A $1.66 Billion Loan Guarantee to Plug Power Presents
Ethics Concerns and Severe Risk to American Taxpayers
WASHINGTON, D.C. — U.S. Senator John Barrasso (R-WY), ranking member of the Senate Committee on Energy and Natural Resources (ENR), sent a letter to the Department of Energy’s (DOE) Inspector General, Teri Donaldson, highlighting concerns that the DOE’s Loan Programs Office (LPO) is continuing to provide financial support to entities in which its Director, Jigar Shah, has possible conflicts of interest. Specifically, this letter urges Donaldson to investigate the DOE’s conditional commitment to Plug Power, whose losses totaled $1.4 billion in 2023, and to examine possible impropriety on the part of Director Shah and the LPO more broadly.
Senator Barrasso has previously highlighted other questionable actions by the LPO in letters sent on October 18th, October 25th, November 8th, December 13th of 2023.
“It appears that DOE’s Loan Programs Office (LPO) continues to provide taxpayer support to entities with which its Director, Jigar Shah, has conflicts of interest,” wrote Senator Barrasso. “I understand that the company has not turned a profit since its incorporation over 20 years ago. Plug Power incurred a $1.4 billion loss in 2023, which was nearly double its $724 million loss in 2022. It also appears that Plug Power only resolved its November 2023 going concern warning in March of this year. Such significant losses raise questions about DOE’s prior decisions to provide Plug Power with tens of millions of dollars in grants as well as DOE’s conditional commitment to provide a $1.66 billion loan guarantee.”
“Given the significant financial implications and the need to maintain public trust, a thorough investigation into the LPO’s conditional commitment to Plug Power is essential to ensure transparency and accountability within the LPO,” continued Senator Barrasso.
Read the full letter here and below:
Dear Inspector General Donaldson,
I am writing to request a comprehensive investigation of the Department of Energy’s (DOE) recent conditional commitment to provide Plug Power, Inc., a hydrogen fuel cell company, with a loan guarantee worth more than $1.66 billion. It appears that DOE’s Loan Programs Office (LPO) continues to provide taxpayer support to entities with which its Director, Jigar Shah, has conflicts of interest.
In your April 3rd response to my letter, dated December 13, 2023, you underscored systemic conflict of interest concerns within the LPO. You also explained that your office is currently evaluating potential conflicts of interest related to Director Shah and DOE’s issuance of a $3 billion loan guarantee to Sunnova. I respectfully request that you investigate DOE’s conditional commitment to Plug Power and specifically examine any potential impropriety on the part of Director Shah and the LPO more broadly.
My concerns about DOE’s conditional commitment to Plug Power arise from Director Shah’s prior role at Generate Capital, a company that finances energy and infrastructure projects. Shah co-founded Generate Capital in 2014. He served as Generate Capital’s President until March of 2021, at which point he joined DOE’s LPO. In 2019, Generate Capital provided a $100 million loan to Plug Power. After Shah left Generate for LPO, Plug Power repaid its loan to Generate ahead of schedule (without any early termination penalties) on December 14, 2022– as it was pursuing a DOE loan guarantee.
I would also point your attention to Taite McDonald, a lobbyist for Plug Power at Holland & Knight, who maintains strong connections to Director Shah. McDonald, a self-described “longtime friend” of Shah and an advisor to Cleantech Leaders Roundtable, an organization that Shah founded in 2017, has led numerous companies through the LPO selection process since Shah became LPO’s Director. As noted on Holland & Knight’s website, McDonald helped Plug Power secure tens of millions of dollars in DOE grants. Shah also appeared on a Holland & Knight podcast with McDonald to discuss the LPO. I am concerned that this comingling of professional and personal relationships undermines the impartiality with which LPO should pursue its statutory obligations to evaluate loan and loan guarantee applications.
In addition to my concerns about Shah’s ties to Plug Power, I have significant doubts about Plug Power's financial viability. I understand that the company has not turned a profit since its incorporation over 20 years ago. Plug Power incurred a $1.4 billion loss in 2023, which was nearly double its $724 million loss in 2022. It also appears that Plug Power only resolved its November 2023 going concern warning in March of this year. Such significant losses raise questions about DOE’s prior decisions to provide Plug Power with tens of millions of dollars in grants as well as DOE’s conditional commitment to provide a $1.66 billion loan guarantee.
My concerns that arise from the above facts are as follows:
Conflicts of Interest: Generate Capital’s $100 million loan to Plug Power and Shah’s transition from Generate Capital to LPO raises questions about potential conflicts of interest. Shah’s previous ties to Plug Power may have influenced LPO’s decision-making process. At a minimum, Shah’s ties have given the appearance of favoritism. Timing of Repayment: Plug Power repaid its loan to Generate Capital ahead of schedule (without early termination penalties) on December 14, 2022 - at the same time it was pursuing a DOE loan guarantee. The timing of this early repayment (without penalty) raises questions whether Shah or LPO gave Plug Power something in return for or helped enable the early repayment – for example, by indicating that LPO would look favorably upon Plug Power’s application for a DOE loan guarantee. Insider Knowledge and Fair Competition: Shah’s insider knowledge from his time at Generate Capital may have given Plug Power an undue advantage in securing a conditional commitment from DOE. Such knowledge might include insights into Plug Power’s negotiation strategies, financial structuring, or approval processes. Other companies, which are pursuing a DOE loan guarantee, might perceive Shah’s ties to Plug Power as a reason to doubt the fairness and competitiveness of DOE’s funding decisions. Due Diligence: Private sector investors frequently look to LPO’s conditional commitments as an indication that a company is credit worthy. If Shah’s previous ties to Plug Power in any way influenced LPO’s evaluation or due diligence of Plug Power, LPO’s conditional commitment might have misled investors of Plug Power. Public Perception and Trust: If people perceive that private sector relationships unduly influence LPO’s decision-making process, public trust in the integrity, transparency, and accountability within DOE will erode. You have written that “[t]here is no precedent in the Department for [LPO’s] level and pace of financing[,]”referring to the “historic expansion” of LPO’s lending authority as a “massive new risk[] to the taxpayer.” With the upcoming presidential election, I am concerned that LPO may accelerate its lending in anticipation of a potential change in administration.
To ensure the highest ethical standards at DOE, I respectfully request an investigation of the following:
Potential Pre-Tenure Involvement: Investigate Shah’s potential involvement in Plug Power-LPO discussions before his tenure as LPO Director, while he was still at Generate Capital. Impartiality in Loan Decisions: Review the decision-making process within the LPO, focusing on whether Shah’s prior personal and business relationships, described above, impacted the decision-making process with regard to DOE’s conditional commitment to Plug Power. Loan Repayment Circumstances: Investigate the early repayment of Plug Power’s loan to Generate Capital and any communications indicating further DOE financial support. Ethical Compliance: Assess Shah’s adherence to the Biden Ethics Pledge, particularly the Revolving Door Ban, in the context of his interactions with Generate Capital and Plug Power. Excessive Financial Risk: LPO’s conditional commitment of a $1.66 billion loan guarantee to Plug Power exceeds the company’s financial loss of $1.4 billion in 2023. Investigate whether an LPO decision to issue a final loan guarantee to Plug Power would constitute an excessive, atypical financial risk compared to prior LPO loan guarantees. Given the significant financial implications and the need to maintain public trust, a thorough investigation into the LPO’s conditional commitment to Plug Power is essential to ensure transparency and accountability within the LPO. For your convenience I have attached the footnoted links and materials in a separate document.
Thank you for your attention to this matter. I look forward to your prompt response.
The LPO announcement back then on the conditional loan:
********************************************************************************************** NTS: What are these conditions SPECIFICALLY, and why can't I find that answer???[
"certain technical, legal, environmental, and financial conditions"
That statement is not informative at all. If "conditions are achieved, and that loan is received, that would be a catalyst. So what are those specifically and not broadly?
Loan Programs Office LPO Announces Conditional Commitment to Plug Power to Produce and Liquify Clean Hydrogen Fuel Image promoting LPO's conditional commitment to Plug Power
Today, the U.S. Department of Energy’s (DOE) Loan Programs Office (LPO) announced a conditional commitment to Plug Power Inc.’s (Plug) subsidiary, Plug Power Energy Loan Borrower, LLC, for an up to $1.66 billion loan guarantee to help finance the construction of up to six facilities across several states to produce clean hydrogen utilizing the company’s own electrolyzer technology. Advancing clean hydrogen is a key component of the Biden-Harris Administration’s whole-of-government approach to building a robust clean energy economy that creates healthier communities, strengthens energy security, and delivers new economic opportunities across the nation. Today’s announcement will help unlock the full potential of this versatile fuel and support the growth of strong, American-led industry that ensures the United States remains at the forefront of the global economy for generations to come.
As part of President Biden’s Investing in America agenda to create good-paying, high-quality job opportunities for American workers, this loan guarantee, if finalized, will support an estimated 100-300 jobs during the construction period when at full capacity, and at least 50 new full-time jobs for each location. Together with the Regional Clean Hydrogen Hubs, and ongoing research, development, and demonstration in the DOE Hydrogen Program, this announcement will help strengthen local economies, create and maintain high-quality jobs, reduce greenhouse gas emissions in sectors critical to meeting U.S. net-zero goals, and enhance America’s manufacturing and industrial competitiveness.
Plug has a development pipeline that includes the build-out of clean hydrogen facilities in several potential locations across the United States to supply its national customer base with end-to-end clean hydrogen at scale. This conditional commitment advances President Biden’s efforts to strengthen domestic clean energy supply chains, which are essential to meeting the nation’s ambitious climate goals and enhancing our national and energy security. If finalized, the project will support an integrated and resilient commercial scale clean hydrogen fueling network across several regions of the United States.
The hydrogen fuel from the project is expected to power fuel cell-electric vehicles used in the material handling, transportation, and industrial sectors, resulting in an estimated 84% reduction in greenhouse gas emissions compared to conventional hydrogen production, which derives hydrogen from natural gas (CH4) and ultimately produces carbon dioxide (CO2). The benefits of harnessing hydrogen fuel cells in applications such as material handling equipment include enhanced operational efficiency, reduced environmental impact through zero-emission operations, and increased productivity due to faster refueling times compared to conventional batteries. Major corporations such as Amazon, Walmart, and Home Depot use Plug’s hydrogen fuel cells across their warehouse and distribution centers.
The clean hydrogen facilities will utilize Plug’s electrolyzer stacks that are manufactured at the company’s state-of-the-art gigafactory in Rochester, NY, and will use modular designs to ensure a resilient hydrogen fuel delivery network. Plug is among the leading commercial-scale manufacturers of electrolyzers in the United States and currently operates the largest Proton Exchange Membrane (PEM) electrolyzer system in the United States at its Georgia hydrogen plant.
Electrolyzers use electricity to split water into its component parts, hydrogen and oxygen. Plug’s PEM technology allows it to operate efficiently even with variable electricity, enabling it to leverage electricity from intermittent renewables. Electrolyzers that use renewables to power their hydrogen production produce emissions-free clean hydrogen. The electrolyzer stacks can be easily configured to produce systems at 1 megawatt (MW), 5 MW, and 10 MW scales. (One MW powers the equivalent of 750 American homes based on their instantaneous demand.)
Plug is expected to develop and ultimately implement a strong Community Benefits Plan for each project and has committed to working with local communities for project siting, including soliciting input from local economic development corporations. In particular, Plug will initiate a community outreach program dedicated to promoting awareness, understanding, and utilization of hydrogen as a clean and sustainable energy source, which aims to engage and empower communities by providing educational resources, interactive activities, and collaborative initiatives that highlight the benefits and potential applications of hydrogen technology. Plug employs local workforce development strategies and programs that leverage the comprehensive suite of services offered by the Workforce Innovation and Opportunity Act’s network of One-Stop Career Centers, including the development of apprenticeship programs for operations jobs.
LPO works with all borrowers to create good-paying jobs with strong labor standards from construction through the life of the loan. Plug also supports President Biden’s Justice40 Initiative, which set the goal that 40% of overall benefits of certain federal investments flow to disadvantaged communities that are marginalized by underinvestment and overburdened by pollution.
This announcement is part of a broader suite of actions LPO has taken in line with the President’s Investing in America agenda, which is growing the American economy from the bottom up and middle-out—from rebuilding our nation’s infrastructure, to creating a manufacturing and innovation boom powered by good-paying jobs that don’t require a four-year degree, to building a clean-energy economy that will combat climate change and make our communities more resilient. Leveraging loan authority from the President’s Inflation Reduction Act, LPO is spurring billions in public-private investments to boost the nation’s competitiveness, strengthen supply chains, and create good-paying jobs to power the clean energy economy.
The financing would be offered through LPO’s Title 17 Clean Energy Financing Program, which includes financing opportunities for innovative energy and supply chain projects like Plug’s, certain state-supported projects, and projects that reinvest in existing energy infrastructure.
While this conditional commitment indicates DOE’s intent to finance the project, the company must satisfy certain technical, legal, environmental, and financial conditions before the Department enters into definitive financing documents and funds the loan guarantee.
Learn more about the U.S. National Clean Hydrogen Strategy and Roadmap, the Pathways to Commercial Liftoff: Clean Hydrogen report, and how the DOE Hydrogen Program and Hydrogen Interagency Task Force are supporting the Biden-Harris Administration’s all-of-government strategy to addressing the climate crisis and delivering a clean and equitable energy future for all.
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