The U.S. Department of Energy announced Thursday that it is soliciting applications for $3.9 billion in Smart Grid grant funding under the American Recovery and Reinvestment Act of 2009[1] (the "Stimulus Package Act"). The DOE allocated these funds to Smart Grid programs on April 15, 2009, earmarking $3.375 billion for a Smart Grid Investment Grant Program, and an additional $615 million for Smart Grid Demonstration Projects.The two final Funding Opportunity Announcements ("FOAs" issued by the DOE on June 25th confirm these funding allocations.

The Smart Grid investment programs will provide new sources of funding to help implement technologies aimed at transforming how electricity providers operate their systems, offer options for increased energy storage, and accelerate the integration of renewable energy sources with the electrical grid. These investments will help implement necessary digital upgrades on the electric grid, making it more efficient, resilient and secure. They should also help make the grid capable of integrating renewable supplies effectively, foster and support the plug-in electric and hybrid vehicles industries, and promote energy management technologies, with the ultimate goal of reducing U.S. dependence on foreign oil. As such, this program is of significant import to every sector of the U.S. electric power industry.

The DOE will evaluate applications for the Smart Grid Investment Grant Program in three phases. A letter of intent from applicants is requested, but not required. The letter of intent and application due dates are as follows:

To view table click here.

The DOE will accept grant applications for the Smart Grid Demonstrations Program through August 26, 2009.

Summary of Investments

To expedite the distribution of energy investments under the Stimulus Package Act, most of the funds included in this funding program are intended to supplement established federal energy initiatives. Funds allocated to the Smart Grid Investment Program will be used to implement Smart Grid technology research, development, and demonstration authorized under title XIII of the Energy Independence and Security Act of 2007.

The Smart Grid Investment Grant program is intended to enable smart grid functions on the electric system as soon as possible, while the Smart Grid Demonstration Projects are aimed at identifying and developing new and more cost-effective smart grid equipment, tools, techniques, and system configurations that can significantly improve upon current technologies.

Smart Grid Investment Grant Program

DOE announced the following size ranges for the $3.375 billion in grants it plans to distribute under the Smart Grid Investment Grant Program:

To view table click here.

Project size is determined by the grant size an applicant seeks. Based on feedback from the public in May 2009, the DOE increased the maximum award available from $20 million to $200 million.

This program will provide federal matching grants of up to 50 percent for investments planned by electric utilities and other entities to deploy existing smart grid technologies on a commercial scale. The program will use a competitive, merit-based process to select qualified projects to receive funding. Eligible applicants will include, but are not limited to:

  • Electric utilities;
  • Load serving entities, or load-distribution companies, which provide electricity distribution services;
  • Retail distributors or marketers of electricity that sell electricity to consumers;
  • System operators that coordinate, control, and monitor grid operations within a single state or region; and
  • Manufacturers of appliances and equipment to enable smart grid functionalities.

Smart Grid Demonstration Projects

The draft Funding Opportunity Announcement distributes the $615 million in grants to two areas of smart grid demonstration: (1) smart grid, and (2) energy storage.

The following chart summarizes how the DOE will invest the $615 million for Smart Grid Demonstration Projects, and the expected number of awards for programs in each area of interest:  

To view table click here.

The intent of this FOA is to demonstrate how emerging technologies can be applied in innovative ways within the electric delivery system, and how those technologies offer integrated and economically feasible solutions.

(1) Smart Grid Demonstrations will support regionally unique demonstration projects with the following goals:

  • Quantify smart grid costs, benefits, and cost effectiveness
  • Verify smart grid technology viability
  • Validate new smart grid business models.

These projects will be demonstrated at a scale that can be readily adapted and replicated around the country.

(2) Utility-Scale Energy Storage Demonstrations will include technologies such as:

  • Advanced battery systems
  • Ultra-capacitors
  • Flywheels
  • Compressed air energy systems.

Each demonstration project must be carried out in collaboration with the electric utility that owns the grid facilities. The DOE encourages an integrated team approach that includes, for example, products and services suppliers, consumers, and state and municipal regulatory bodies. All Smart Grid Demonstration Projects require a cost share of at least 50 percent non-federal funds.

The DOE plans to collect and provide the optimal amount of information necessary for customers, distributors, and generators to change their behavior in a way that reduces system demands and costs, increases energy efficiency, optimally allocates and matches demand and resources to meet that demand, and increases the reliability of the grid.

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The Smart Grid funding via the Stimulus Package Act that is available to electric utilities and manufacturers of batteries and other smart grid components can create critical opportunities for your company, enhance your operations, and provide excellent joint venture opportunities between power providers and distributors and smart grid development and load balancing and energy storage companies. For further information on the program and for assistance in applying for these grants, please contact any of the attorneys listed in the sidebar.