine interviews Arpita Bhattacharyya of the DOE Loan Programs Office.


Catherine: Hi, I’m Catherine McLean, Founder and CEO of Dylan Green. And today I have with me Arpita Bhattacharya, the Chief Climate Officer at the DOE Loan Program. Thanks for joining me Arpita.

Arpita: Thank you so good to be here.

Catherine: So I think you’re in gloomy DC, just up the beltway from me. It is so gloomy today! So hopefully we can talk about some nice positive things and get a bit cheerier. Can you introduce and tell us a bit more about your current role at DOE?

Arpita: Absolutely! So, as you mentioned, I’m the Chief Climate Officer here at the Loan Programs Office. Along with Jigger Shaw, I’m one of the Biden administration political appointees. So my role really here is to think about how we actually meet the administration’s priorities, their climate goals, and as you likely know, the nuance of our climate mission is that it’s not just about reducing greenhouse gas emissions. It really is about creating good jobs on-shoring and reshoring manufacturing here in the United States, ensuring that those who’ve been historically disadvantaged from the climate transition and climate and energy supply. Communities are benefiting from this transition. So I help ensure we’re driving forward or climate priorities with a focus on our Tribal Energy Finance Program.

Catherine: And you majored in political science and international relations. How did you make your way into renewable energy?

Arpita: Great question. So I actually, my parents are from immigrants from India, from Calcutta, which borders Bangladesh, which is going to be one of the most climate vulnerable countries in the world. I remember in ninth grade reading this article in Time that was talking about how more flooding, hurricanes, climate disasters would potentially impact a lot of migration from different countries to other countries and just thinking I just remember like ninth grade: we are already so crowded, how are we gonna have more people here? How’s it going to be even more hot for my relatives who are still living there? So that really sparked an interest you know, did my high school environmental club and then focused on in college in the International Relations major was really about how folks perceived climate change and how they perceive something that was going to impact future generations but weren’t to impact them, and probably take action around that. But of course, as we’ve seen in recent years, it’s already affecting us.
So it’s interesting to watch sort of that shift happen and so I went into energy and climate policy after that, working for former EPA Administrator Carol Browner and with John Podesta, who was then leading Center for American Progress on climate and energy work. And that was at that time, the Waxman Markey legislation had just failed. So this was 2010-2011. And everyone was sort of like, what do we do now? We don’t have this big piece of legislation. Who’s going to help us with this transformation? And there was a lot of talk about your private finance. We need the capital markets to come in and actually fund those transitions. And I was like, I don’t know, what they’re talking about, like, I don’t know how to do that. And so while obviously the public, you know, the public and the Congress has such a huge role to play. I need to understand the private sector like levers that we’re going to be using. So I went to business school, focused on renewable energy finance, they’re just into investment banking, and got to work on the Sunrun IPO which was very cool. And then decided, though, that I really wanted to go to a company where I could touch and feel the impact.
Solar development is really that!. You’re able to like go be like this actual product is reducing emissions. So I went to SunPower to do commercial solar project development there. This was working with Apple and Amazon on their big warehouses and target on their big warehouses and thinking, designing their solar projects and also doing the project financing on those projects. So it was really great. And then solar… as people call this solar coaster, it is both a wild ride, and really fun to be a part of but I also wanted to see what it was like to be at the start of an industry and so I went to Impossible Foods. That was helping create this market around low emission food technology and spent some time there helping launch- we did during COVID actually did the big first big retail launches. We launched the Starbucks breakfast sandwich and so it was really cool to see how you make the case for this like low emission food. So that’s my journey till DOE and its permanent energy have been lucky to have a bunch of awesome opportunities versus Chief of Staff. To the deputy secretary and working across our lab infrastructure and sort of seeing the full scope of what this agency can do and now at the Loan Programs Office, so it’s really exciting to put together the Climate and Energy and the finance pieces together in my current role.

Catherine: Yeah, it’s so interesting. I really think that that journey makes so much sense to me, especially like I was passionate about nutrition and also passionate about climate like I think that kind of really coincides in a lot of different ways just, with being environmentally healthy but as well as being healthy for yourself. What is the barrier you have faced in your career and how did you overcome that?

Arpita: So I think there’s obviously lots of barriers and I think your organization does such a good job trying to address one of them. But I mean, for my career, I’m usually the only woman in the room, the only person of color in the room. And that is comes with its own barriers obstacles, but what has been amazing of the permanent energy, obviously led by Secretary Granholm most of the rooms I have now in they’ve done such a good job hiring and a really feel very balanced and I feel, there I haven’t felt that as much it’s more of an energy which makes me very excited. about where we’re going in this industry. I know it’ll be different if I were to ever go back to private sector and even at the loan programs office, our C suite level executives is basically 50/50 And it’s just incredible to be in that environment. So that is one and have it always dive in more to those pieces. The other thing I would say is what is both like the opportunity and challenge of being in climate is that you can move through things that are as different as a solar panel and hamburger meat you know sort of in the climate space. And obviously there are transferable skills that you’re thinking about right where like, okay, so you know, SunPower we’re saying we’re making the most efficient solar panel in the world versus we’re making. And then on the other side, Impossible Foods, marketing, like we’re making, like the lowest emission, meat type product that you’re able to. So it’s really fun to see those parallels, but sometimes I’m, especially in my last role, working with the deputy secretary. It’s like you go for meetings that are like, geothermal, which is a very specific type of technology, to talking about fusion, which is like completely different technology, but they’re still in this energy, climate space. And I wouldn’t call it as much a barrier but it is you have to be able to absorb information really quickly and then be also be able to understand where your intervention in a huge department like permanent energy is going to be the most impactful without getting overwhelmed by all the different technologies and opportunities that we want to go after.

Catherine: Right. With the passage of the bipartisan infrastructure law and the inflation Reduction Act, the LPO jumped from $40 billion to $400 billion, and authority for clean energy commercialization. What for this funding has already been deployed and what are the LPS top priorities when it comes to deploying these funds?

Arpit: Yes, it’s exciting to have inflation Reduction Act, and I just heard a lot of really just supersized, but we couldn’t be able to do, I think, but just take a quick minute to step back. I think what’s so amazing about these two pieces of legislation that I haven’t seen on my 15 plus years working in this sector is that it’s creating both the demand as well as the supply. So with the tax incentives, you’re actually incentivizing consumers to go out there and buy EVs and buy solar panels and heat pumps etc. And then we’re also creating the supply we’re like helping build the backbone of the manufacturing sector for EVs for solar for all of these different sectors. So that has been really cool to see with both of these pieces of legislation. And I think what I always go back to like sort of the civics lessons like why sometimes I think people ask the question, Why does the government need to do this? And for me, it’s really that like, it goes back to the civics class, when there is a problem that the private sector alone cannot figure out or face. You really do need the government to come in and for the innovation, as well as the deployment to get us to meet our goals for national security before really are obviously future generations and it particularly in the climate change arena.
And so then when you think of Loan Programs Office, we fit into sort of the end of what we think about as like the different technology readiness levels. And what’s great about permanent energy is we have program offices and grants and funding for every single valley of death that a technology will face.So whether you know it’s basic r&d within our labs, to our applied offices, who are thinking a little bit further down the line of like, hey, we actually really need you know, a cobalt free battery. Like can we actually do price competition about that to our office of clean energy demonstrations grid deployment office? The manufacturing and supply chains, which is a little further down where we’re taking, we’re like, Hey, can you actually demonstrate some of these technologies RPE falls into that, and the drums office as you come in. When you already have a proven technology we don’t take will you/won’t you risk and we come in and try to catalyze and scale up. Some of the sectors that we think are really gonna be transformative in the clean energy space. So far the Loan Programs Office has, in this administration, issued 20 billion in both closed loans and conditional commitments. And we have a pipeline of over $200 billion of applicants, and we’re across batteries, clean fuels, hydrogen, offshore wind, and so it’s just been really exciting to see that and we still have a lot of loan authority left and we are working super hard loan forecasts office to get the get those loans process in through the door and it’s a very exciting time to see us have that momentum and pick up.

Catherine: I think what’s so exciting from what I’ve seen is just the breadth of technology. That’s not just like wind solar, just like you said cobalt. I mean, it’s just so interesting, all the different technologies and projects.

Arpita: Yeah, yeah, exactly. And that’s what great about it where we really are trying to get all the different uses of the sector, and all the different pieces of the supply chain as you see in a lot of our EV supply chain Awards, which has been really cool.

Catherin: That’s us going back to the LPO. They’re currently supporting a range of clean energy projects as we discussed from onshore wind, geothermal TV, nucular, etc, etc. What are some of the projects you’ve been most excited about?

Arpita: Yeah, and I think you’ve mentioned so many of the awesome ones we’re doing. I think I’d say two things. And I was hinting to this previously, but so cool is to see us take on like the EV supply chain. We’ve done projects with lithium carbonate, graphite, anode cathode materials, so it’s really and then also, actually just producing the batteries. And so that’s what’s really cool. About our ATVM program, Advanced Technology Vehicle Manufacturing. Because there’s an innovation requirement, it’s really about scaling up and so you can see all the different pieces of that supply chain and scale all of them up which is, I think, great. The other ones I get really excited about are sort of the standalone ones and ones that are really first to market. One of the ones they announced recently was $189 million for a long path. And so this is supporting methane emissions monitoring in real time. And methane is obviously sort of like a super greenhouse gas. So the more we’re able to work in different gas and oil fields to do that methane monitoring, it’s gonna have a huge impact. So I’m really excited about when we can be in those sectors where we’re leading the charge.

Catherine: Okay. Some might not know that the LPO which was created in 2005 I did not know that. I thought it was way more recent than that. Previously, rescued Tesla from bankruptcy in 2010 with a $465 million loan. I don’t know if they’re regretting that. Or why do you believe the LPO is critical to the energy transition?

Arpita: And this is something we talk a lot about in the loan programs office. And more and more as we’re putting more deals out the door. We are inherently a risk taking organization. And as I mentioned, I think it’s so important for the government to take this role that we will come in where the private sector is and so that is just going to keep playing out and we are going to see companies that we are conditionally committing to that might struggle on execution. And there might be times when they’re, oh, this site didn’t work out. Actually we need to pivot here. We need to have trouble scaling this and that. And what is great about the Loan Programs Office and the way that we do this is at Conditional commitment. We have a lot of conditions precedent that you have to meet before we’re actually going to give you the money and so what’s important there is ensuring that those conditions precedent, gives room and gives flexibility for companies to like keep trying to hit their execution. So that’s just been great. And I think Tesla is obviously a perfect example of that. You know, this was a risky bet and we took it and it succeeded. And I just think that it’s going to be so crucial for some of these companies who really are at the edge of making it able to come in and really support them and take them through all those sort of difficult phases to scale up.

Catherine: Just a follow up question to that. Can you provide some examples of other companies or technologies LPO has played a critical role for.

Arpita: Yeah, definitely. So 10 of the first utility scale solar projects in the United States, were underwritten by us, as well as the first nuclear plant in those built in the last 25 years in this country, as well as like the first wind farm so a lot of that first generation of technologies was vital for us to be there. And then we’ll be really interesting given the breadth and volume of the different types of technologies we are now supporting that sort of that idea of like crowding in private sector capital, and bringing the private sector in will be it I don’t think it will just be like wind and solar, which I felt like were the big players last year around it’s going to be a much wider swath across, again, like when we’re thinking about geothermal, hydrogen, and carbon capture and storage, like there’s going to be just a bigger suite. So it’ll be interesting to see which of the ones have we successfully build the bridge to bankability and have the follow on investing? So we’re excited about it.

Catherine: It’s just so interesting because yeah, it’s just you don’t want to be so reliant on like, one thing and I mean, that’s what’s so exciting about energy. It’s going to take a bunch of different technologies to get to where we want to go. I want to talk next about environmental justice. Like can you talk about the ways in which the DOE is helping to ensure environmental justice including the Dewey’s tribal Energy Finance program?

Arpita: So, as you know, the President issued the Justice 40 Executive Order early on and it is such a great idea. It is exactly what we should be doing thinking about these energy communities who’ve been burdened by the energy transition in the past and so but how are operationalizing that is super difficult and what is it that we are going to ask of our applicants, how do we ensure that we’re tracking that progress throughout life alone these can be 10,20, 30 year loans, and so administrations will change the LPO will change and so how do we ensure that we’re building something that last? And we have an incredible community jobs and justice team here LPO who works with the applicants at every stage of the process to start having these conversations. And what I think has been so successful with our committee jobs and justice team is you have to meet your applicant where they’re at. Sometimes this is the first time they’re coming and have ever interacted with the federal government. On anything that involves their technology. And if there’s a lot, there’s a lot of nuance to that. And there’s a lot of things that they would not have to deal with in the capital markets.
So bringing them along with us having those early conversations of hey, how are you thinking about engaging with the community on this? Have you thought about you know, where are you thinking through the salary of these employees and sectors provided before and having those conversations? And then I do think for environmental justice, and thinking specifically on the tribal Energy Finance program, is like what I think about and keeps you up at night, all the time. Because we are such our program is really, really good for large projects for $100 million dollar plus we do not have a floor or anything like that, but just how long it takes to get through the process, our due diligence, etc. For tribal communities and for the tribal Energy Finance program. A lot of the need is much smaller, it is in the $10 to $20 million range. And so, what we’re really thinking about is how do we partner with outside whether it be native CDFIs? How do we think about community lending and all of that and how do we become partners together to fund the projects to where they need to be so just because we have the money does not mean we’ve figured out how to get it to the communities most in need. And I also think just because we are giving money to companies and asking them to engage with communities, does that mean that we’ll have results so I think we are really working to make this a match ensure that our metrics and goals and then we’re fulfilling them and I think we’ve made a lot of progress in the last three years.

Catherine: What advice you have to give to applicants. So for energy companies that are thinking about applying for LPO funding, what would you say to them?

Arpita: So we actually just put out a really great blog post on this and so encourage everyone to look at it, but I’m just going through some of the big points at and some of this, you’re like, oh, obviously that makes sense. But I think what we have to realize is particularly in climate tech, for a while, you know the VC funding world was really the focus and it was like okay, let’s like we have an idea let’s try to get a lot of money. That’s a good idea. Right? That financing it’s this whole Oh, holy a different thing, right. You should be past that phase of just like hey, this is what we’re going to do. You need to see that you’re actually doing it. And so one of them is something I mentioned earlier that again, we don’t have a minimum, but is the project big enough to go through our process? Does it make sense given the way that we’re going to have to bring in market advisors and outside legal advisors, so I think that’s one important conversation to have without a regional business development lead that will put on each applicant and then off take. Do you have a reasonable strategy to actually sell what you produce. And this can be really interesting, where they’re new markets. For hydrogen, for example, the hydrogen hubs were announced out of the office of clean energy demonstrations. In parallel, they put out a $1 billion RFP around ideas to both generate demand and actually create demand. So there are ones where we’re really trying to think like, this is such a good idea if only these trucks could actually handle the type of fuel you’re putting together planes or you know, whatever it might be. So we have to have a lot of those initial conversations to make sure we’re all on the same page.
And then have you raised development capital RT, do you have project equity that is committed and ready to take you through? What we see a lot is particularly on the Tribal r&d finance side is a project it is ready to go but some of that early stage development, finance feasibility studies, technical studies, just haven’t been done. So it’s really hard for us to say, Okay, this is ready for primetime ready for LPO. Oh, just really we need to ensure that there are equity investors who are committed to the success along with us. Again, this is often a conditions precedent for us getting any money out the door is ensuring that we’re in it with other private sector players, because at the end, that’s the whole point of galvanizing that already talked about about you know, sure that it’s past demonstration phase, but it’s we can ensure that it will continue to work. And then other things like site control, and good management of your team. And then are you really working with the community to your last question, so, some of that sort of basic things, but I’m putting it all together. We just want to ensure that folks know that we’re really here to help you through the process. And we’re willing to just chat through and work with you, even if it takes months to get to the point where you’re ready for us.

Catherine: Thank you so much for talking to us today. I really appreciate your time.

Arpita: Thank you so much! And thank you so much for all the work you’re doing to get us more folks into this important sector.